Sony Ericsson increases UK share

July 31, 2008

Sony Ericsson increases UK market share by five per cent, to 25 per cent, as it gears up for Q4 dogfight for top spot with Nokia

Sony Ericsson maintained a 25 per cent UK market share for the fourth week running last week as the global business reported a massive 97 per cent slump in its Q2 earnings and threatened to axe 2,000 staff.

It has gained five percentage points in UK market share in recent weeks on the back of the launch of the C902 on contract, and the W350i and W380i on prepay.

In addition the W910i and W580i, last year's models, are selling well on low-end contracts and prepay.

Sony Ericsson is looking to cut €300 million (£236.7m) per year in costs. It is unclear if jobs will go in the UK, but Sony Ericsson UK and Ireland managing director John Harber (pictured) said: "No one escapes the microscope."

The Q2 slump was put down to Sony Ericsson's increased production costs and expanded product portfolio.

It produced around 15 more handset models last year, compared with the previous year. Sources claimed each new device requires in excess of 100 extra engineering and marketing staff.

"It can cost tens of millions to launch a new handset unnecessarily, and hundreds of staff for each one," said a source close to the situation.

"Sony Ericsson has over expanded too quickly, like Nokia did a couple of years ago."

The planned 2,000 job cuts are in line with extra staff numbers taken on last year to manage its extended portfolio.

In the UK, where it remains number two behind Nokia and expects to fight with it for the Q4 number one spot for the third year running, Sony Ericsson's retail and network customers selected a handset range in line with 2006/7's numbers.

Globally, Sony Ericsson shipped 24.4 million units in the quarter ended June 30. Sales were €2,820 million (£2,222), a fall of nine per cent year-on-year. It cited "unfavourable exchange rate fluctuation, continued slowing market growth in mid to high-end phones and increased competition."

Gross margin also decreased compared with a year ago, reflecting a less favourable product mix, with particular impact in Europe and increased price competition in general.

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