Summary:
Sony Ericsson is a mobile phone maker company owned by the Swedish company Ericsson and the Japanese company Sony. This company has recently posted lower than expected profits of 35million euros ($44.7million less than expected), and sales of $1.53billion ($0.29billion less than expected) for the last quarter of 2010. Some say that this was due to the competitive market of the Smartphone industry. Sony Ericsson loss many customers and sales opportunity due to the major success of Apple Inc. and the nimble PC-like handset portfolio of Nokia. Another major issue that Sony Ericsson faced was the lowering of their average selling price and quantity. Their average selling price went down 12% on the third quarter and their shipment of new products lowered 23% on the same period compared to 2009. Due to this disappointing quarter, it is unsure whether or not Sony Ericsson is still ranked the 5th biggest handset maker in the industry.
Connections:
Chapter 5 mainly talks about the importance and roles of cash flow statements towards a company. Cash flow statement is a financial statement that summarizes the cash flows of the company during the accounting period, categorized into operating, financing and investing activities. As shown in this article, Sony Ericsson is recently having troubles keeping up with other companies due to their unexpected low profits. They also had a much higher amount of expenses to pay off this quarter as shown from earning $44.7 million less than expected. With a major decrease in their Operating activities (sales and revenue) and an increase in Financing activities (payables and debts), Sony Ericsson is having a hard time competing with the rest of the companies out there.
Reflection:
Sony Ericsson has always been on top of their game for the last few years. I believe that the main cause of their downfall is the competitive market out there. The main rival for all companies in this market would be Apple. Due to the release of the iPhone 4, Apple has been snatching away many possible customers. I believe that in order for Sony Ericsson to actually recover their sales, it would have to either increase price or quantity. The best way to increase price, quantity or even both would be to invest more in R&D. Sony is well known for its advanced technology; therefore R&D isn’t something that is impossible for Sony Ericsson to accomplish. Sony Ericsson has a chance to compete against the popular iPhone 4, only by releasing new and better products. Sony Ericsson is more alarmed now due to this disheartened quarter, and therefore I believe that they would have a higher sense of urgency to improve their products and will eventually improve R&D.
http://www.ibtimes.com/articles/103021/20110120/sony-ericsson-quarterly-results-lag.htm
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I agree that the main reason for Sony Ericsson’s disappointing results is the competitive market. Sony Ericsson has to compete with companies like RIM and Apple, both of which have proven to be very successful in this area. Increasing their R&D will certainly improve their results. With their rivals slowly adding on new features, it is almost mandatory for Sony Ericsson to upgrade their inventory to keep up with rivals such as Apple and RIM. In addition to improving R&D, Sony Ericsson should look to invest in marketing to improve their sales and increase their customer count.
ReplyDeleteI agree with you that the main cause of the downfall of Sony Ericsson would be the competitive market out there such as Apple. Since Apple is a successful and strong company therefore I also believe investing into R&D would be the best solution to increase sales of Sony Ericsson. With new technologies it would be able to attract customers and increase sales or potential investors investing into Sony Ericsson. However I don’t believe increasing the price would increase Sony Ericsson’s sale since the root problem is not solved. Increasing the price would just mean giving away your customers to other companies. The root problem is Sony Ericsson had not refreshed its top of the line, PC-like handset portfolio quickly enough and customers being snatched away by other companies such as Apple. Therefore increasing spending into marketing or R&D would help Sony Ericsson recover their sales.
ReplyDeleteI agree that Sony Ericsson is probably one of the most popular brands out there and that Apple is doing a good job attracting customers. I think the reason why people are really into Apple products is because of the Iphone and the Itouch that was brought into the market a while ago. People liked the product so much they immediately went to get it. They told their friends, family, post it on Facebook, Tumblr, therefore Apple advertised their new technology without knowing. I also agree with Eric that Sony needs to spend more money on R&D. Apple is introducing new products constantly, although it is only a little change or development. Sony needs to work harder to advertise, to remind everyone out there that they are still here, ready to compete with any rivals, and show us something we have never seen before.
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