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Thu, Mar 07, 2002 - Page 18 News List

Sony, Ericsson hope alliance will boost sales

CELLPHONES The two high-tech companies believe the merger of their handset operations will help them to capture 20 percent of Taiwan's phone sales this year

By Annabel Lue  /  STAFF REPORTER

An alliance between the handset operations of Sony and Ericsson hopes to capture about 20 percent of Taiwan's mobile phone sales this year, a senior official for the venture's Taiwan branch said yesterday.

"We estimate that about 4.5 to 5 million new mobile handsets will be sold in Taiwan in 2002, of which Sony Ericsson will sell one million [phones]," said Steven Yeh (葉順發), general manager at Sony Ericsson Mobile Communications International AB Taiwan.

Ericsson, the world's biggest builder of wireless telephone networks, and Sony, the leading provider of consumer electronics and entertainment content, teamed up in October last year.

The Sony Ericsson joint venture -- a global merger of the two companies' mobile phone divisions -- specializes in the design, marketing and sale of handsets.

Given cellphones' two-year life cycle, consumers who bought their first phone in 1999 are expected to purchase a second one sometime this year, Yeh said.

"Handset sales reached a peak in 1999," he added.

An industry analyst agreed with him, saying that more than half of the cellphones sold this year were bought to replace old phones.

"Globally, about 45 percent of mobile phones sold in the last quarter of 2001 are replacement handsets, and we expect that the figure will rise to 61 percent in the same period this year," said Alex Wu (吳興國), an analyst at KGI Securities Corp (中信證券).

He predicted that user demand for color screens and GPRS handsets will drive replacement sales.

Meanwhile, Yeh said Sony Ericsson aims to become a "multimedia mobile communication leader."

"Combining Ericsson's skill in wireless technology and Sony's entertainment resources, our products can be both reliable and fun," Yeh said.

The venture has signed contracts for content usage with Sony Pictures Entertainment Inc, Sony Music Entertainment Inc and Sony Style Imaging in Europe.

"Our new handsets will include built-in video games featuring "Charlie's Angels" and the "Men in Black," as well as some pop music ring tones," he said.

Sony Ericsson said it will fight to be the world's number one mobile phone provider in 2005.

However, one market watcher called the dream "very challenging."

"The market is still dominated by Finland-based Nokia, a company that has won strong brand recognition over the years," Wu said.

In 2001, Nokia controlled about 34 percent of handset sales around the world, followed by Motorola's 17 percent and Ericsson's 8 percent. Sony's sales account for about 2 percent, according to Wu.

"The gap between number three and number one will be very hard to overcome because rivals like Nokia and Motorola won't just sit back," Wu added.

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