Sony Ericsson triple software: a costly mistake

Sony Ericsson triple software: a costly mistake

The joint venture between Japan's Sony and Sweden's Ericsson has already made a 370 million euro ($486 million) first-quarter loss

Tarmo Virki

Tuesday, April 28, 2009

HELSINKI, FINLAND:Mobile handset maker Sony Ericsson's rush into the top end of the market using three different operating systems could prove a costly mistake for the struggling vendor.

The handset industry is expecting its worst decline on record in 2009 as a global recession hits demand, and the joint venture between Japan's Sony and Sweden's Ericsson has already made a 370 million euro ($486 million) first-quarter loss.

The fall in demand has taken its toll on the company's forte of mid-priced feature phones, which focus on specific selling points such as high-spec cameras or music, prompting it to look to the top end of the market, smartphones, a rare growth area.

While many makers, including Sony Ericsson, the world's fourth-largest, have said they can't compete with market leader Nokia in making cheap phones, they all fancy their chances in the smartphone segment, where three of the top makers, RIM, Apple and HTC, are specialists.

To go toe to toe with RIM's Blackberry or Apple's iPhone would be a tough task under any circumstances, but analysts say Sony Ericsson is tying one hand behind its back by planning to support three different operating systems in its portfolio.

When rival maker Motorola's star faded with the fortunes of its erstwhile hit model, the Razr, it decided last year to go with one operating system, Google's Android, to develop a competitive offering of smartphones.

Last year, by contrast, Sony Ericsson expanded its software usage beyond Symbian to Microsoft's Windows Mobile with its X1 model, which combines a touch screen and full keyboard.

"So far the X1 has not done a great deal for them, and unless they are serious about going after the enterprise market, Windows Mobile does not make sense," said Gartner's Carolina Milanesi.

It introduced the "Idou" smartphone model, which has a 12 megapixel camera and runs on Symbian software, in February. The phone is scheduled to hit the market in time for Christmas sales later in 2009.

Last December it said it would also start to use Android.

"Symbian and Android both address the consumer market, and with the portfolio Sony Ericsson has today, two platforms addressing the same market does not make sense," Milanesi said.

"Android will be very crowded, and given the investment they made so far in Symbian, maybe they should see what the Idou can deliver and bet on that," she said.

"Utter Madness"

Sony Ericsson has already made tough decisions in product management, where it has cut the number of phone models in development, which makes it all the more surprising that it has not followed the same logic with operating systems.

"The plan to split development efforts between several smartphone operating system projects seems like utter madness," said GC Research analyst Tero Kuittinen.

While Android and Symbian are both run on an open-source basis, making the code free for handset makers, vendors and analysts say it is still a costly exercise to make phone software work seamlessly on top of the operating system.

The costs multiply when several operating systems are used.

"Supporting multiple operating systems in multiple regions with multiple operators is a resource-intensive strategy," said Neil Mawston from Strategy Analytics.

"Reducing the number of software platforms could actually benefit Sony Ericsson by enabling it to generate scale and uniformity. After all, supporting just one major operating system has not done Nokia, RIM and Apple too much harm so far," he said.

A charitable view might be that multiple platforms allow a vendor to hedge its bets, but if top vendor and Symbian user Nokia, which sold 61 million smartphones last year, doesn't see the need, then for Sony Ericsson, which sold just 2.3 million, it could be a luxury too far.

©Reuters