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China smartphone market: Sony Mobile Communications AB will win enormous opportunities.
Sony Mobile Communications AB will win enormous opportunities in China's smartphone market if the company always focuses on the right products, is quick to respond to market demand and is speedier in innovation, according to Sony Mobile's top officer in China.
The Chinese smartphone market is extremely "tough and intense", said Magnus Ahlqvist, president of Sony Mobile China. "The market has all the international players, as well as a number of Chinese rivals who also perform actively," Ahlqvist said in an exclusive interview with China Daily.
After the Japanese electronics giant Sony Corp bought out Ericsson AB's half of their 10-year-old venture for $1.3 billion in February, Sony Mobile has become a wholly owned subsidiary under Sony Corp and is acting as a pillar for the company's turnaround plan.
With China being the world's biggest smartphone market, with an expected smartphone shipment of more than 164 million units this year, Sony Mobile regards it as a key customer and focuses more on it now, he said.
"Sony Mobile tries to ensure it does very deep analysis on the Chinese market. Then we can have a good assessment of what are the opportunities going forward," Ahlqvist added.
Unlike Samsung Electronics of South Korea, which has a complete product line covering all price levels, Sony Mobile's products were mainly targeting mid- to high-end segments. Of all the global brands competing in China, Sony Mobile had about 60 percent of its smartphones sold at a price of more than 2,000 yuan ($315), behind only Apple Inc and Research In Motion, according to a study conducted by Barclays.
However, the majority of Chinese people can only afford a smartphone with a price tag of between 700 yuan and 2,000 yuan, which means Sony Mobile has ceded the lion's share of the booming Chinese smartphone market to Samsung and local competitors.
"Yes, we have probably lost shares in those segments because we have not addressed them, so we don't really have a presence today," Ahlqvist said. But, on the other hand, every company has to do a good job in areas it is really expert at, he continued.
Sony Mobile's performance in the mid- and high-end sectors has already given us a lot of confidence, he pointed out.
Ahlqvist said Sony Mobile had achieved a clear increase in market share in the higher end segment in the second quarter in China. "Combined with our creative technology, rich content and unique design, I am quite confident that we will continue to grow at a fast pace," he said.
Sony Mobile has introduced 12 smartphone models in the Chinese market this year. Ahlqvist said it is a must for his company to better understand customers' needs and be quick to launch products satisfying their demands. "The Chinese market is changing very fast," he said. Therefore, every product may have a shorter life span and should be replaced by new devices with advanced technologies.
Analysts argued that Sony Mobile might have the most potential to challenge industry's dominant players - Samsung and Apple - since Sony Mobile could take advantage of tremendous resources from its parent company Sony Corp.
"The competition in the mobile phone industry is no longer merely relying on hardware, but also on software and the whole eco-system as well," said Wang Ying, an analyst at Beijing-based research firm Analysys International. Sony is a rare, comprehensive entertainment company, with operations in movies, music, gaming and financial services. If it integrates well, those resources would quickly make Sony devices stand out, she said.
In a previous interview, Ahlqvist said there is a trend that people like to enjoy content and services through multi-screens, including smartphones, tablets, televisions and personal computers. "Through our many devices, people can enjoy all of Sony's content - from movies to music and games - in a way no one else can," he said.
Meanwhile, Chinese customers are familiar with the Sony brand thanks to the company's lengthy presence in the Chinese market. It's a positive benefit for Sony Mobile after it returned to Sony, he added.
Sony had a 3.5 percent share of the global smartphone market in the second quarter, according to Gartner Inc. Samsung topped the rankings with a 29.7 percent share, followed by Apple with 18.8 percent.
"I doubt Sony has the scale to re-emerge as a serious contender anytime soon," said Duncan Clark, chairman of BDA China, a consultancy company that follows China's IT industry.
Kunimasa Suzuki, a Sony executive vice-president overseeing mobile products, said earlier this month that Sony plans to draw on its skills in video games, cameras and audio players in developing smartphones and tablet computers, Bloomberg reported.
In April, when Sony's chief executive officer Kazuo Hirai laid out his strategy for the company, he said he expects the mobile products group, which also includes tablet computers and traditional personal computers, to generate more than 1.8 trillion yen ($23 billion) in revenue with a "significant improvement" in operating profit within three years.
Sony's mobile products division posted a loss of 28.1 billion yen in the fiscal first quarter that ended in June. However, Sony raised its estimate of smartphone shipments by about 2 percent to 34 million units for the year ending in March next year.