Miles Flint, president of Sony Ericsson Mobile Communications, is stepping down Nov. 1 based on personal, family issues, sources said last week.
The company said that the move was Flint’s decision, but SEMC’s carefully worded statements, Flint’s successful tenure and near-simultaneous news that the vendor would pursue a global PR strategy raised questions about the underlying cause of Flint’s unexpected move.
Three analysts, all based in the United Kingdom, weighed in on the impact of Flint’s departure on the London-based, Japanese-Swedish joint venture’s future and the choices the company now faces. All three praised Flint’s work in guiding the JV to its current position as the world’s No. 4 handset vendor in the three years since he took the helm. And all three cautioned that the vendor’s renewed focus on moving into the top-three ranking carried long-term challenges.
Calculated risks
“The reality is that Miles Flint really was a leader in the business, and he’s rolled the dice on some things that have yet to play out,” said Ben Wood, analyst for Collins Consulting Services. “He inherited a business that was in good shape. His predecessor deserves credit for getting the company profitable. But Flint deserves credit for being a talented diplomat. He has managed both parent companies well and, in the process, made Sony Ericsson an asset on both parents’ balance sheet.”
Wood said Flint’s leadership in taking the company’s Walkman-branded mobile handsets to global success had been a boon to the company’s fortunes. The two critical “rolls of the dice” include his purchase of the UIQ operating system from Symbian Ltd. late last year and his deal to license software from Sagem Communications for entry-level phones in emerging markets. (Terms of both deals have not been made public.) Both projects have yet to fully play out in the market, according to Wood. The analyst said that the UIQ deal could help the company offer a richer end-user experience-the latest mobile mantra-while the Sagem deal may prove critical to SEMC’s ability to scale up for the market share it now seeks.
Growth challenges
Meanwhile, Sony Ericsson’s new ambitions place it at a critical and familiar crossroads, according to Wood.
“Getting to 10% market share is one thing,” Wood said. “Getting past it is another. To be one of the big guys, with 15% share or more, you need a broad, diverse portfolio, with a significant share of the sub-$100 market. That will be difficult to achieve by 2008. The pivotal piece for Sony Ericsson is the U.S. Undoubtedly, it will get some traction at AT&T [Mobility] by asking the carrier: ‘What is it you want?'”
“They’re going to have to make some trade-offs,” Wood added. “Once you get past 10% market share, you’re going to feel some pain.”
Carolina Milanesi, analyst at Gartner, said Flint clearly made a personal decision to leave.
“There was no business reason for him to go,” Milanesi said. “He has done a lot for SEMC and he is leaving on a high.”
Milanesi said, however, that Sony Ericsson’s fresh affirmation of its goal to become a top-three vendor (or better, SEMC is quick to add) will be “a real challenge.”
“As badly as Motorola [Inc.] is doing, it won’t be easy to overtake them,” Milanesi said. “SEMC needs to get much stronger in the
U.S. market before it can think of becoming No. 3. You can argue that Nokia [Corp.] can be No. 1 with a weak position in the U.S., but their strength in other regions makes up for that. SEMC right now does not have that strength.”
Deeper focus on U.S.
“It’s interesting that the company picked a U.S.-centric guy to lead the company,” Milanesi added, in reference to Flint’s successor, Hideki “Dick” Komiyama, who is chairman of the board at Sony Electronics Inc. USA, and executive VP for electronics marketing and sales strategies at Sony Corp., the Japanese parent company.
“It might signal that they want to do something in that market,” Milanesi added. “I also found it interesting that he mentioned the importance of services, so I wonder if we’ll see more in that space. It’s about time they leverage the Sony content side of things more.”
Bill Ray, columnist for The Register and an ARC Chart analyst, emphasized that the business model for handset companies is now shifting.
“If Apple [Inc.] can make end users the customers, then everything changes,” Ray said. “Nokia’s Ovi project is the same thing. They want to sell electronics and services to end users rather than network operators.”
“Sony Ericsson makes nice handsets, but their success is tied to the strength of their relationship with the network operators,” Ray continued. “If you believe that operators are going to win this battle, then Sony Ericsson will be very well placed. If you think Nokia and their ilk are going to hold the day, then a close relationship with the operators isn’t going to be worth much. Sony Ericsson must judge its strategy carefully and decide who is going to be their customer in five years and work to build that relationship.”
