You might be surprised at how much mutual strategy a carrier and handset vendor can pack into a single device.
Consider the Z750a by Sony Ericsson Mobile Communications for AT&T Mobility.
For Sony Ericsson Mobile Communications’ GSM-only posture, the narrow path to most American consumers leads through AT&T Mobility, with regional carriers and alternative channels a distant second for driving volume.
The “alignment of interests” between a vendor and carrier can resemble the eye of needle – where even components represent mutual, strategic interests. That makes SEMC’s placement of the clamshell Z750a sporting HSDPA connectivity at AT&T Mobility worth examining.
The Z750a sells today at the sweet spot of $50 – after a hefty $100 mail-in rebate and two-year contract. Two of the handset’s three colors probably will appeal to women, according to one analyst. That means SEMC gets another SKU (or three, depending on how you count) at the U.S. carrier with the most subscribers, boosting its position at the nation’s biggest retail channel for GSM phones.
Looking through the mirror
In the handset’s mirror-finished cover one can discern the outlines of AT&T Mobility’s interests and Sony Ericsson’s ambitions in the U.S. market.
Sony Ericsson has struggled to gain significant market share in the United States; it reports earnings April 23, when it will also report on its progress in the world’s major markets.
Michelle Mindala, AT&T Mobility’s executive director of product management for devices, said the Z750a fits into the carrier’s effort to drive HSDPA throughout its portfolio, across price tiers.
In fact, Mindala said, the Z750a embodies three of the carrier’s strategies: HSDPA in a fashionable device at the $50 sweet spot, the device’s quad-band GSM and tri-band UMTS aids international roaming agreements (200+ countries for voice, 145 for data and 60 for 3G) and the device fosters diversity among the carrier’s chipset suppliers.
Maintaining a diversity of chipset suppliers aids handset innovation and keeps prices low for the carrier and its customers, Mindala said. This is AT&T Mobility’s first Ericsson Mobile Platforms-supported 3G chipset.
“It’s important to us to drive chipset diversity in a competitive environment,” Mindala said. “We’ve had to work hard in the past few years to bring new suppliers to market in order to offer a full array of 3G devices. The Z750a is our first product with EMP and it speaks of great things to come with Sony Ericsson and EMP.”
Progress for SEMC
Najmi Jarwala, CEO of Sony Ericsson’s North American operations, said that the Z750a represented his company’s progress in placing handsets at the nation’s leading GSM carrier. He too noted that the device was SEMC’s first HSDPA phone in the U.S. market.
“Our intent is to fully align with carriers’ needs and consumer trends and build our portfolio around that,” Jarwala said.
Analyst Brad Akyuz at Current Analysis said that the Z750a’s HSDPA connectivity was a timely move.
“Samsung launched an HSDPA handset 18 months ago to help AT&T Mobility build a base of 3G consumers,” Akyuz said. “And in the past, Sony Ericsson’s feature orientation – Walkmans and Cybershots – didn’t require speedy data services to enjoy. Now that carriers seek customer ‘experiences’ that depend on fast data, HSDPA is more important. Sony Ericsson tends to wait for market maturity before scaling up and now the U.S. market is maturing for HSDPA and (CDMA2000 1x) EV-DO.”
Market timing
Jarwala concurred on the timeliness of the Z750a’s delivery of HSDPA and offered candor.
“We’ve been working on delivering HSDPA since last year and perhaps we’re a tad later than we wanted to be,” Jarwala said. “But we wanted to meet our own standards for quality and 3G services are just beginning to see mass market adoption. Were we on the ‘bleeding edge’? No. Were we ‘late’? No. I think we’re spot-on for HSDPA.”
To Akyuz, the Z750a’s three colors – Mysterious Purple, Rose Pink and Phantom Grey – speaks not just to fashion, or an appeal to women, but to the vendor battle for SKUs.
“Sony Ericsson’s W580i at AT&T Mobility now comes in four colors,” the analyst said. “The Z750a comes in three colors. The forthcoming W760i (carrier and launch date TBA) will be available in several colors. This is important to Sony Ericsson because its rivals have played the color strategy for some time. The more SKUs Sony Ericsson can obtain, the more that eats into its rivals’ shelf space.”
“I wouldn’t read too much into the colors,” Mindala added. “We want fun, hot colors across our portfolio. This isn’t just a tube of lipstick – this is a full-featured, powerful phone.”
Building scale
As for the Z750a’s place in the context of Sony Ericsson’s U.S. portfolio, Akyuz said the trend was positive.
The W580i model at AT&T Mobility at nine months of age “still has life,” the analyst said. Add the W350i, a low-mid tier music phone aimed at the youth market, announced in January. Add the Z750a. Add the W760i, a high-tier music phone, and the touchscreen Xperia, due in the second half of the year. (Both units, Jarwala emphasized, have not been publicly blessed with carrier deals. Akyuz speculated that they would go to AT&T Mobility.)
“Later this year, Sony Ericsson will have a full-spectrum portfolio at AT&T Mobility,” the analyst said. “That’s a substantial change in SKUs from last year and a big accomplishment.”
“One of the big advantages to AT&T Mobility,” Akyuz added, “is having these music phones in their lineup – the carrier doesn’t have a particularly well-focused music strategy.”
The devices yet to launch later this year presumably will give AT&T Mobility opportunities to tout its revenue-generating data services and boost subscriber ARPU, the analyst said.
