Sony Ericsson to Target Lower-end Cell Phone Segment

Includes: ERIC, SNE
by: Steven Towns

Sony Ericsson and France's Sagem Communication (of SAFRAN Group) announced licensing and ODM agreements for entry-level GSM, GPRS & EDGE mobile phones. This is an interesting move for Sony Ericsson, as it has become a force in the mid-range market, achieving record earnings in 2006. Sagem will license certain hardware and software technologies to Sony Ericsson and provide it with "Sony Ericsson" branded mobile phones. In a press release, Sony Ericsson said it will establish a unit specifically for developing entry-level phones. A Sony Ericsson executive commented, "Our co-operation with Sagem Communication will allow us to offer a mature range of phones right from the start." An executive at Sagem called the agreement "long-term." MarketWatch reports Sony Ericsson's spokesman told Dow Jones Newswires the phones will be priced between 50 - 100 euros -- far from the very bottom of the market -- adding that "... operator customers are asking for phones in this entry, lower tier of the market."

Sources: Press release, MarketWatch
Commentary: Sony Ericsson Triples Profits in 4Q06Ericsson's Growing Emerging Market Success Should Leave Motorola Trailing BehindSony Ericsson Sees Opportunity in Mobile TV
Stocks/ETFs to watch: Ericsson (NASDAQ:ERIC), Sony (NYSE:SNE), SAFRAN (Paris: SAF). Competitors: Motorola (MOT), Nokia (NYSE:NOK), Samsung [see iShares MSCI S. Korea (NYSEARCA:EWY)]. ETFs: Wireless HOLDRS (NYSEARCA:WMH)

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