Sony Ericsson cautious about 3G prospects

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Sony Ericsson cautious about 3G prospects

Despite the billions of dollars about to be spent on 3G networks around the world, shipments of 3G handsets are expected to make up less than a third of all phones shipped by Sony Ericsson Mobile Communications in 2005.

In 2005 the company expects around 20% to 30% of its handsets to be 3G telephones, with most of the rest being made up of terminals for GPRS and CDMA-1x networks - so-called 2.5G services - said Katsumi Ihara, president of the newly established joint venture.

The first 3G handset to carry the new company's name, a Universal Mobile Telecommunications System (UMTS) model for the European market, is expected to appear in the second half of 2002, said Ihara.

A handset for the Japanese market - where commercial 3G service was recently launched by NTT DoCoMo - is expected to be available in the first half of 2002 although it will not carry the name of Sony Ericsson because of restrictions placed on the company by NTT DoCoMo.

Much of the launch schedule of 3G handsets will depend on the availability of suitable chip-sets with which to manufacturer the phones. Sony Ericsson is currently in discussions with as yet unnamed chip suppliers.

Sony Ericsson Mobile Communications came into being on 1 October, when Sony and Ericsson merged their mobile handset businesses.

The new joint company is expecting to turn a profit in 2002 despite the slowing economic conditions, said Ihara. The imminent introduction of GPRS services, which offer higher data transmission speeds over a packet-based network, is expected to help the company meet this goal.

"As we go to the new standard, new applications will emerge to stimulate growth in the replacement market and the industry will grow," Ihara said, adding that he expects to see growth of between 10% and 15% in the handset market. For the current year, Sony Ericsson expects worldwide handset shipments to be around 410 million, rising to 450 million next year.

One of the company's advantages, said Ihara, comes from Sony's significant strength in the Japanese market, where virtually all handsets are made by domestic manufacturers. Even Nokia, which has the largest share of the world handset market, is procuring its latest Japanese handset from Sanyo.

If all does not go according to plan, an exit clause allows either party to withdraw from the joint venture after five years, with an earlier withdrawal possible if both parties agree, said Ihara.

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