China is now the world's biggest mobile phone market with almost 500m users. It commands much respect from foreign handset makers who increasingly realise that the one-size-fits-all marketing and product strategies of the past will not work in China.
Another challenge, and one that sooner of later every mobile operator faces as markets mature, is the need to encourage existing customers to use their phones for more than talk by developing new services and compelling local content.
Sony Ericsson has woken up to the challenges and unveiled a programme to help developers in China produce mobile phone content and applications aimed squarely at the Chinese market.
The aim is twofold: to help Sony Ericsson handsets stand out in a crowded marketplace — there are at least 70 phone vendors in China; and to help operators boost average revenues per user (ARPU) — a key metric for phone operators. Ulf Wretling, head of global content planning and management for Sony Ericsson, said:
Our aim is to increase subscriber ARPU and loyalty for operator customers by making the best developers target our phones and helping them achieve business success. We hope Chinese developers can quickly become a strong force in the Sony Ericsson Developer World community and also help create content for the global market.”
China has become one of the world's most dynamic mobile markets, according to Sony Ericsson, which says mobile content and applications will play an increasingly important role.
Sony Ericsson Developer World will target a broad range of developers in China and provide dedicated services and support in the local language. It aims to give partners in China and the Chinese developer community with the tools, information and support required for them to deliver content on Sony Ericsson phones. The firm also launched a Chinese section on the global Sony Ericsson Developer World portal, offering technical documentation, tools and other information in Chinese.
SE says it is exploring various content distribution channels in China, including pre-loading applications on China-specific phones, its own own over-the-air download service, portals and retail distribution models. China Mobile's Web-based content distribution service, which contains themes, ring-tones, pictures, video and games, supports 26 Sony Ericsson phones.
Interestingly, SE is dangling the carrot of global opportunities for Chinese developers, whose content and application are seen bringing “something creative and unique” to the European and American markets, for distribution through Sony channels in the west or pre-loaded on global handsets.
While Sony Ericsson is clearly working harder to engage the Chinese developer community and get more local content into the Chinese market, EngagingChina's experience from more developed markets is that these so-called value-added services rarely achieve the sort of uptake that manufacturers or operators desire. Often, the stumbling block is pricing and consumers' understandable fear of “bill shock” — an unexpectedly high charge for appears on their bill.
To address this issue, China Mobile, the country's largest operator, last year tightened the rules on selling of value-added services. In doing so, it pulled the rug out from the WVAS operators like London-listed IGM and MonsterMob, which saw their revenues tumble – more in this EngagingChina story.
Since August 2002, when the company first established operations in China, Sony Ericsson has turned China into a strategic base not just for manufacturing but also R&D, design and regional sales and marketing.
Talking of sales, Sony Ericsson recently won two bid orders in China. One is framework agreement with Shenzen Telling Communications, a Chinese mobile phone distributor, for 4bn yuan worth of handsets. The other deal with China P&T Appliances, the largest handset distributor in China, and covers 5m handsets.
The latter order, while not quite on the scale of Nokia's mammoth order from China P&T Appliances earlier this week, is important nonetheless as it show SE can successfully compete in China's entry-level handset market — about 60 percent of the 5m handsets will be mid-range and low-end handsets.
Until now, SE has been best known for its high-end models and it has not been seen as a competitor for low-end and mid-range handsets, which where the volume growth is in emerging markets like China. That will change, promises Gunilla Nordstrom, president of Sony Ericsson China, who says SE has set up an R&D facility in China specifically to focus on entry-level handsets.