A total of 500 people in RTP and Munich, Germany will lose their jobs after Sony Ericsson decided to shift emphasis in its research and development efforts.
Some 200 of those were based at the joint venture’s North American headquarters in RTP. The workforce at the site has been slashed to 500 from 800 in recent months.
Sony Ericsson announced Tuesday that it would put less emphasis on code division multiple access phones. Instead, Sony Ericsson will concentrate on the competing standard known as GSM (global system for mobile communications) UMTS (universal mobile telecommunications system) that is at the core of next-generation wireless development in Europe. UMTS allows transmission of data of up to 2 megabytes per second.
There are some 127 million CDMA users in the world, 55 million of which are in the US. There are some 140 million wireless users total in the US as of December 2002, according to the Cellular Telecommunications & Internet Association. Most users rely on GSM phones. According to Gartner Dataquest, Son Ericsson had less than 5 percent marketshare.
Sony Ericsson stated some CDMA work would continue for phones sold in Japan and for other device applications.
In its press announcement, Sony Ericsson said the moves were made to “strategically focus” GMS UMTS phone technology that “has started to drive market share growth.”
But even GMS UMTS efforts weren’t spared. The joint venture said development sites would be consolidated.
“Today’s announcement ensures the continued growth and development of Sony Ericsson,” said Katsumi Ihara, president of Sony Ericsson, in a statement. “The actions reflect our strong forward momentum as we intensify our business focus and work to achieve profitability.”
The joint venture has been under increasing pressure to achieve profitability, with Ericsson executives at one time threatening to pull out of the agreement.
In the quarter ending March 31, Sony Ericsson reported a loss of $114 million and a 400,000 drop in phone shipments to 5.4 million. Revenues were off 35 percent.
The future had appeared to brighten in January when Sony and Ericsson announced a cash injection of $324.6 million. The company said the funds would be used to strengthen its capital structure and to “support business expansion.”
In the fourth quarter of last year, Sony Ericsson lost $74.6 million.
Sony Ericsson: www.sonyericsson.com