Sony Ericsson posts gloomy quarter, unleashes two devices

24 Apr

Swedish cellphone vendor, Sony Ericsson, reported a colossal 48 percent decrease in year-on-year net income in its 2008 first quarter results. The company attributes these figures to “higher R&D investments as a percentage of sales” and a “slowing market growth in mid-to-high end phones.”

The results at are par with an interim announcement the company had made on March 19, where it warned investors of a slow-down in the industry. Even global market leader, Nokia, felt the pinch this quarter, which saw it losing a percentage of its global market share, which fell to 39 percent from 40 percent in the last quarter. Likewise, even Sony Ericsson witnessed a percentage drop in its global market share, which now hovers at 8 percent.

However, unlike Nokia, Sony Ericsson faces a tough challenge in front of it. With the European and American handset sales slowing down, the bulk of revenues are expected to come from emerging markets in the coming quarters, where low-cost, entry-level phones rule the roost. Unfortunately, Sony Ericsson’s upcoming product portfolio is dominated by mid and high-end phones in its popular Walkman and Cyber-shot series. There are only a handful of products – the T270, T280, R300 and R306 –slotted for the second and third quarter this year, that cater to the emerging markets in Asia and Africa. Even with the results, the company announced two mid-end HSDPA-enabled devices – the Z780 and G502 – aimed at the American and European markets respectively.

Will the absence of compelling products in the low-end of the spectrum bring the Swedish Express to a screeching halt? Is this the window of opportunity for Motorola, which has focussed on its W-series of entry-level products in these emerging markets and kept the mid-end Z-series devices on the backburner for the moment? Well, it’s going to be one helluva a quarter coming up.

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