Sony Ericsson is altering its mobile strategy to focus on lucrative, high-end smartphones.
According to iSuppli senior analyst Tina Teng, the company is (wisely) positioning itself to cash in on the fastest growing and most profitable segment of the global wireless market.
“Given that cell phone penetration has [already] reached 73.4 percent of the [world’s] population, shipment growth is slowing markedly,” Teng told TG Daily in an e-mailed statement.
“Meanwhile, average pricing for mobile phones has declined to extremely low levels and will continue to decrease in the coming years. In contrast, smartphones and feature phones continue to offer fast growth and strong profit margins.”
Teng explained that Sony Ericsson was “mirroring” rival Motorola’s strategy, which has seen the manufacturer withdraw from the mainstream cell phone market to promote its high-end Droid line.
To be sure, Sony Ericsson only recently entered the crowded smartphone marketplace with devices like the Xperia (X10) – which is powered by Google’s popular Android mobile operating system.
“[Yet], the strategic shift is already apparent in Sony Ericsson’s second- and third-quarter results. For the second quarter, the company’s gross margin amounted to 28 percent, more than double the 12 percent the same time a year ago,” said Teng.
“And overall, smartphones represented 13.6 percent of Sony Ericsson’s total mobile handset shipments in the second quarter of 2010, more than double the 5.8 percent seen during the second quarter of 2009.”