Mobile phones have become fashion accessories with a limited shelf life. The same, it seems, is true for growth fads among handset makers. The more successful are rediscovering developed markets, as third generation telephony materialises. After bucking pricing pressures in the fourth quarter, Sony Ericsson has won plaudits for its strong presence in western Europe and its limited exposure to emerging markets, the previous hip thing.

Unfortunately, the Swedish-Japanese mobile joint venture has just over 6 per cent of the global market, mostly at the top end. Given its marketing efforts, it would be depressing if it did not report a slight rebound in average selling prices. But this has yet to translate into decent profits at Sony Ericsson, underlining the longer-term risk to sector margins.

It has been a bit of a shock for the sector to discover that consumers in developing countries are relatively poor and price sensitive. The growth of outsourcing has also reduced barriers to entry for indigenous companies. As the setbacks at China's TCL illustrate, western companies have fought back, but at the expense of margins. For now, the transition to 3G looks set to squeeze profits further. But at least it seems likely that handset makers will think of something else, if profits from sleek 3G phones prove disappointing. As Oscar Wilde put it, fashion is a form of ugliness so intolerable that we have to alter it every six months.

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