Music phones help Sony Ericsson

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Sony Ericsson, the mobile phone maker, delivered a strong third- quarter performance boosted by its new range of top-end phones, including its new Walkman music-player device.

The results for the three months to the end of September reflected stronger-than-expected demand this year among the bigger mobile device makers.

Miles Flint, chief executive of the London-based joint venture between Sony of Japan and Sweden’s Ericsson, said the results also reflected the company’s big push over the last 12 months to expand the product portfolio. “I think we are reaping the rewards from that.”

Sony-Ericsson’s success has led to it regaining market share, which now stands at about 7 per cent. The company is in the second tier of handset makers with LG and Siemens, whose handset business was recently acquired by BenQ of Taiwan. Those three along with the bigger rivals - Nokia, Motorola and Samsung, have been increasing market share this year, seen by analysts as confirmation the top six are pulling away from the rest.

Mr Flint gave a bullish assessment for the rest of the year and while not being drawn on a forecast for 2006, he insisted “we will see growth continuing”. His comments echo those of Jorma Ollila, chief executive of Nokia, that 2006 would match this year for strong growth despite downbeat assessments at the start of this year.

Mr Flint said it was hard to be specific about next year because some of the dynamics in the market were hard to read.

Growth in the first half of 2005 came largely from the emerging markets, such as China and eastern Europe, but western European demand for replacement handsets kicked in in the second half, Mr Flint said. Asia-Pacific also performed strongly.

The company’s third quarter received a boost from the launch of a number of top-end phones, including its Walkman range of music players and a number of advanced camera phones.

As a result, average selling prices rose from €137 ($165) to €148 ($178) and margins jumped from 5.4 per cent in the second quarter to 7.3 per cent.

Sony-Ericsson’s handset sales rose 29 per cent to 13.8m units over the same quarter last year. Pre-tax profits were 11 per cent higher at €151m, on sales up 22 per cent higher at €2.1bn.

The Walkman phone, launched in July, is at the forefront of the push by the industry to persuade consumers to accept the phone as the one “must-have” accessory, incorporating other devices such as cameras and music players.

Last month, Motorola launched its ROKR music phone, incorporating the hugely successful iTunes software. Nokia has linked up with Microsoft to launch a high-end music device, the N-91, early next year. It recently launched its first music phone, the N3250.

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