As the share prices of Motorola (MOT) and Nokia (NOK) go down in flames as handset margins shrink, the world’s No. 4 handset company is doing just fine. Sony-Ericsson (SNE)(ERIC) said Q4 earnings would double.It is estimated that the firm will sell 23 million units in the period, up from 16 million in the same quarter a year ago.
Sony-Ericsson has a nice little trick. It sell very few low-cost phones and focuses on handsets with cameras and other expensive gadgets.
To keep at the top of the market share pile, Motorola and Nokia have had to sell cheap phones. Volume over profits and all. Consumers in emerging markets and the less than affluent in emerged markets don’t want to pay big wampum for phones. The two largest handset manufacturers assume that someone has to supply these markets, so it might as well be them.
The cell phone industry is starting to look like the automotive world. Some of the very large companies rely on volume but make very little on each unit.
Perhaps it is better to be BMW or Porsche.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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