Sony Ericsson, The Forgotten Smartphone Firm, Makes A Profit

Almost no one mentions also- ran handset company Sony Ericsson anymore. The firm lost money and market share over the last two years. That trend may be in reverse now. Sony Ericsson sold 8.1 million handsets in the first quarter of this year–about 5% of global shipments. The company also made a profit of $15.7 million, modest but still black ink. Larger rivals like Nokia (NYSE: NOK) should be as fortunate.

Sony Ericsson also posted an increase in revenue per handset, up 5% to 131 euro. That is another sign that it has moved up-market into the smartphone sector.

And, indeed, Sony Ericsson said that the smartphone part of its portfolio doubled from last year’s first quarter. Most of these products are powered by the Google (NASDAQ: GOOG) Android operating system, which has done so much to help HTC and Motorola to compete with Apple (NASDAQ: AAPL) Sony Ericsson has launched a new flagship line–the Xperia arc, Xperia PLAY and Xperia neo. Future earnings will almost certainly depend on the health of the sales of the new handsets.

Sony Ericsson is demonstrating something that Nokia and Research In Motion (NASDAQ: RIMM) may want to consider. Money can be made without a massive volume of smartphone sales. The industry is not a zero sum game. The overall smartphone market continues to expand fast enough so that even Sony Ericsson can prosper and make money. Wall St. has focused on the fact that RIM and Nokia are failures because they have been hurt by Apple’s iPhone. But, that hurt is only relative. There are still more enough sales–and profits–to go around.

Douglas A. McIntyre