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Google Android phones boost Sony Ericsson profit

Smartphones represent 50 percent of sales

Sony Ericsson reported a profit for the third consecutive quarter as the company's Google Android-based smartphones continue to help it turn around its fortunes.

The company reported a third-quarter net profit of €49 million, compared to a loss of €164 million a year earlier and a profit of €12 million in the previous quarter. However, revenue for the quarter fell to €1.6 billion from €1.62 billion a year earlier.

Smartphones now represent 50 percent of Sony Ericsson's sales. The company didn't detail how much of that came from its Android-based smartphones. However, during the second quarter about 80 percent of the smartphones Sony Ericsson sold were based on Android, and that share has likely increased, according to Carolina Milanesi, research vice president at Gartner.  

Today, Sony Ericsson offers four Android-based smartphones: the Xperia X10, the X10 mini and mini pro, and the X8, which started shipping earlier this month.

The company's goal is to become the biggest maker of Android phones by value. Key to achieving that will be to increase the number of countries where its phones are available and the number of operators that sell them, especially in North America. Today, AT&T sells Sony Ericsson's Xperia X10 and Canadian operator Rogers sells the Xperia X10 and the Xperia X10 mini.

Asked if Sony Ericsson plans to develop CDMA smartphones for Verizon Wireless, CEO Bert Nordberg said that people could draw their own conclusions as to what has to be done in order to grow in the US.

Revenue wasn't the only thing that fell in the third quarter: Sony Ericsson sold fewer phones too. It shipped 10.4 million phones, down 26 percent year-on-year and down 5 percent compared to the second quarter. Part of the drop was due to shortages of LCD displays and printed circuit boards, according to Nordberg.

Competition among the makers of Android-based smartphones is very tough and shipping more than its competitors will be a tall order for Sony Ericsson.

HTC and Samsung are in an extremely strong position, according to Ben Wood, director of research at CCS Insight. To make its goal even achievable, Sony Ericsson will have to add a lot of software resources, according to Wood. So far the company has been playing catch-up to the other vendors, he said.

Owners of Sony Ericsson's Android-based smartphones are still waiting for an upgrade from Android 1.6 to 2.1. On Thursday, the company said its plan is still to start rolling out the update toward the end of October. Sony Ericsson still maintains that its own additions to Android are more important than having the latest version of the operating system.


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