Sony-Ericsson’s chief predicts healthy year

The head of Sony-Ericsson, one of the top five mobile phone makers, said on Wednesday that the global mobile phone market is expected to remain healthy this year but growth will halve to about 10 per cent.

Miles Flint, chief executive of the Swedish-Japanese joint venture, predicted overall sales of around 860m units in 2006, up from 780m last year.

Buoyant growth rates of more than 20 per cent last year defied analysts’ forecasts at the start of 2005 of a rapid slowdown in global demand over the next few years as developed countries reached saturation.

Developing markets picked up the slack in 2005, as manufacturers – particularly the big two, Nokia and Motorola – helped to stimulate demand with low-cost handsets. Mr Flint said there was more optimism around the industry at the start of 2006 than this time last year, but warned that the growth rates in recent years “can’t go on forever.”

But he pointed out that the growth of 80m units predicted for 2006 was already double the size of the market for digital cameras.

His comments came as Sony-Ericsson reported record profits in 2005. Net income for the full year rose from €316m ($382m) to €356m ($429m), as revenues climbed from €6.5bn to €7.3bn.

The group, a 50:50 joint venture between Sony of Japan and Sweden’s Ericsson, shipped 51.2m units last year, up from 42.3m a year earlier, giving it a market share of just under 7 per cent.

Unit sales were boosted by the traditionally strong fourth quarter, which saw shipments jump by 27 per cent to 16.1m handsets.

Mr Flint insisted the company was happy with its market position – it vies with LG Electronics of Korea for fourth spot – and would not be chasing market share. Finland’s Nokia is by far the biggest manufacturer, with about one-third of the market.

Sales at Sony-Ericsson were boosted in 2005 by the introduction of high-end camera phones and its highly successful launch of Walkman music phones.

The company said it had shipped 3m Walkman phones since their launch in August. The response has given the industry confidence that music is likely to be a key revenue stream.

“The success of the Walkmans has very much been the icing on the cake. I guess 12 months ago we were a little more uncertain about what the reaction would be, as we weren’t sure whether the consumer would think of the phone as a music device because of the success of the [Apple] iPod,” Mr Flint said.