Accountants at IT industry analyst Isuppli have praised Sony Ericsson for its shift to smartphones.
Tina Teng, senior analyst for wireless communications at Isuppli said that Sony Ericsson's smartphone shipments have been soaring even as its overall cellphone sales ranking declined.
She said that this reflected the company's strategic shift away from lower-margin, higher-volume products and toward more profitable devices.
The company's overall mobile phone shipment ranking fell to sixth place in the second quarter, down from fourth in the first quarter.
This marked the first time in at least three years that Sony Ericsson didn't rank among the Top five global mobile phone brands.
While shipments rose 4.8 per cent compared to the first quarter, close rivals Research in Motion and ZTE surpassed Sony Ericsson because their growth rates were higher.
But Isuppli preferred to see the glass as half full. The outfit had a 15.4 per cent increase in smartphone shipments during the second quarter. This made Sony Ericsson the fourth fastest growing smartphone brand of the quarter.
Teng said that with its shift in focus from volume to value-add, Sony Ericsson is positioning itself to cash in on the fastest growing and most profitable segment of the global wireless market.
She said that average pricing for mobile phones has declined to extremely low levels and will continue to decrease in the coming years. In contrast, smartphones continue to offer fast growth and strong profit margins.
Global shipments of all kinds of mobile phones are set to rise by 6.9 per cent from 2009 to 2014, down from the 13.9 per cent for the period from 2003 to 2008. However smartphone shipments will rise by 22.7 per cent from 2009 to 2014, she added.
Teng said that by shifting to the higher-end phone market, Sony Ericsson is mirroring the successful strategy of Motorola, which has been withdrawing from the market for mainstream cellphones in order to focus on its high-end Droid smartphone line.
In 2010 Sony Ericsson entered the Android smartphone marketplace, and it has offered handsets like the Xperia line that uses Android.
Smartphones represented 13.6 per cent of Sony Ericsson's total mobile handset shipments in the second quarter of 2010, more than double the 5.8 per cent seen during the second quarter of 2009.