Moto vs Sony Ericsson

Last year Samsung overtook Motorola as the second-largest phone manufacturer. Now, the flailing Razr-maker risks ceding third place to Sony Ericsson. Oh, my!

Motorola released yet another round of disappointing earnings — profit from continuing operations fell to $111 million from the year-ago $523 million, as handset sales plunged 38 percent.

In his first earnings report as acting CEO, Motorola’s Greg Brown told analysts that the mobile devices unit “remains challenged.” What’s more, Brown warned it would likely be into 2009 before Motorola has a “robust and competitive portfolio.”

If Motorola keeps stumbling and Sony Ericsson marches on, their market positions could soon be reversed. “If Motorola doesn’t bring something entirely new by 2009, you will probably see the switch happening by then,” says Ping Zhao, a telecom analyst with Credit Sights.

Sony Ericsson’s global market share stood at 8.8 percent in the third quarter of 2007, according to technology research firm iSuppli. At the same time, Motorola’s market share slid to 12.7 percent (considerably down from its Q4 2006 height of 22.6 percent). If Sony Ericsson’s plan to make an aggressive push into the United States is successful, it will likely snag even more market share from Motorola, especially considering its multimedia device lineup — much of which is not yet available in the United States — is superior.

Sony Ericsson has approximately 8,000 employees worldwide. With a 43% annual growth rate, it became the fastest-growing mobile vendor in Q3 2006 compared to Motorola with a rate of 39%. In 2007, Sony Ericsson had surpassed Nokia to become the most profitable mobilephone maker in terms of net profit rate, and behind Nokia in gross profit. It had been achieved by her marketshare growth in high end handset market.

Sony Ericsson’s multimedia phones — mainly its Cybershot camera phones and Walkman music devices — are already popular overseas. But because the company makes GSM devices, it has yet to make a dent in the CDMA-heavy U.S. market. The new phones it plans to introduce later this year will be optimized for U.S. networks. The company also said it plans to launch a music phone campaign this summer and push its Cybershot phones in the 2008 holiday season.

Motorola also unveiled several new multimedia devices at CES — including the video-centric Moto Z10 and the Rokr E8 music phone — but Credit Sight’s Zhao was unimpressed.