Business, Hardware

Sony Ericsson Reports Record Smartphone Sales, Loses $70M

We have the first results of the big second quarter results season – today we have Sony Ericsson and Google with results. I will keep this short (A short article from Tomi? That’s incredible. Ed.)

Sony Ericsson reported a decline in its overall handset sales of 31% in just one quarter, but its smartphones did grow 8% to 5.3 Million units. That gives Sony Ericsson roughly 5% market share so they are holding steady from Q1 to Q2 but may have fallen behind LG in rankings. We also learned that Sony Ericsson ships 11% of all Android phones so that gives us a Q2 Android number of about 49 Million in total.

The company completed the first half of this year by selling more smartphones than in whole of 2010, but winding down the dumbphone and featurephone businesses resulted in a sharp drop in profitability. That is a nice number as I reported in my analysis of Android handset partners’ market shares for the first quarter – in which I estimated Sony Ericsson’s Android share at 12%. This is what we forecasters call a bullseye and they are rare. As regular readers know, I get my share of mistakes in the forecasting trade… 

The bad news is that Sony Ericsson dropped back to generating a loss in 2Q 2011, and the loss was quite massive – 70 million dollars – compare that to 2Q 2010, in which Sony Ericsson market a 36 million Euro profit (45.9 million USD). So this puppy is not yet a healthy one. As it usually happens, growing sales while making losses is no way to remain economically viable in the long term.

The big news that came just before the Sony Ericsson announcement is the monster stat we heard was that Google is now activating 550,000 Android handsets each day, and yes, the word they used was handsets (so this number excludes tablets and other Android devices). That correponds to an annual level of 200 million smartphones and in terms of market share it is roughly 43% of the total market already. Note this is the number now. But as it is growing, it was a smaller number at the start of the quarter on April 1, so the actual second quarter Android number is smaller than 50 million. We do have the Sony Ericsson 11% number and get a rough 49 million as the number of Android handsets sold in the past quater – a number up by 17% 40% from 1Q 2011. It also means absolute growth of 7 14 million Android handsets in the past 3 months (read: acceleration is now at a doubling rate per quarter).

Ok, that was the quick word on second quarter results. I will return as we get more results.