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Sony Ericsson sees future in camera phones

The company launches five new picture-taking handsets, in hopes that such phones will help it gain market share amid fast-growing demand for mobile imaging.

Sony Ericsson Mobile Communications launched five new picture-taking handsets on Tuesday, in hopes that such phones will help it gain market share amid fast-growing demand for mobile imaging.

Sony Ericsson, jointly owned by Japanese electronics group Sony and Swedish telecommunications equipment maker Ericsson, said 55 million mobile phones with a camera were sold last year, exceeding sales of digital cameras themselves.

"Camera phones and mobile imaging are really picking up," Sony Ericsson Executive Vice President Jan Wareby said. "The ambition for this year is clearly to grow faster than the market, and these phones will help in that."

Gunilla Nordstrom, head of Sony Ericsson in China, said the company is the second-biggest seller of camera phones there and that at least 30 percent of all phones sold globally in 2004 will have a built-in camera.

The industry expects that more than 560 million handsets will be sold this year, compared with 510 million in 2003.

Sony Ericsson returned to profit in the last two quarters of 2003, after a string of losses since its inception in October 2001. The company reiterated Tuesday that sales momentum in this year's first quarter was strong and that it expects to stay profitable in 2004.

But with a market share of 6 percent, it is a small player, compared with world leader Nokia and No. 2 Motorola. South Korea's Samsung and LG Electronics and Germany's Siemens are also bigger. All offer camera phones.

Sony Ericsson said it expects that 8.3 billion picture messages will be sent this year between mobile phone users worldwide, driving demand for camera phones. As taking pictures with a phone becomes more popular, customers are keen on better photo quality. Phones sporting high-resolution cameras have become a great success in Japan.

Sony Ericsson launched the S700 handset, which has a camera with a 1.3-megapixel resolution--good enough to make a small print. A similar model sold in Japan was a success.

But it won't come to the European market until the fourth quarter--a delay analysts say will give competitors ample time to launch their own high-resolution camera phones.

Nokia has said its own megapixel camera phone will come by the end of 2004, and Japan's Sharp is set to deliver one to the biggest mobile phone operator, Vodafone, this month.

Another new Sony Ericsson model, the Z500, will appear in the United States in the third quarter and work in the EDGE (Enhanced Data GSM Environment) network--a fast third-generation technology using existing Global System for Mobile Communications network spectrum.

Two other models meant for the U.S. market are the T237 and T637, upgrades of existing European models. The T637 and Z500 have a walkie-talkie function popular in the United States, where Nextel Communications dominates the service.

Sony Ericsson said it has great hopes for the new K700 phone as a successor to its best-selling T610 model. The K700 has an FM radio, a camera and an MP3 player for digitally recorded music.

"We expect it to be a flagship similar to the T610," Wareby said. "It will be sold in the second quarter, so, definitely, the effect on our sales will come this year," he said.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.