Sony Ericsson Sees Mobile Phone Market Growth Slowing 05

STOCKHOLM -(Dow Jones)- Sony Ericsson said Tuesday it estimates the total market for mobile telephones in the fourth quarter was around 175 million units.

Sony Ericsson's Executive Vice President Jan Waareby told Dow Jones Newswires that the total market in 2004 came to 620 million units.

Waareby said the market in 2005 is expected to slow significantly from an exceptionally strong 2004.

"We expect market growth in 2005 to be less than 10%," said Waareby.

He added that measured in revenue, any growth will be marginal.

Sony Ericsson plans to expand its product portfolio during 2005, but Waareby declined to say how many new products it expects to launch.

New third-generation mobile phones will however become more important and should reach 10% of total unit sales this year.

Sony Ericsson's 3G V800 model has been selling well in several countries since Vodafone Group PLC (VOD) launched the phone in many of its markets.

Waareby said he sees Sony Ericsson's average selling price holding up at the current level at best, as competition heats up and prices for 3G phones are expected to fall rapidly.

Waareby said he expects availability of 3G phones to approach the low-end segment of the market in 2005.

In the meantime Sony Ericsson will continue to build its brand awareness in an effort to sustain growth and gain market share.

"We will use a good momentum to further build our position in a tougher market," he said.

The slower growth will lead to vendors competing harder to keep or grow their market position.

Waareby said he sees better features to listen to music on mobile phones as an important addition to current imaging features in driving replacement rates and growth for his company.

Waareby said inventory levels for mobile phones generally were back to normal, but that the situation varies significantly between markets.

"Going into 2004 the inventory levels were unusually low. This year we're back to normal," he said.

Waareby said sales in Europe, China and Latin America had been particularly strong in 2004, while other markets had also lived up to expectations.

-By Magnus Hansson, +46 8 545 130 91, magnus.hansson@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 18th January 2005