Sony and Ericsson's partnership to produce mobile phones has hit an unexpected snag: how best to exploit the growing digital camera market without cannibalising Sony's own sales.
The Sony Ericsson joint venture was formed in 2001 to exploit Sony's expertise in consumer electronics and Ericsson's knowledge of mobile technology. While the company's market share is still small compared to rivals such as Nokia and Siemens, it has finally moved into the black over the last six months.
However, much of that profitability has come from camera phones such as the T610, which incorporate a basic digital camera into a mobile handset. The success of those models has now begun to threaten Sony's own digital camera business.
"We're already selling more Sony Ericsson camera phones than Sony is selling digital cameras," said Ericsson CEO Carl-Henric Svanberg.
Sony Ericsson president Katsumi Ihara played down suggestions of a possible conflict, saying that the market would likely eventually divide on natural lines. Speaking at a press conference at the 3GSM Congress in Cannes, he suggested that camera phones had already eliminated the market for entry-level digital cameras, but high-end users would still favour a standalone camera.
Abandoning the camera phone market certainly isn't an option for the joint venture. According to IDC, 14 percent of phones shipped in Europe last year included camera features. "This year, 30 percent of GSM phones will have cameras," Ihara predicted.
Angus Kidman travelled to Cannes as a guest of Ericsson.