Sony Ericsson unveils first Android phone

Sony Ericsson unveiled its flagship X10 mobile phone on Tuesday, its first to run on Google Inc's Android operating system, hoping the device will help reverse its loss of market share.

Android has gained impetus this year as handset vendors like Motorola Inc look for ways to beat Apple Inc's iPhone.

"Android's momentum continues apace with four of the top five vendors in the world having now announced an Android product and roadmap," said Shaun Collins, Chief Executive of British research firm CCS Insight.

Of top vendors only Nokia Oyj has not unveiled any Android plans.

Loss-making Sony Ericsson, the world's fourth largest handset maker, has suffered since 2008 from a lack of attractive high-end models in its offering, and saw overall third-quarter sales shrink 45% year-on-year.

"The X10 is a high-value smartphone that will help Sony Ericsson back on the road toward profitability," said analyst Neil Mawston from Strategy Analytics.

However the new phone will not go on sale until early next year. Analysts expect the company to report another deep loss in 2010, but its gross margin and market share are seen up.

The X10 will have a 4-inch-wide touch screen, will use Qualcomm Inc's Snapdragon processor and will come with an 8.1 megapixel camera. It will go on sale in selected markets at the start of 2010.

Sony Ericsson's current top model, Satio, with a 12 megapixel camera, has just gone on sale and the announcement could hurt sales in the key period ahead of year-end holidays.

"I think some consumers will think about waiting until the first quarter to get their hands on the X10, rather than get a Satio for Christmas," said Gartner analyst Carolina Milanesi.

"It was a difficult call to make trying not to negatively impact products like the Satio while at the same time announce something that will persuade consumers not to go to another brand," Milanesi said.

Some analysts were positive on the new model.

"Sony Ericsson is re-emerging after a difficult 18 months with a new engaging user experience and well received product, it has clarified its strategy and understood that its users no longer want megapixels and megabytes but Facebook and Twitter," said CCS Insight's Collins.