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Sony Ericsson Cuts Jobs, Delays Android Plans

Sony Ericsson is putting plans for any Android-based smartphones on the low-priority list after announcing layoffs, a $382 million loss for the first quarter and a 35 percent drop in shipments year-over-year.

The company announced in its earnings report that it will cut 2,000 jobs, after trimming 2,000 last year, and that phone shipments fell 35 percent, to 14.5 million between January and March.

"As expected, the first quarter of this year has been extremely challenging for Sony Ericsson due to continued weak global demand. We are aligning our business to the new market reality with the aim of bringing the company back to profitability as quickly as possible," Dick Komiyama, president, Sony Ericsson, said in a statement. "The management intends to pursue an additional cost saving program targeting a further annual operating expense reduction of Euro 400 million, to be completed by mid-2010."

Sony Ericsson's (NASDAQ: ERIC) grim financial news comes at a time when handset makers gun for position in the smartphone market, with signature releases slated for this summer. They include the do-or-die Pre from Palm, the rumored new iPhones from Apple (NASDAQ: AAPL) and BlackBerry models from RIM, plus Android devices from Samsung, HTC and Acer.

Though Sony Ericsson is touting its newest model, the Idou, based on Symbian's upcoming operating system, it's not poised to gain back any of the marketshare it is losing in the high-end mobile phone category, mobile analyst Avi Greengart of Current Analysis told InternetNews.com.

"Sony Ericsson was once a focused company: it built high-end featurephones and a handful of Symbian UIQ smartphones. The high-end featurephones were overtaken by Nokia's Nseries - and the European economy - and its Symbian smartphones never had a chance to penetrate the U.S. market at all," said Greengart.

"Right now, Sony Ericsson appears lost, and there is simply no way it can build featurephones, Android phones, Windows Mobile phones and Symbian Foundation phones and end up with differentiated offerings in each category," Greengart added.

Holding off on Android

Meanwhile, the company plans to put any Android releases on hold, according to Reuters reports, as industry watchers eagerly anticipate new handhelds on Google's open-source mobile platform to see how they'll fare in the competitive smartphone market.

This buzz is being fueled by speculation that sales of smartphones using Android will overtake the iPhone by 2012, as U.K.-based research firm Informa Telecoms and Media predicted in a recent report.

The reasoning goes like this: Android will be available on a wide variety of devices and mobile networks at different price points, and this widespread availability is bound to have an advantage over iPhones, which are available from one manufacturer -- Apple -- and on one network, AT&T.

Another factor that might give Android phones the edge is that it may be easier for developers, compared to other major phone platforms. Google offers developers a standardized set of tools, for instance, while Nokia's (NYSE: NOK) Symbian has been roundly criticized for being too complicated, Informa said.

But while Google officials remain bullish on Android, with CEO Eric Schmidt saying during an earnings call last week that 2009 will be a strong year for Android, the press is getting antsy over the scant news on specific launch dates from manufacturers and the lack of any actual product roll out.

Currently, the T-Mobile G1, launched last year, remains the only Android smartphone in the U.S. market, though other companies have plans for product debuts later this year, including Samsung's trio of Androids, HTC's three Android models and rumors of Acer's entry into the Android arena with its own device.

Greengart, however, said that there's still time for Android to play a major role in the mobile OS space, though he said it will require more product roll outs sooner than later.

"The press got all wrapped up in the notion of Google upsetting the mobile OS space that they're getting way ahead of themselves. Android is simply suffering the growing pains of a new OS," said Greengart.

He adds that currently the promise of Android is still mostly unrealized, as only a single vendor has a commercial implementation of Android shipping in the market.

"More phones are planned and every day there's another rumor of companies adapting Android to netbooks or other consumer electronics categories, but until more products are available and someone other than HTC is building them, Android's market impact will be limited," he said.