Sony Ericsson puts focus on camera phones in '09

NEW YORK (Reuters) - Sony Ericsson is betting heavily on camera phones in the United States this year, hoping high-end photography will convince consumers to buy a new phone or replace digital cameras.

The Sony Corp and Ericsson venture has seen strong international sales of its Cybershot camera phones and Walkman music phones, but has yet to make big inroads in the U.S. market.

While some analysts are skeptical about the timing for such devices, Sony Ericsson plans to launch its C905 8 megapixel camera phone in the hope the boost in picture quality and carrier promotions will help it increase sales here.

"We're going to be really focused on this device starting in the second quarter," said Jon Mulder, the company's head of product marketing for North America. "We know that this device is going to be relevant to consumers in the second half."

Mulder estimated the device, which sold for as much as 400 euro ($538.79) in Europe, would cost $199 to $249 here after carrier subsidies, which typically tie customers into a two year contract in exchange for the discount.

The phone could work on the networks of either AT&T Inc or T-Mobile USA, owned by Deutsche Telekom AG. While Mulder said he was confident it would be sold by at least one of the carriers, he would not say which.

Sony Ericsson says consumers are be keener than ever to have a high-quality camera with them at all times in the form of a cell phone because of the trend for sharing everyday photographs on social networks such as Facebook.

But analysts worry consumers might not be willing to pay the premium price for a boost in picture quality during a recession and when Apple Inc's iPhone has already set a benchmark price of $200 for more powerful smartphones.

"It's a challenging case to make, particularly in this age where we're seeing standalone 8 megapixel cameras offered for $100 or less," said NPD analyst Ross Rubin, who noted that Cybershot is already a strong standalone camera brand.

Sony Ericsson has also announced a 12 megapixel camera phone, Idou, which it does not plan to sell in the U.S. market this year. But this device also faces analyst skepticism.

Gartner analyst Carolina Milanesi said that 2 megapixel cameras will make up about 35.8 percent of North America camera phone sales this year with only about 2 percent of sales generated by 8 megapixel camera phones. She sees demand growing to about 19 percent for these cameras by 2012.

"For the majority of consumers 5 (megapixels) is probably good enough and what should be improved is flash and zoom rather than pixels," she said.

Sony Ericsson will have to share the market with at least one bigger phone rival, Samsung Electronics Co Ltd, which has launched its 8 megapixel Memoir phone through T-Mobile USA for $249 a month.

But Mulder said there were many factors in favor of its high-end camera phone this year, not least the fact that when U.S. operators decide to promote a phone, it tends to do well.

And despite the hype around touchscreens, lead by iPhone, he noted that many people still want more traditional phones like Cybershot, which has easy to use physical buttons.

"There is a large consumer segment that is still very much interested in a feature phone," he said referring to phones with features such as cameras that are cheaper than smartphones.

And he said that, if customers who need to replace their phone and their camera are worried about splurging due to the weak economy, they may end up choosing a combined device.

"This is as close to a replacement (for a digital camera) as you'll ever get," he said, pointing to multiple features such as BestPic, which lets a user take several shots quickly from one button press, and Panorama, the ability to put a collage of photos together to make up a bigger picture.

Sony Ericsson was the No. 4 global handset provider in the fourth quarter with sales of about 24 million phones.

(Editing by Andre Grenon)