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Nokia continued to rule as the undisputed leader in the mobile phone industry as global handset sales raced past the one billion unit mark in 2006.
But Sony Ericsson climbed to the second most profitable firm, quarterly statistics compiled by Reuters showed on Thursday.
The Japanese-Swedish joint venture, which is only five years old, turned in a profit of 502 million euros in the fourth quarter, which was more than Motorola and Samsung Electronics which sell up to 2.5 times more phones.
Because of the high average selling prices of its handsets, Sony Ericsson even managed to generate higher revenues than Samsung which was long the industry's king in expensive phones, according to Q4 earnings statements.
'A combination of attractive models and cool sub-brands drove shipments to an all-time high. Strong demand for Sony Ericsson's Walkman and CyberShot ranges is driving expansion,' market research group Strategy Analytics said in a note on Thursday.
On the back of its premium products, Sony Ericsson shipped 26 million phones in the fourth quarter, 61 per cent more than in the year-ago period, by far the sharpest increase in the sector.
'This quarter has two winners, Sony Ericsson with high-margin products, and Nokia, with its economies of scale,' said analyst Jyssi Hyoty at FIM in Helsinki.
Measured in units Sony Ericsson has climbed to the global No. 4 spot from No. 6 two years ago with a global market share now of 8.7 percent versus 6.6 percent a year ago.
'In terms of volume, global market share for Sony Ericsson, at 9 percent, is within striking distance of Samsung at 11 percent,' Strategy Analytics said.
Nokia remained a strong market leader as it sold 106 million mobile phones in the fourth quarter, up 26 percent from the year-ago period.
Despite a shift to ever cheaper phones, as Nokia caters to low income consumers in emerging markets, its operating profit from mobile devices increased by 23 percent, largely thanks to its huge scale advantage.
Nokia and Sony Ericsson were the only top five phone makers which increased profits. Motorola, Samsung and LG were all hurt by an increasing focus on cheap phones for developing markets and price pressure and sluggish demand in developed markets.
'It was not long ago that shipments into mature markets, including Japan, North America, and Western Europe, consumed the majority of devices shipped worldwide. More recently, however, device shipments into emerging economies in Asia/Pacific, Central and Eastern Europe, the Middle East, Africa, and Latin America have surpassed shipments to mature markets,' said analyst Ramon Llamas at market research group IDC.
Global sales of mobile phones totalled a record 1.02 billion units in 2006, according to IDC and Strategy Analytics, an increase of 25 percent over 2005.
Nokia improved its position in the fourth quarter with a 35.2 percent market share, compared with 34.3 per cent in the third quarter.
Motorola also improved its market share, to 21.9 per cent from 20.8 per cent in the third quarter and 18.2 per cent a year ago.
Samsung Electronics, as the No. 3, lost ground at 10.7 per cent versus 11.9 per cent in the third quarter and 11.1 per cent in the year-ago quarter.
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