A New Old Product Fad

7:00 PM -- Proving that some brands never lose their cachet, Sony Ericsson Mobile Communications reported record fourth-quarter results today, fueled mostly by the hot Walkman phones.

Equipped with not one, but two cameras, plus enough music capacity for around 150 songs, the stylish white-bodied Walkman 900 has helped the mobile phone maker sell more than 3 million phones since the Walkman line launched last August. SE's fourth-quarter net profit almost tripled from 2004, the company reports.

This is good news for the joint venture between the Swedish mobile phone giant and the Japanese consumer-electronics titan, which has endured a bumpy ride since its formation in 2001. Ericsson AB (Nasdaq: ERIC), which had seen its handset sales slide for years, considered opting out of the venture, while Sony Corp. (NYSE: SNE), stung by the runaway success of Apple's iPod, has struggled to create a similar product fad. In the event, it was Sony's venerable Walkman brand that saved the joint venture.

Lessons from this turnaround? 1) Consumers are more fickle than ever; 2) Depending on a single hot product can be a great strategy -- for a while.

Note that, also today, Apple saw its shares drop 7 percent in after-hours trading despite a 92-percent surge in profit. The reason? Investors aren't sure that soaring demand for iPods can be maintained.

— Richard Martin, Senior Editor, Unstrung

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