Experts believe that over-caution will cause Sony Ericsson to struggle further in 2010, although elsewhere optimism is returning amongst manufacturers.
Sony Ericsson announced that it had made a loss for the seventh quarter in a row last week, despite Nokia's predictions that the market will grow by 10 per cent over the next twelve months.
Sony Ericsson Chief Executive Officer (CEO) Bert Nordberg said that although green shoots emerged in the final quarter of 2009, his firm believes "that the value of the market will be flat for the next 12 months."
This suggests that Sony Ericsson expects to be able to stop share prices sliding and hopes to hold on to its current market share.
Nokia's announcement that it would be offering free turn-by-turn navigation has put the frighteners on other smartphone manufacturers and has driven Sony Ericsson to claim that it will be competitive in the future pricing of GPS-based apps for its mobiles.
Sony Ericsson announced losses before tax of over £166 million, which correlates with the figures forecast by analysts early in 2009.
Mr Nordberg was relatively enthusiastic about the future of his firm, in spite of the tough operating conditions.
He said: "On the positive side we see that the new phones ... are well received by customers and they are really selling more high-end phones and that is raising the average sales price quite a bit."
The Sony Ericsson Aino and Satio have made the biggest impact on the market, gaining significant public interest and continuing to sell well.