STOCKHOLM, SWEDEN: World No.4 mobile phone maker Sony Ericsson said it would add another smartphone to its offering in the fast growing sector as it looks to consolidate its recent return to profitability.

Sony Ericsson has seen its market share slide in recent quarters, partly due to a lack of appealing smartphones -- mobiles with multimedia, networking and PC-like functions.

The company, which bounced back to a surprise profit in the first quarter, said on Wednesday it would launch its new Xperia X8 model in the third quarter.

The phone, cheaper than Sony Ericsson's flagship X10, uses the Android operating system, has a 3-inch screen and a 3.2 megapixel camera.

Smartphones were the bright spot in the gloomy market last year and industry researcher Gartner has said the sector will grow 46 percent this year from the 172.4 million phones sold in 2009, boosted by cheaper models.

However, competition in the smartphone segment is fierce.

On Wednesday, world No.1 Nokia issued a profit warning saying profitability at its key phones unit would be weaker than expected this quarter and in 2010, hurt by competition from high-end rivals like Apple.

Nokia said it still expected the mobile device market to grow 10 percent this year.

Sony Ericsson also said its X10, X10 mini and X10 mini pro smartphones would get software upgrades in the third quarter with additional features to be offered.

The company said the phones would be upgraded to run on the Android 2.1 operating system. The Xperia X10's will also get HD video recording capability while a further upgrade will make it possible to connect wirelessly to and display content on a TV screen