Sony, which has struggled to compete with the likes of Apple and Samsung in the smartphone market, is promising a new device to rival the iPhone 5 and Galaxy S3.

In an interview with German news site, Financial Times Deutschland, Sony Mobile's sales chief, Dennis van Schie, said the company is preparing a new flagship model, which it will unveil at CES 2013 in January.

"In the near future we'll finish a flagship model, which will be able to compete with Apple's iPhone and Samsung's Galaxy S III," said Schie.

In October, news sites leaked images of its C660X handset dubbe 'Yuga'.

The Yuga will reportedly have a unibody design with a 1.5GHz quad-core processor, 2GB RAM, a 12MP camera and a 5-inch 1080p display.

Sony entered the mobile phone market when it created a partnership with Swedish telecoms company Ericsson to form Sony Ericsson in 2001.

However, the company has struggled to make its mark on the smartphone industry which is dominated by companies such as HTC, Apple, Samsung and LG.

In February, Sony's Japanese parent company bought Ericsson's shares in the joint venture and rebranded the mobile phone division as Sony Mobile Communication.

Schie said that the company plans Android-based smartphones next year but there are no current plans for Windows Phone 8 devices.

"We have a good relationship with Microsoft and we are closely watching development of Windows Phone," said Schie. "If it succeeds, we will not be caught off guard."

In September the company launched its Xperia Tablet S based on the latest Android OS. Schie said customers should expect an addition to the existing Xperia Tablet range next year but the tablet market isn't proving profitable for the company.

"It has become very difficult to earn money with tablets," said Schie, adding that its offerings in this sector will remain limited.

Schie says that Sony Mobile will report further losses for the full year 2012, but expects a turnaround in 2013.

Samsung's Galaxy S3, released in May, is the biggest selling smartphone in the world this year. Apple launched its iPhone 5 in September and reported selling five million units in the first three days.