Sony Looking to Buy Ericsson Share of Mobile Phone Partnership
October 7, 2011 12:28 PM
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Sony Ericsson Xperia Play
Deal could be worth $1.3 billion to Ericsson says analyst
In the smartphone world, there are several players out there and many of them are banking on the popularity of Google’s Android operating system for continued success.
was one of the firms that came later to the Android game.
reports that Sony is in talks to buy out the Ericsson stake in the mobile phone company. That would mean the smartphones would be solely under the Sony brand. Considering one of the more interesting smartphones to come out of the partnership between the two firms was the
that is heavily focused on gaming, it's not surprising that Sony want the devices under its own brand.
Right now, Sony makes tablets, music players, and computers under its name and the only products offered under the Sony-Ericsson brand are mobile phones. According to
, the negotiations with Sony and Ericsson have been ongoing for weeks. The Sony Ericsson brand is a 50:50 joint venture and the decade-long deal that started the venture must be reapproved this month.
A source close to the deal that Sony was talking buyout as of Friday. The deal could net Ericsson $1.3 billion depending on what the telecom patents Ericsson holds and uses in the smartphones are worth according to analyst Yoshiharu Izumi of J.P. Morgan in Tokyo.
Izumi said, "Up to now Sony's products and network services have all been separate. Unifying them would be positive. If they can leverage their games and other network services I think they can lift their share."
The Sony Ericsson venture has reportedly turned a profit of 90 million euros as of last year after a massive loss of 836 million euros in 2009. However, its share of the cell phone market has dropped from fourth place to 9th place in only a few years time.
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Just in time.
10/7/2011 3:24:16 PM
Sony Ericsson was one of the firms that came later to the Android game.
I think it's becoming pretty clear now that you need to have both smartphones and tablets to survive as a mobile phone producer or as a large scale producer of consumer computing devices, and that the divide between being computer manufacturer and mobile phone manufacturer has closed.
The duel corporate relationship between Sony and Ericsson would have made it difficult to respond quickly to the needs of the market, which maybe one reason that my local electronics store has just two Sony Ericsson smartphones and no tablets for sale. Compare that to Apple who have 12 different iPads for sale in the same store.
It was recently estimated that in just 4 years time half the people (world wide) that regularly access the internet will do it via a mobile device, which means there are hundreds of millions of devices going to be sold, and to be part of that you need to have both tablets and smartphones, and you need to be able to have a wide range of products.
My guess is Sony will be desperately wanting to get tablets into the market, but that even though both Sony and Ericsson each own 50% of there company, Sony is the company carrying the weight of their mobile products. Having to wait for Ericsson to approve the sale of every new product would rankle at Sony.
Nokia are having to lay off staff because of lack of sales, and it wouldn't surprise me if a lack of sales has also affected Sony-Ericsson, and if so then that would be another motivating factor behind the buyout.
All in all, I think this is a good move for Sony.
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