Is Sony interested to buy out Ericsson from the Sony Ericsson partnership?
7 October 2011 by Olav Hellesø-Knutsen
Latest rumors are saying that Sony is interested in buying Ericsson's half of the 50/50 joint venture Sony Ericsson.
Wall Street Journal today reported that the two mother companies of Sony Ericsson are having talks about the future of the 50-50 joint venture between Ericsson and Sony.
Sony Ericsson Mobile Communication had a market share of 2.6% in 2010 but this dropped to 1.7% between April and June this year. Sony Ericsson earlier said that the aftermath of the earthquake in Japan caused significant impact on the 2nd quarter results because of supply chain constraints. Sony Ericsson further said the company will focus more on high-end smartphones and leave the entry-level market to others. Despite the shift in type of devices sold, the average selling price dropped 3% year-on-year 2010-2011. 7.6 million devices was shipped during the three months in second quarter. The company had a negative income of -50 million Euro. It will be interesting to read the latest sales figures when these becomes available on October 14th.
Sony Ericsson was eager to focus on mass market with entry-level mobile phones for a long time while main competitors such as Samsung, HTC, Motorola and LG created more expensive devices for the smartphone market in general and the Android market particular.
Sony has just arrived to the tablet market with the Sony Tablet S and Tablet P. A little late maybe, but the Tablet S has received good critics by reviewers. The accept from consumers might have given Sony the extra kick-start to start thinking of a buyout of Ericsson from Sony Ericsson. They can do this Android development themself without the help from the Swedes.
In the recent months, Sony Ericsson has been very enthusiastic in releasing firmware updates more often, allow unlocking of the boot loader and lastly helping independent developers modify the operating system which the Sony Ericsson Xperia phones run on. On the other hand, the mother company Sony is understandable better known for protecting their game consoles by suing those how try to fiddle with it. We do not know what a takeover will result in, but the policy of more openness by Sony Ericsson could be changed.
Sony's CEO Howard Stringer was earlier this year asked if the joint venture still makes sense and he replied that "We talk a lot about this, and we continue to talk". CEO of Sony Ericsson Bert Nordberg told reporters that the Sony Ericsson has more in common with Sony than with Ericsson.
If Sony want to buy the second half of Sony Ericsson, they will have to pay a lot for the patents portfolio owned by Sony Ericsson. According to WJC, some analysts estimates that half the company is worth between 1 and 1.25 billion Euro.
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From my personal experience I can say that a lot of Sony Ericsson phones were made as a joint project between Sony and Ericsson,which together produced one of the best if not one of the most reliable and recognizible products in the last decades. When we look on how other companies such as SAMSUNG,NOKIA and LG develop their phones,choosing appropriate operating systems,GUI's and more, we clearly see that the brand group XPERIA (Sony Ericsson) is more reliable and popular than any other brand. Of course,opinions may be very different.
My very first phone ever to be in use at my home,was a Sony Ericsson,because this meant quality and sattisfaction for me. Often I disregard negative critics about Android OS or Sony Ericsson in particular. Because together they're stronger than ever before. When you mix the right ingredients,you get right results - Sony Ericsson is one of them.
On the question about leaving this joint venture split in two different pieces, I would rather like to see both parties working together as a team. Their products work. XPERIA is the best proof of their cooperation.
As I always say : ''Great minds always work together.'' Separated they become weaker''.
You do realise Sony has already bought out Ericsson's share, right?