Sony to buy Sony Ericsson, turn into 100 percent subsidiary

The Japanese electronics maker says it will pay Ericsson €1.05 billion for its share of the business and related patents.

By Jay Alabaster, IDG News Service |  IT Management, Ericsson, Howard Stringer

Sony said Thursday it will acquire Ericsson's 50% share in their Sony Ericsson mobile phone joint venture, turning the company into a subsidiary in January 2012.

The Tokyo-based electronics maker said in a press release it will pay Ericsson €1.05 billion ($1.5 billion) in the deal, which includes several sets of related patents and a cross-licensing agreement for intellectual property.

Sony has until now launched its smartphones through the joint venture, which began operations in 2001. The deal will allow it to integrate phones into its overall product lineup, as rivals such as Apple and Samsung do now, and better leverage its broad music and movie holdings.

"During the past ten years the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to internet services and content. The transaction is a logical strategic step that takes into account the nature of this evolution and its impact on the marketplace," Sony said in its release.

The tie-up helped turn around the ailing phone businesses of both companies, by leveraging well-known Sony brands into phone models such as the Walkman and Cybershot series.

The joint company has recently released its advanced phones under the Xperia brand, and Sony has expanded its streaming networks and game download services to work on the Android-driven devices.

Sony said the deal will allow it to include phones into its "four-screen strategy," which aims to offer content and interconnect smartphones, laptops, tablets, and televisions.

"This is the last piece of the puzzle," said Sony CEO Howard Stringer during a press conference in London. He was joined by Ericsson's CEO Hans Vestberg, who said that handing over its share of Sony Ericsson to Sony is a natural step, leaving the company to focus on building and running mobile networks.

There is no question that the smartphone has become very important for any consumer electronics company.

"There are now more smartphones in the U.S. than there are people ... people have fallen in love with their smartphones," said Stringer.

The possibilities are leaving Stringer feeling optimistic about catching up with the likes Samsung, Apple and HTC, which today dominate the smartphone business, he said.

The deal was widely expected, following a new round of rumors a few weeks ago.

Consumer electronics vendors are looking for ways to set themselves apart from the competition, and offering an integrated user experience across tablets, smartphones and the living room TV is one of the ways they hope to do that, IDC analyst Francisco Jeronimo said at the time.

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