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Sony takes over handset biz from Ericsson JV

Posted: 01 Nov 2011     Print Version  Bookmark and Share

Keywords:mobile phone  handset joint venture 

Sony Corp. is buying out the 50 per cent stake of Telefonaktiebolaget LM Ericsson (Ericsson) in their mobile joint venture (JV), Sony Ericsson, amounting to Rs.6,591.93 crore ($1.47 billion). The mobile handset business will now be a wholly-owned subsidiary of Sony.

The transaction is said to give Sony an opportunity to rapidly integrate smartphones into its broad array of network-connected consumer electronics devices—including tablets, televisions and personal computers—for the benefit of consumers and the growth of its business. The transaction also provides Sony with a broad intellectual property (IP) cross-licensing agreement covering all products and services of Sony as well as ownership of five essential patent families relating to wireless handset technology.

Sony eyes stake in Ericsson JV
There were already speculations that Sony will buy out Ericsson in their mobile phone JV. Read the earlier report here.

The Japanese-Swedish joint venture was created in 2001, leveraging the then handset operations of Sony and Ericsson. The JV became the sixth-biggest player in the mobile market. However, Sony Ericsson has been floundering for years, struggling to market smartphones that approximate the popularity of Apple Inc.'s iPhone or leading Android-based handsets. According to Sony, the company has about 11 per cent market share in Android phones and 80 per cent of its revenue is derived from smartphones.

In a statement released by the companies, they said "The synergies for Ericsson in having both a world leading technology and telecoms services portfolio and a handset operation are decreasing. Today Ericsson's focus is on the global wireless market as a whole; how wireless connectivity can benefit people, business and society beyond just phones. Consistent with that mission, by setting up a wireless connectivity initiative, Ericsson and Sony will work to drive and develop the market's adoption of connectivity across multiple platforms."

"This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want. With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-licence agreement, our four-screen strategy is in place. We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment. This includes Sony's own acclaimed network services, like the PlayStation Network and Sony Entertainment Network," said Sir Howard Stringer, Sony's chairman, CEO and president.

The two companies said they would continue working together, announcing they had set up a "wireless connectivity initiative ... to drive and develop the market's adoption of connectivity across multiple platforms."

The deal is expected to close in January 2012, Sony said. It remains subject to closing conditions, including regulatory approvals, the company said.

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