Sony Acquires Sony Ericsson
by Kristian Vättö on October 27, 2011 8:07 AM EST- Posted in
- Laptops
- Sony
- Smartphones
- Android
- Sony Ericsson
- Mobile
Sony has released a press statement which announces Sony's purchase of Sony Ericsson. Before today, Sony has owned 50% of Sony Ericsson while Ericsson has held the other 50%, making Sony Ericsson a joint operation of Sony and Ericsson. The price of the acquisition is €1.05 billion ($1.475 billion) in cash. Sony has not revealed whether they will keep the Sony Ericsson brand around or just brand products as Sony from now on.
Update: Future products will be branded as Sony.
A brief history lesson: Sony Ericsson was founded in 2001 by Sony and Ericsson (obviously). The aim of Sony Ericsson was to combine Sony's experience of consumer electronics with Ericsson's knowledge of telecommunications. Sony Ericsson is mostly known for their mobile phones, such as the Walkman brand. However, Sony Ericsson has lost a lot of their market share during the era of smartphones. In Q3'08, Sony Ericsson had over 8% market share but in Q2'11, their market share had dropped to below 2%.
The acquisition makes sense considering that Sony makes a variety of consumer electronics. In August, Sony announced their plans to enter the tablet market. Given that Sony's tablets run Android and so do Sony Ericsson's smartphones, this purchase allows Sony to develop their ecosystem even further. Sony is a major player in TV and PC market, hence they have the possibility to create an Apple-like ecosystem (sans the OSs), which has been proven to be very successful if you look at Apple's quarterly profits. What is certain, though, is that the smartphone market is extremely competitive at the moment, meaning that it won't be easy for Sony to gain market share.
Source: Sony
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WeaselITB - Thursday, October 27, 2011 - link
That's a good point - I hadn't considered that. Thanks.-Weasel
ruibing - Tuesday, November 15, 2011 - link
The yen is very strong, the euro is very weak, and Ericsson wants to get to focusing on its network infrastructure, so this is a great time for Sony to make that purchase. Palm had some brand power and patents, but hindsight is 20/20 and it was a costly investment.Sony is hoping to concentrate on the very profitable mobile, consumer electronics space when the large consumer electronics, like HDTVs, are losing money for every company.
Besides, the sale also includes cross-licensing agreements on five core patent portfolios from Ericsson along with all the ones that SE had. Most analysts believe it a good deal.
gcor - Thursday, October 27, 2011 - link
I worked for Ericsson prior to and after Sony getting involved in Ericsson's handset development.Prior to Sony, consumer focus was something Ericsson just couldn't get it's head around. In fact, handset sales were seen only as a way to get network equipment sales. This was to the extent that Ericsson's handset business was allowed to make a loss, provided new network features were utilised fast. As an engineer in the company, it was incredibly frustrating to see opportunities to make great products killed time and again.
Once Sony got involved, consumer focus improved, but Ericsson still considered the network the priority for handsets.
With a bit of luck, now that Sony has ditched the network focused retard, interesting products may appear.
shompa - Friday, October 28, 2011 - link
I guess you worked after 1997-98?I remember when Ericsson where Nr1. They had by far the best specced phones but lacked design.
Everybody laughed at Nokia: They make gummy boots and tires.
The internal politics at Ericsson was a mess. Ericsson could not hire people. We had Ericsson Data that hired out "consultants" internal at Ericsson. (they in their turn hired people outside Ericsson data. But Ericsson data put 30% extra on the tab to Ericsson. Ericsson data made a huge profit. All other parts of Ericsson had insane costs. We had 17 year old consultants that had not even quit high school! People who earned 10 times as much as we employees did.) Most highly qualified people at Ericsson quit. Some came back as consultants the day after with 10 times the salary.
Then Rolf Skoglund came with his insane Microsoft ideas. (ex Microsoft VP)
Whole Ericsson got the same computer environment : Ericsson Standard Office environment: ESOE. They were so insane that phones/base stations should be developed in Windows/Excel.
As you now: A phone/base station needs to run simulations. A single simulation took 4-6 weeks with the fastest computers. Back with NT 3.51 - 4: try to not reboot them in that time! We lost YEARS in computer time. Telephones came out 9-12-18 month after schedule. in 5 years with Rolf Skoglund: Ericsson's shares went down from over 250SEK to 3SEK.
It was then that Sony entered the partner ship. And they did not bring anything beside the brand names Walkman, Cybershot and playstation. At least 2 of those brands have zero meaning today.
(BTW. If you remember the SETI at home scandal at Ericsson. I ran seti at home over 500 + sun servers and got 3 place in Sweden in just 3 days. Fun times. It was also in "my" house they found the largest MP3 server. But I had nothing to do with that. )
In 2001 we bought 1.5 terra hard disk space. It cost over 200K dollars. Today you can get it for 70 dollar. Love IT.
Ronakbhai - Friday, October 28, 2011 - link
Basically the big guy on the right ate the small guy on the left.rddtretff - Friday, October 28, 2011 - link
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shompa - Friday, October 28, 2011 - link
Somehow Ericsson is one of the few Android vendors that don't have to pay protection money to MSFT. Probably because they have an extensive patent portfolio.Lets say Sony manages to sell 5 million phones/year. Just the licensing fees to MSFT would be 25-75 million dollar/year. Somehow they sell Ericsson's part for 1 billion Euro including cross license.
The only thing I can guarantee: Sony will never be successful in Mobile telephony. It was a huge mistake by Ericsson to start the joint venture. (I worked at Ericsson at the time as a consultant. According to "experts" Sony would bring great design to Ericsson. The funny thing is that Sony never have designed a beautiful of good phone in history. Ericsson have at least a track record in being nr1 vendor in the world. Sony have nothing.)
Sweden loves to give away its companies. All people here will work to the state = the government will be in power for ever.
This is a sad day for Sweden.
BTW: Thanks Microsoft. Killed Ericsson with Rolf Skoglund and killed Nokia with their insane CEO who have empty factories and buys Korean made phones with Windows Mobile and brand it "nokia"
200K worker that have lost their jobs thanks to MSFT.
Camikazi - Saturday, October 29, 2011 - link
O come on now, Ericsson hired the ex MS guy and Nokia went into the venture with MS willingly, don't place all the blame on MS for taking advantage of what your companies were giving out. Your companies made the decisions that led to what you don't like and they should take a majority of the blame.Valis - Saturday, October 29, 2011 - link
I wont touch anything Sony does after the DRM, SCMS, SWG, etc. I owned a SE Mobile, but now I can mark that off my list of possible future cell phones. :-/ruibing - Tuesday, November 15, 2011 - link
Are you talking about the root-kit and star wars mmo? The only interactions I've had with their products has been Bravia TVs and Playstations, so I don't have any aversion to them. I was burnt before by Samsung/LG feature phones, so my next smartphone will probably be another HTC, a Motorola, or a Sony (Ericsson).