Sony Ericsson splits after 10 years in Sony cash buyout

Summary:Sony and Ericsson are not to renew their ten-year pact, allowing the two companies to go their separate ways. Ericsson gets cash, Sony gets investments.

Sony and Ericsson are to go their separate ways after ten years of its Sony Ericsson joint venture into the mobile phone market.

Sony is to take full control of the mobile phone venture in a bid to catch up with the two-horse race between Android and iOS-powered phones, with Ericsson taking a consumer-facing backseat for the time being.

Ericsson will receive $1.5 billion in cash for its 50 percent share of the joint venture, which was set up in 2001 to take on Nokia as the then crown prince of mobile manufacturers at the time.

In effect, it has been one of the most drawn out takeovers, in effect, the technology world has seen in recent times.

The breakup, which has been in review over the past few months, was expected, after a source told the Wall Street Journal and Reuters that the ten-year-old pact between the two companies would not be renewed.

It will also give Sony a handful of valuable mobile handset patents by Ericsson, enabling a new range of new products and online content, reports Reuters. Ericsson said that the transaction's output will give Sony the opportunity to integrate smartphone technology into its wider range of products, from televisions, tablets and computers.

The 50-50 partnership has been under scrutiny by Japan-based Sony, after the company saw smartphone demand surge. And, by buying out Ericsson would give Sony a foot in the door with Google, with the search giant already supplying the Android mobile operating system to existing Ericsson phones.

Ericsson will concentrate on sales of wireless communications equipment and services for business and enterprise, leaving the company on the most part without a consumer-focused face.

The deal is expected to close in January 2012, subject to regulatory approval.

Related:

Topics: Hardware, Mobility, Telcos

About

Zack Whittaker writes for ZDNet, CNET, and CBS News. He is based in New York City.

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