Sony to buy out Ericsson 'to catch up' with rivals (report)

Summary:Sony, trying to break back into the market after the iPhone wiped its smartphones off the map, could ditch its partner Ericsson to do so.

Sony is in talks to buy out Ericsson's stake in the joint mobile phone venture, in a bid to "catch up with rivals", sources have said.

The sources, speaking to the Wall Street Journal and Reuters said that the half Sony, half Ericsson deal could end the 'Sony Ericsson' brand, allowing Sony to take the reigns and catch up with competitors.

With talks in motion, one source told the Wall Street Journal that the discussions could "break apart at any time", leading some to question how frail the relationship is between the two companies.

Currently, Sony Ericsson is failing to compete against Apple and Samsung, both engaged currently in a bitter patent dispute and strong rivalry, by not producing game-changing devices and online content.

Approaching the tenth anniversary of the partnership, the two companies must decide whether to renew the pact or not. The deal is said to be worth upwards of $1.3 billion, according to Reuters, depending on the outcome of the agreement.

The Wall Street Journal highlights some of the issues with Sony's management of phone development:

"Sony's inability to oversee mobile-phone development directly has become a hindrance as the cellphone has evolved from a simple communications tool to become a multifunction electronics device. By moving phone operations in house, Sony would maximize its technology strengths to develop new innovative handsets more quickly."

Sony Ericsson was once at the forefront of the mobile world, releasing market changing devices combining the power of phone hardware with music software. Once the iPhone was released in 2007, however, Sony Ericsson's marketshare plummeted in favour of Apple's phone.

Back in 2001 when the smartphone market was still emerging, the decision to partner the two mobile device manufacturers seemed smart and logical. Booming at the helm of the Walkman phone, the iPhone set to indirectly seek and destroy the partnership, by challenging what Sony Ericsson had been famed for doing.

Amid Google's proposed acquisition of Motorola Mobility, Sony has an even harder task on its hands -- competing directly with the Android ecosystem.

Topics: Mobility, Hardware

About

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

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