Sony controls its smartphone fate, but will still fail

Sony controls its smartphone fate, but will still fail

Summary: Sony's buyout of Ericsson makes strategic sense, but it's hard to see the company gaining much traction with its four-screen strategy.

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Sony bought out its joint venture partner Ericsson in a move that effectively ends the Sony Ericsson effort. There are positives to the deal such as Sony will control its smartphone destiny, can integrate phones with its consumer devices and use a broad patent portfolio. However, it's still hard to see how Sony can win in smartphones.

The buyout of Ericsson for 1.05 billion euro wasn't surprising. Nevertheless, Sony's purchase and visions of PlayStation phones and TV-smartphone connections generated a good bit of press coverage.

According to Sony's announcement about the Ericsson transaction:

The transaction gives 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 CEO Howard Stringer noted that the company can now seamlessly connect devices and "open up new worlds of entertainment." "Our four-screen strategy is in place," said Stringer.

Sounds great right? Color me highly skeptical. Here's why I doubt that Sony can do much of anything in the smartphone market. It's hard to stand out in the Android army. Sony said that Sony Ericsson had 11 percent of the Android phone market. The catch is that Android accounts for 43 percent of the total mobile device market. On the global mobile device stage, Sony Ericsson had 1.7 percent of the market in the second quarter, according to Gartner. In the same period a year ago, Sony Ericsson had 3 percent. Sony will need flawless execution and a lot of luck to take share from Samsung, Motorola, LG and HTC. The Android party is crowded. Very crowded.

Sony has a four screen strategy but doesn't the consumer buy them all. Sony was talking about how the Ericsson buyout means better integration with its devices. That's fine, but very few if any consumers have Sony TVs, Sony laptops, Sony tablets, Sony phones and live on the company's network services such as the PlayStation Network. I doubt Stringer has that many Sony screens in his living room.

Where's the platform? Sony can have the connections and even a multi-screen interface, but it better come up with something huge to be a platform. Apple, Microsoft and Google have more of a platform strategy when it comes to the living room. Macquarie analyst Jeff Loff sums it up in a research note:

Sony’s idea of four screens (phone, tablet, PC, TV) and a common user experience (“UX”) is the closest it has to a sensible strategy, in our view. As it relates to the user experience, though, we think Sony is failing: it has too many disparate stores and too different an experience across devices and operating systems. To be serious, we think Sony must drop some legacy stores and integrate along a common brand.

Sony's best brand is probably the PlayStation, but that's not going to unify four screens.

Execution matters. Sony has improved its operations greatly, but still remains a company of silos. Are the engineers from Sony Ericsson going to blend seamlessly with the PlayStation managers. What happens when they have to talk to the movie and music types? It's telling that Apple can take Samsung parts and integrate them better than Samsung can on many occasions. Is it realistic to think Sony can play the hardware-software integration game flawlessly? Sony has to clean up Sony Ericsson. Sony Ericsson has a whopping 60 handset models. It probably needs three, maybe four at the max. The unified user experience, connections to devices and a straightforward branding strategy are at best a year away. Sony may take years to sort this four-screen strategy out. By then everything will have changed.

Topics: Smartphones, CXO, Hardware, Laptops, Mobility, Tablets

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22 comments
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  • RE: Sony controls its smartphone fate, but will still fail

    It's not that hard. HTC and Samsung manage to stand out.

    Sony Ericsson's android phones are much better this year but they're basically what they should've released last year. HTC and Samung have moved on, and are producing much better phones again.

    Their flagship, the Sony Ericsson Arc S isn't a patch on the Sensation or Galaxy S2.
    bradavon
    • <a href="http://www.tran33m.net/vb/">2012</a>

      @bradavon Buy a smartphone from the company that installed a rootkit via its music CDs and lost its entire PSN customer database to blackhats (in a not entirely unrelated attack)? Dream on Sony, you dropped the ball 10 years ago.
      jku1
  • Everyone but Apple will fail in these markets

    In the only measure that counts to business (profit) all companies except Apple will fail in the iPhone and iPad markets. Sorry. I meant to say smartphone and tablet markets. HP, Motorola, and Ericsson found that out already. RIM and Sony are right behind them. Nokia is teetering on the edge. Samsung's future is in the hands of a few judges around the world.<br><br>Read that list of companies again. HP, Motorola, Ericsson, RIM, Sony, Nokia, and Samsung. All have fallen or are about to fall to Apple. It is truly breathtaking how powerful Apple has become. We've talked in the past of MS being an 800lb gorilla. Apple is something else. Apple is the 800 ton Mecha-Streisand.<br><br>It is a sick market. We all lose.
    toddybottom
    • Mecha-Streisand!

      @toddybottom
      +1
      :D
      William Farrell
    • RE: Sony controls its smartphone fate, but will still fail

      @toddybottom

      It is not how powerful Apple has become, but rather, how stupid all these companies have become!

      Sony will do best to stay away from Android and develop it's own platform. If not --- they will fail with the rest of the deluded Android vendors.
      danbi
      • RE: Sony controls its smartphone fate, but will still fail

        @danbi <br><br>It will take a long time for Sony to catch up if it introduces its own new ecosystem. Problem is, Sony does not have the software development competency to start its own ecosystem. If Sony introduces one, are they going to gain enough mindshare among developers to develop third party apps for it? While Android has its own drawbacks, it IS the fastest way Sony can get a foothold in the market.<br><br>Or....<br><br>should HP decide to license WebOS....
        CyberGuerilla
    • Baa-bura! Baa-bura!

      Baa-bura!??? Baa-bura! Ichiban kirai na hito!
      Baa-bura! Baa-bura! Hana ga ooki!
      goyta
    • RE: Sony controls its smartphone fate, but will still fail

      @toddybottom - If Apple doesn't do anything to freshen up the iOS UI its my guess Apple will become less popular in the coming years. They can't rely solely on hardware design to carry the iDevice ecosystem.

      I don't know much about what OS underpins PSN or Sony's phones but they need to bring all this together and I don't see them accomplishing that by hooking up with Google.

      My guess is that Sony will make an attempt to expand their ecysystem off of PSN or whatever it is that runs their phones. Problem is....it may be too late. Then again, Sony has a lot of loyal Asian fans that won't go near an XBox so that group might be Sony's target.
      NPGMBR
  • Sony should make a huge Microsoft partnering push.

    They are a perfect fit. Smartphones, laptops, tablets, TV's. They just have to swallow a bit of pride on the xbox end of it which is what i suspect has kept them away so far. But it's that or amount to nothing with android
    Johnny Vegas
    • RE: Sony controls its smartphone fate, but will still fail

      @Johnny Vegas Not going to happen unless something really drastic/bad happens that forces the Xbox and PS to combine. This would mean gamers would probably lose - less competition.
      Cagny
    • RE: Sony controls its smartphone fate, but will still fail

      @Johnny Vegas Not going to happen. If anything they will look to partner more deeply with Google. Possible beginning with a cross sharing of patents, imagine Motorola and Sony/Ericsson patents combine into a single pool. Even Microsoft would have to reconsider it strategy of attacking android through patents.
      Knowles2
  • RE: Sony controls its smartphone fate, but will still fail

    Apple's good days will be over by 2015, and MS will once again take over the smart phone and tablet market by 2016. Google will be a distant third with their pirated software stack
    owlnet
    • RE: Sony controls its smartphone fate, but will still fail

      @owlnet I agree the Metro UI will shine on the three screens! Apple will be stuck with ther dated looking UI!!
      jatbains
  • 60 models of handsets? Hmmm...

    I'd certainly be very confused if I had to choose from 60 models of anything, but while I agree that's too much, the phrase makes it seem that Sony has 60 different models of Android smartphones. It's not really so. If it has 60 models of handsets, that includes low-end, basic models of "dumbphones", many models of media cell phones (one of Sony's strengths, for obvious reasons), and a few smartphones like the several flavors of Xperia. There are also models that are sold or even custom-designed only for certain countries and markets.

    So, while they could certainly do with a smaller line-up (although that's against their culture - Sony Ericsson has always had tons of models), it's not as if the consumer had 60 models of Xperia smartphones to choose from. It's misleading to imply that.
    goyta
  • RE: Sony controls its smartphone fate, but will still fail

    When people shop for phones, they want beautiful, or at least different designs. Sony should be able to do that very well. Then if they pick the right OS, AND really connect to other devices and standards, they should really shine!
    Hameiri
  • Can't see what will change, Sony ericsson have been making phones for ages

    the Xperia X8, X10 mini and X10 mini pro are quite well regarded.
    Prior to that, the bugginess of the software let them down (and Memory stick -gah) on K660 and K990 etc models.
    Prior to Android there was great music on the Walkman ones, but they'd crash if you went in and out of Camera.
    Not sure what difference this will actually make, but if part of the problem was a difficult interface between the companies, this might help.
    stevey_d
  • RE: Sony controls its smartphone fate, but will still fail

    Poor old Sony-Ericsson, I reckon that actually had the first half decent smartphone with a touchscreen on the market. Who remembers the SE P800? About 10 years ago. It had a stylus, but I tweaked the UI so that I could use my fingers. Nice handwriting reco, memory card etc. Then SonyE went the wrong direction and lost the plot....
    Riaanh
  • Four-Screen Strategy

    Currently they can run Android on 3 of those 4 screens. Ditch Windows from the laptops and replace it with Android, and Sony can claim to be the only major company to offer a consistent OS experience across its <B>entire</B> product range. Wouldn't that be a unique selling point?
    ldo17
  • RE: Sony controls its smartphone fate, but will still fail

    If Sony stick to what earned them their reputation, electronics hardware, and used Windows 8 (Metro UI) across their phones, tablets, laptops, tvs but keep Android on their ereaders, it'll set them apart from the rest and let them focus on their strengths.
    frazelamont
  • RE: Sony controls its smartphone fate, but will still fail

    Buy a smartphone from the company that installed a rootkit via its music CDs and lost its entire PSN customer database to blackhats (in a not entirely unrelated attack)? Dream on Sony, you dropped the ball 10 years ago.
    Psdie