Sony takes over Sony Ericsson in 1bn euro deal

Sony is to pay Ericsson more than €1bn to gain control of the companies' 50-50 joint venture for mobile phones and tablets, Sony Ericsson.

Sony is to pay Ericsson more than $1bn to take over the Sony Ericsson brand. Photo credit: Stephen Shankland/CNET News

The decade-old joint venture will become a wholly owned Sony subsidiary and will be "integrated into Sony's broad platform of network-connected consumer electronics products", the companies said in a statement on Thursday.

The €1.05bn (£919m) cash deal, expected to close in January, lays out a broad cross-licensing agreement between Sony and Ericsson. It also gives Sony ownership of five "essential" patent families that belonged to Ericsson, but did not specify which patents are involved.

"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," Sony chief Howard Stringer said in the statement. "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."

Sony's four-screen strategy entails smartphones — Sony Ericsson said this month that it would next year stop making any other kind of phone — as well as laptops, tablets and TV sets. Stringer said the buyout means Sony can allow those devices to connect with each other more effectively and to interoperate with the PlayStation Network and Sony Entertainment Network.

"We can help people enjoy all our content — from movies to music and games — through our many devices, in a way no one else can," Stringer noted.

Sony Ericsson's latest devices include the Xperia Arc S smartphone, and the Sony P and S tablets, all of which run Google's Android OS.

'Perfect sense'

Analysts agreed with Stringer's assessment. According to Gartner's Carolina Milanesi, the buyout "makes perfect sense in the current market", as it will give Sony a strong portfolio, along with the "patents and content to go with it".

"[It] will be interesting to see what happens to the Sony Ericsson brand, but [I] would argue consumers would be happy with just 'Sony' on their phones," Milanesi said in a post to Twitter, while also theorising that Sony might benefit from "completing the picture" with its own platform. Sony Ericsson smartphones all use Android, but Milanesi suggested that WebOS — now in limbo after being ditched by HP — might be an option for "a strong vertical play".

However, in a press conference on Thursday, Stringer downplayed the WebOS suggestion. "I never say 'never' about anything, but we're not thinking about it at the moment," he said.

Stringer confirmed that the Sony Ericsson brand will go, but a "task force" still has to figure out the brand that will replace it. "In the short term, it will obviously remain Sony Ericsson," he said.

The deal should "improve integration" in the Japanese electronics maker's portfolio, according to independent analyst Ian Fogg. "Now Sony owns all of Sony Ericsson, they should use PlayStation branding more aggressively on their smartphones [as there is] less reason not to," he said in a Twitter post.

Stockholm-based Ericsson's divestment of its share in the joint venture will let it "focus on enabling connectivity for all devices, using our R&D and industry-leading patent portfolio to realise a truly connected world", Hans Vestberg, chief executive of Ericsson, said in the companies' statement.

According to research firm Gartner's most recent figures, Sony Ericsson was 10th in global mobile device sales in the second quarter, with a 1.7-percent market share. A year before, its share was three percent.