Sony Corp. and Telefonaktiebolaget LM Ericsson on Thursday announced that Sony will acquire Ericsson’s 50% stake in Sony Ericsson Mobile Communications AB, making the mobile handset business a wholly-owned subsidiary of Sony. With the integration of mobile phone business, Sony will be able to provide similar user experience across a range of consumer devices.
During the past ten years the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to Internet services and content. This means that the synergies for Ericsson in having both a world leading technology and telecoms services portfolio and a handset operation are decreasing. Today Ericsson’s focus is on the global wireless market as a whole; how wireless connectivity can benefit people, business and society beyond just phones. Consistent with that mission, by setting up a wireless connectivity initiative, Ericsson and Sony will work to drive and develop the market’s adoption of connectivity across multiple platforms.
“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. With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-license agreement, our four-screen strategy is in place. We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment. This includes Sony’s own acclaimed network services, like the PlayStation Network and Sony Entertainment Network,” said Howard Stringer, Sony’s chairman, chief executive officer and president.
The reasons why Sony wants to get its share from Sony Ericsson are more or less clear. The handset maker has been losing market share for some time now and it will continue to as the popularity of higher-end feature phones is declining while the popularity of Xperia smartphones remains low. Sony also has dropping market shares in its media player, consumer camera and some other businesses, where application-specific smartphones could help to fight back the revenue from smartphones like Apple iPhone.
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.
As part of the transaction, Ericsson will receive a cash consideration of €1.05 billion ($1.49 billion). The transaction, which has been approved by appropriate decision-making bodies of both companies, is expected to close in January 2012, subject to customary closing conditions, including regulatory approvals.