Sony and Ericsson announced that the mobile handset business will become a wholly owned subsidiary of Sony, ending their decade-long partnership. Or to put it in legalese, Sony Corp. will acquire Telefonaktiebolaget LM Ericsson’s 50 percent stake in Sony Ericsson Mobile Communications AB.
Under terms of the agreement, Ericsson will receive EUR 1.05 billion (about $1.47 billion) in cash.
Among other things, Sony will get five essential wireless handset technology patent families. Howard Stringer, Sony’s chairman, chief executive officer and president, said Sony intends to integrate smartphones into its product line of network-connected consumer electronics devices including tablets, televisions and personal computers.
“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,” Stringer said. “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.”
He added that the acquisition will result in operational efficiencies in engineering, network development and marketing, among other areas. “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.”
Sony Ericsson recently made the transition from feature phones to Android-based Xperia smartphones. By the end of the third quarter of 2011, the company held a market share of 11 percent (by value) in the Android phone market, representing 80 percent of the company’s third quarter sales.
“Ten years ago when we formed the joint venture, thereby combining Sony’s consumer products knowledge with Ericsson’s telecommunication technology expertise, it was a perfect match to drive the development of feature phones,” said Hans Vestberg, president and chief executive officer of Ericsson. “Today we take an equally logical step as Sony acquires our stake in Sony Ericsson and makes it a part of its broad range of consumer devices. We will now enhance our focus on enabling connectivity for all devices, using our R&D and industry leading patent portfolio to realize a truly connected world.”