Hans Vestberg, CEO, Ericsson

The owners of handset joint venture Sony Ericsson are to part company, with Japanese electronics firm Sony acquiring the 50 per cent share of the JV held by Sweden’s Ericsson for €1.05bn. The announcement comes ten years after the formation of Sony Ericsson, which saw two struggling handset units combined in the hope of marrying Sony’s consumer electronics expertise and Ericsson’s telecoms experience.

Sony Ericsson has endured mixed fortunes over the past decade and a repositioning in early 2010, together with a commitment to the Android OS in the high end was the latest in a line of strategic overhauls designed to secure a consistent and improved performance. Earlier this month the firm reported net profit of zero for the third quarter of 2011, down from the €49.9m it made for the same period in 2010, but up from a loss of €50m for the second quarter of this year. Such ups and downs have typified its performance.

Ericsson’s commitment to the JV has long been questioned and Sony’s move earlier this year to release two Android tablets under its solo brand hinted that it might be preparing to go it alone.

Still, there are some that find today’s development surprising, given that there were rumours not so long ago that Sony was looking for a way out of the JV, as its consumer electronics business suffered and mobile phones were not considered a core opportunity. Informa analyst Dave McQueen suggests that Sony may see value in creating a unified experience across its device range, incorporating TV, Blu-ray, PlayStation 3, tablets and mobile devices, as part of a wider connected home strategy whilst also leveraging on its music, video and film assets to create rich content ecosystem.

Ericsson’s announcement supported this suggestion. A shift in the nature of the handset space to content and service-oriented smartphones meant that “the synergies for Ericsson in having both a world leading technology and telecoms services portfolio and a handset operation are decreasing, “the Swedish firm said.

As part of the deal, Sony will gain an intellectual property portfolio of five patent families, and a “broad IP cross-licensing agreement. The Japanese firm believes it will be able to better position handsets as part of its wider product portfolio, said chairman and CEO Howard Stringer.

“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,” Stringer said.”

“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” said Hans Vestberg, president and CEO of Ericsson.

The deal is expected to close in January 2012.

Sony Ericsson JV split

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