Sony Take Full Control Of Mobile Phone Venture

Sony Corp is to buy full control of the Sony Ericsson mobile phone venture from its Swedish partner to catch up on smartphone and tablet makers such as Apple and Samsung. Mobile handset maker Sony Ericsson will be fully taken over by Sony Corp., ending a 10-year tie-up with Sweden's Telefon AB L.M. Ericsson, the companies said on Thursday.
Japanese consumer electronics company Sony will pay €1.05 billion ($1.46 billion) in cash for Sony ownership of certain handset patents held by Ericsson and will enable it to integrate the joint venture's output with its own range of products and online content.

Until now Sony's tablets, games and other consumer electronics devices have been kept separate from the phones sold by Sony Ericsson. Ericsson said the mobile market has shifted focus from simple mobile phones to smartphones with advanced computing capabilities and it no longer sees obvious synergies in having both a technology portfolio and a handset operation.

"This acquisition makes sense for Sony and Ericsson, 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, " Sony's chairman and Chief Executive Sir Howard Stringer said in a statement.
Mr. Stringer added that the acquisition enables Sony to offer a broader range of wireless consumer electronic products. A buyout by Sony had long been talked of, and a source with direct knowledge of the matter told Reuters this month that a deal was in the offering.

Sony Ericsson was formed as a merger of the unprofitable handset operations from Ericsson and Sony. While the Swedish-Japanese hybrid enjoyed initial successes with its line of Walkman-branded music handsets and Cybershot camera phones, Sony had to make this deal as it had run out of options, but integration challenges could prove to be a major hurdle.

As a major consumer electronics player lack of mobile assets had become a liability for Sony. Sony Ericsson appointed Bert Nordberg as chief executive and decided to drop Symbian as its operating system and introduced a smartphone strategy using Google Inc.'s Android platform, effectively ending Sony Ericsson's presence in the low-end market. Ericsson said the deal provides Sony with a broad intellectual property cross-licensing agreement covering all the Japanese company's products and services as well as ownership of "five essential patent families relating to wireless handset technology.

The move led to the company becoming profitable again, despite falling market share. Sony's takeover is expected to close in January 2012. Shares in Ericsson, whose main strength lies in its wireless network equipment business, were up 5 percent at 70.1 euros by 0813 GMT (4:13 a.m. EDT).