Sony is looking to buy out Ericsson’s share of Sony Ericsson, a move to gain full control and beef up development of the struggling handset unit.
Japanese-Swedish joint venture, a 50-50 partnership since 2001, is the sixth-largest handset maker, but has been losing profits in recent years as it held back on smartphone development. The two have had ongoing talks in the past, but discussions fell apart do to the settlement terms, according to the Wall Street Journal.
Analysts believe if Sony takes control of the company, it will spur the advancement of smartphones and handheld games, allowing Sony to streamline development.
Sony is pushing for a deal in hopes of duplicating the successes of companies like Apple and Samsung, who are ruling the market through their closely-related smartphones and tablets.
Last week, Sony Ericsson CEO Bert Nordberg said the company will become a 100 per cent smartphone company by the middle of next year, aiming at becoming the largest maker of Android devices in the U.S. But the announced smartphone development still falls under the Sony Ericsson partnership, not as a separate function for Sony.
If Sony and Ericsson decide to part ways, the deal may all hinge on how much Sony wants to pay Ericsson to buy out its share. Market analysts believe Ericsson’s side of the business could be worth about $1.5 billion because the transaction could include the Swedish company’s mobile technology patents.
The purchase may further a possible strategy to combine mobile devices with its music, video and gaming lines, a much needed boost in the arm for a company late to the tablet market and trailing Apple and Samsung.
Sony and Ericsson may also remain separate entities, in which case Sony may go forward with smartphones and tablets that feature the company’s top-ranked PlayStation brand, as has been anticipated for several years. The indecision about the partnership’s future is causing smartphone delays, and an unclear gaming path for both, and giving the competition a big headstart.
If Sony and Ericsson part ways, it could streamline operations for Sony, allowing it to resharpen its focus on integrating smartphone and tablet development to once again be an industry leader.