Wednesday, April 14

Sony Ericsson no more, just Sony and Ericsson

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Where there is smoke, there normally is fire.  I have been keeping an eye on Sony for the last few weeks and I am of the belief that something BIG is happening behind the scenes at the Japanese behemoth. Sony it seems is in position of weakness in various categories it operates in. Samsung and Apple are predominantly the companies giving them the headaches.

Last week Sony spent several billion dollars ($1.47 Billion to be precise) to buy out the shares of Ericsson in their joint venture. Sony Ericsson it seemed was going nowhere. The end of the market where their products are is being decimated by Android devices.  Yes, low end cellphones have a huge role to play for billions of people but they still need a degree of features. The effect that Huawei has had in East Africa is testament to that.

Having cellphones that can act as walkmans and can house music to be accessed anywhere unfortunately no longer has that wow factor. That feature is now common place. The ending of the joint venture has provided Sony with 5 patents and at the moment they are very important.  It provides Sony the opportunity to focus on the development of smart phones and I presume end its efforts in the low to middle end of the market. It seems that the main reason for the joint venture was that at the time Ericsson had the best software. The problem was that their devices did not have the capacity to adequately represent the software’s ability.  Sony at the time had great devices but no software to showcase it and thus came the joint venture.

The future for Sony I suspect contains devices such as LCD and LED TV’s and fridges having apps on them. Samsung has done it to great success.  Ericsson I think is in a position to focus entirely on being a communications company.

The other question that also needs to be asked; is Sony becoming an acquisition target? Left field option would be Apple buying them and spinning off a variety of the businesses. A colleague mentioned Samsung as a potential suitor which makes a lot of sense for both parties. Samsung is slowly moving to be a major threat to Apple and Sony could provide them with a variety of new steams of income.  Sony is a very important Japanese company but the clock is ticking on them…

Sony and Ericsson part ways

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