Sony Focuses on Sony Ericsson

by Yuyutsu Sen on October 27, 2011

Last Friday at the AsiaD: All Things Digital event held in Hong Kong, the executive deputy president of Sony Corp Kazuo Hirai, who is responsible for the integration of the company’s consumer products, said in an address that the management team is well aware of the importance of Sony Ericsson in the organization’s overall strategy. There have been rumors about Sony trying to buy out Ericsson’s share in their equal ownership cell phone joint venture. Ericsson’s announcement that Sony Ericsson is not the most critical part of their overall strategy has further fueled these rumors. With 100% ownership Sony will be in a better position to compete against the likes of Samsung Electronics and Apple.

Both the companies had declined to comment on the subject. Sony’s offerings include consumer electronics, content, tablet computers as well as gaming devices, but not smartphones, the fastest growing segment of the mobile market. Takeover will enable the consumer electronics giant to expand its offerings in general. Although Hirai did not comment on buyout, he said that the company was working much more closely with Sony Ericsson workforce.

The sale of its 50% share in the joint venture can be advantageous for Ericsson as well. It will allow the company to allocate its resources to ST-Ericsson, chip venture that has been making a loss, and safeguard its cash flow from the volatility brought about by Sony Ericsson. In a poll conducted by Reuters, the value of Ericsson’s 50% stake in the joint venture was estimated to be around $1.5 billion by analysts.

The disjoint strategy, under which smartphones and cell phones are manufactured by Sony Ericsson, and other consumer electronics, game consoles, cameras and tablets are produced by Sony, is one of the reasons why the company has been lagging behind rivals like Apple and Samsung. With smartphones offering access to a wide variety of content and functions, integration is the key to success in this rapidly growing sector. This fact was stressed by Hirai citing that better integration on part of Ericsson is necessary to offer consumers combined experience between smartphone, cell phone, pad and television.

Although Sony boasts of popular products and brands like PlayStation game consoles, Vaio laptops and Bravia LCD televisions, it is lagging far behind in the tablet PC and smartphone sector. Industry data indicates that currently Sony Corp’s market share in the smartphone and cell phone sectors is less than 5%, which puts it behind companies like ZTE CORP, LG Electronics Inc, Samsung Electronics and world leader in overall mobile sector Nokia Oyj. With such strong competitors, the journey to the first spot in the mobile market will not be easy for Sony.

In last Friday’s conference, Hirai also talked about plans of extending the highly popular PlayStation games on Google’s open source Android mobile platform. He further stated that the firm’s expansion efforts were not limited to the Sony family, but included discussions with other manufacturers. Depending on the outcome of the discussions, the company will make further announcements.

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Written by: Yuyutsu Sen. Follow by: RSS, Twitter, Facebook, or YouTube.

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