UPDATED 06:38 EDT / OCTOBER 27 2011

Sony To Acquire Ericsson’s Shares for $1.5B

Sony Ericsson Mobile Communications AB is the joint venture of Sony Corp. and Ericsson AB.  For 10 years, the two companies brought some pretty cool, mostly musically inclined phones to the market.  But the demand in the market nowadays calls for smartphones, and this is where Sony wants to focus.

In the 10 year partnership, Sony and Ericsson products weren’t really integrated together.  Sony wants continuity in their products; they want all their products to be more streamlined with each other and not exist like separate entities in the market.  They want to incorporate technology from their smartphones into their tablets and gaming devices, and vice versa, expounding on their own ecosystem.

Sony will buy out Ericsson’s stake for Sony Ericsson Mobile Communications AB for €1.05 billion (or $1.5 billion).  In return, Sony will be awarded with Ericsson’s patent rights and ownership of some key intellectual property as security.  The deal was agreed upon by both parties and will be completed by January 2012.

According to Ericsson, the will provide 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.”

“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,” said the Sony chairman and chief executive, Howard Stringer.

“This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want. With a vibrant smartphone business … our four-screen strategy is in place.”

Their joint venture before was what helped overthrow Nokia from the top spot of cellphone sales, but with the arrival of smartphones like the iPhone and other Android-based devices, even their phones slowly faded into the background.  It wasn’t until they released the Xperia Play, an Android-based smartphone that is equipped with the gaming powers of Sony, that they realized it was time to shake things up.

Sony Ericsson’s third quarter reported an 81% increase in sales in the Asian market but suffered a 43% decline in sales in Europe, Middle East and Africa.


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