Sony Buys All Sony Ericsson

Sony who was once ‘the’ electronics brand has had it share of market slippage and some years ago felt it had to enter the mobile market in partnership with Ericsson. Scandinavia once the centre of mobiles, has in recent years, lost out to the awakening Far East manufacturers and changing consumer demand driven by the likes of Apple. The likes of Nokia and Sony Ericsson have struggled to keep up.

Founded in 2001, Sony Ericsson only have some 2% of the global smartphone market with sales of 6.3 billion euros and now are clearly lagging behind others in the smartphone race. Sony Ericsson Xperia smartphones themselves accounted for 80% of its sales and these run on Google's Android operating system.

Today Sony has thrown down the gauntlet and decided to buy full control Sony Ericsson for 1.1bn euros ($1.5bn; £964m), making it a wholly-owned subsidiary of Sony. Sony will also get the five sets of patents that cover the phones and a licensing agreement on any other intellectual property.

The question is will it make a difference?

They believe that the tighter integration with its TVs, tablets, PCs and the Sony PlayStation through its Consumer division will make the difference and also allow it to seamlessly connect smartphones, laptops, tablets and televisions online.

The proposed technology integration and alignment with Sony’s entertainment content should be a good test. Sony’s integration strategy will still have to compete with Apple’s and its App Store, other Androids and the Google Marketplace , Google Motorola, the Nokia Windows 7 threat, Amazon’s Kindle media platform and much more.

Mobile World Just got a Lot Harder at the Top

Who would you blame for a 90% drop in profits? The world’s largest mobile manufacturer only made £108 million compared to £1.08billion for the same quarter last year. Nokia have already announced 1,700 job cuts but is it enough?

Some of it down to the economic climate and reluctance to change handsets but it still sold 93 million handsets compared to 115 million certainly not a 90% drop in units sold.

The problem is not the numbers of units sold but the mix of units sold. At the lower end they are losing out to cheaper phones which is not as profitable for Nokia. At the high end they have Apple, Samsung, RIM all eating from their table.

However Nokia aren’t the only big player feeling the cold. Sony Ericsson reported their third consecutive loss with a $387 loss in the 1st quarter of 2009 on falling sales and has also announced 2000 job cuts. They shipped 14.5 million units in the quarter down 35% year on year.

So both mobile giants are missing out on the low end and face increasing pressure at the high end. There has to be casualties in this crowded market and without continued profit the research may so down and dry up and that’s just as potentially dangerous as not keeping up with the Apple’s.