updated 12:50 pm EDT, Thu October 6, 2011
Sony Ericsson may split through Sony buyout
Sony Ericsson is on the verge of splitting up as Sony hopes to get a more Apple-like control of its phones, insiders disclosed Thursday. Under the terms slipped to the WSJ, Sony would buy Ericsson's 50 percent stake. Little is known other than that the Ericsson share could be worth as much as $1.7 billion and that Ericsson's mobile-focused patents might be involved.
Sony's CEO Sir Howard Stringer reportedly wants to finish a deal as equickly as possible.
Neither half of the partnership would comment, although Sony Ericsson CEO Bert Nordberg said a week ago that his company was closer to Sony than Ericsson, which is defined by networking infrastructure gear rather than public-facing devices.
Much of the reasoning behind the split would be to streamline Sony's work and have more direct control over the hardware and software, even as it keeps using Android. Although never officially confirmed, it's widely known that Sony was frustrated at being held back by Ericsson and, at one point,refused to allow a PlayStation phone as it didn't want the Sony Ericsson brand and design attached to one of its best-known names. Eventually, the two compromised and released the Xperia Play.
Sony, like Apple, is now thought to see smartphones as part of a wider ecosystem, like its movie and music stores as well as its home theater gear and TVs. An example of Sony's direction is the Tablet S, where users can steer a home theater and quickly play media wirelessly to other networked components. Current Sony Ericsson phones have only a limited amount of integration.
Sony Ericsson is widely considered one of the first victims of the iPhone. It once dominated the media phone category through a large range of low- and mid-range basic feature phones with virtually no smartphones. While initially expensive, the iPhone quickly started pushing Sony Ericsson's share down as it handled many of the music tasks more effectively with a much more powerful OS. It wasn't until Android that Sony Ericsson began reversing its fortunes, by which point it was knocked out of the top ranks and was shipping millions fewer phones each quarter.