As the mobile-device wars heat up, Sony is making a bold move to buy out Ericsson's 50 percent stake in Sony Ericsson. Sony will pay Ericsson 1.05 billion euros ($1.49 billion) in cash for the assets.
Sony plans to integrate smartphones into its portfolio of network-connected consumer electronics devices, including tablets, televisions and PCs, as part of a growth strategy.
Under terms of the deal, Sony gets a broad intellectual property cross-licensing agreement as well as ownership of five essential patent families relating to wireless handset technology.
The Four-Screen Strategy
"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," said Howard Stringer, Sony's chairman, CEO and president. "With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-license agreement, our four-screen strategy is in place."
Sony's motivation is the exploding growth of the mobile market over the past decade. In its acquisition announcement, the company noted how the mobile market has shifted focus from simple mobile phones to rich smartphones that include access to Internet services and content. Company executives see the acquisition as a logical strategic step.
"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," Stringer said. Sony's empire includes network services like the PlayStation Network and Sony Entertainment Network.
Zeus Kerravala, principal analyst at ZK Research, said the split makes sense for both companies. Even if Sony uses the intellectual property to create reference design for other hardware manufacturers it wants to work with, he said, there is value in owning the hardware and having software rights.
"Apple demonstrated that you can create a unique experience if you control the hardware...