More Woes For Sony As Ericsson Get Set To Say Adios

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Only days after Sony Australia sacked 32 staff comes more bad news for the consumer electronics giant with confirmation that Sweden-based telecommunications firm Ericsson wants out of their relationship with Sony who are set to finish the Japanese financial year with a whopping $3 billion dollar loss.

Insiders at Ericsson say that there has been constant fighting with Sony executives over the future design of mobile phones with Sony keen to push consumer phones over business smartphones.  

According to a recent report in Europe Sony has “expressed interest” in seeking out banks to help it purchase Ericsson’s 50% stake in the company.

This could see Sony going it alone in the phone market with content linked devices while Ericsson builds their own range of mobile phones however such a deal could be hampered by the current global economic situation and Sony’s current financial woes.

Recently Sony said that they were reluctant to release a PlayStation-branded phone despite Ericsson wanting to launch one.

InformationWeek in the USA claim that Sony doesn’t have the cash to buy out Ericsson’s share of the company, so it is exploring ways to finance the deal. Neither company has officially commented on the matter, nor has any sort of timeline been given.

 

This raises some serious issues. Sony Ericsson is a top player in the worldwide market for cell phones. It has held steady in the top five for years. It is known for its Walkman and CyberShot series phones, which focus on providing excellent music and camera experiences, respectively.

Why does Ericsson want out now? Is this a response to the current economic climate? Sony Ericsson has reported dismal numbers of late, but they don’t appear to be too far out of line with general market trends.

What would be the financial and market-share fallout of such a divestiture? Could a standalone version of Sony, phonemaker, survive? Does Sony have the wireless technical expertise to match what Ericsson provided? Would Sony maintain its pledge to bring Symbian Foundation handsets to market, or would it renege and choose something else?

These are all unanswered at the moment. We’ll have to keep a close eye on this as this deal moves forward.

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