cell phones

Ericsson to sell its half of Sony-Ericsson

"The news came as a surprise"
4:18 min

Swedish telecom giant Ericsson announced today that it is selling its half of the cell phone brand, Sony Ericsson, to Sony for US$ 1.47 billion.

The sale of Ericsson’s share in Sony-Ericsson means that the brand name Sony-Ericsson will soon be a thing of the past, as will their mobile phones and those old ring tones that so many of us have heard over the past decade.

´"Sony Ericsson will become a subsidiary entirely owned by Sony and integrated in Sony's broad platform for consumer electronic products," Ericsson wrote in a statement.

The joint Swedish Japanese venture of Sony Ericsson recently celebrated its ten year anniversary. During the second quarter of this year, the company had just 1.7 percent of the global cell phone market, according to analysis company Gartner.

Sony-Ericsson has its headquarters in London, but employs around 3,000 people in Lund in the south of Sweden. Trade union leader Ulf Bengtsson is surprised by today’s news, saying that there has been talk of Ericsson selling before, but it had never come to anything.

Bengtsson is not worried though about the prospect of Swedish job losses, as he believes that Sony will continue to have a need for the research and development carried out in Lund.

The news may have come as a surprise to some, but not to others like Helena Nordman-Knutson, a telecommunications analyst with the fund manager, The Öhman Group. She sees this as logical step for both companies, given the shift in the market away from mobile phone devices to smart phone technology. Ericsson is mainly a service deliverer of technical systems, while Sony manufactures consumer electronic goods. Today’s news sees the two companies going separate ways to concentrate on their own focus areas.

Helena Nordman-Knutson says that Ericsson failed to make a successful transition from feature phones to smart phones and that competitors such as Apple have taken a large share of the market.

Although Ericsson will no longer be directly involved in the mobile phone market through devices, it will still play an indirect role through ST Ericsson which manufactures chips for phones.

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