Sony Takes Control of the Future, Its Mobile Play
After ten years as a joint venture, Sony has bought out partner Ericsson to take sole charge of mobile phone maker Sony Ericsson. The split appears amicable. Sony gains full control of the products plus access and/or ownership of numerous patents. Ericsson receives Euro 1.05bn ($1.45bn) for its stake.
This move is even more important for Sony group than for Sony Ericsson itself.
Mobile phone technology is becoming ubiquitous. Similarly, digital media is becoming personal as smart mobile devices are a mainstream way of reading, viewing, and listening to media. Mobile phone connectivity is being integrated into everything from eReaders, tablets computers, to portable games consoles and beyond. Soon, no area of consumer electronics will be untouched by mobile’s reach. Sony group makes many of these consumer devices, including the upcoming PSP Vita handheld games console that includes a 3G mobile phone radio and eReaders that compete with the 3G-enabled Amazon Kindle.
The future is mobile and personal. Sony needs the competencies that Sony Ericsson has worked for years to nurture. Equally SonyEricsson needs the unreserved commitment of Sony to ensure that its smartphones — now 80% of Sony Ericsson’s shipments — intelligently tie into all of a person’s digital life: on Sony TVs, on notebook PCs, tablets, music, gaming and other media.
HTC demonstrates the importance of digital media for smartphones and tablets:
In 2011, HTC has bought cloud gaming company OnLive and Beats to boost its gaming and music credentials. Additionally, these acquisitions will help raise the profile of the HTC brand among high growth consumer segments. Sony Ericsson — or whatever the brand will be now — will now not need to buy such assets or negotiate at arms length with its half-parent. Now Sony Ericsson will be part of the same company that owns PlayStation, music, movie and other media businesses.
In the past, SonyEricsson has often competed with one hand tied behind its back. The clearest recent examples of problematic brand and product integration are:
- Sony Ericsson’s Xperia Play smartphone. It’s a PlayStation phone in all but name. The design even includes the iconic four gamepad buttons that Sony Computer Entertainment have often placed at the heart of their PlayStation advertising. But the Xperia Play lacked full use of the brand. The PlayStation-branded games store and games didn’t ship at the same time the phone went on sale. Now Sony takes charge of the mobile phone division there will be no excuses for such awkward product execution.
- Sony Electronic’s Android tablets. They have been created and sold by Sony group, not Sony Ericsson, although both of these initial Sony tablets and all of Sony Ericsson’s smartphones use Google’s Android software and ARM processors, quite unlike the Intel and Windows-powered PCs that Sony group creates. Duplication of such similar product development makes no sense. At best, it will cost more, at worst it will cost more and take longer to bring both tablets and smartphones to market. Given the speed of innovation that’s currently happening across all markets, achieving a fast time to market has become a critical competency. Sony Ericsson’s rivals, smartphone-makers HTC, Apple, Samsung, and LG all maximize synergies between their tablet and smartphone strategy. Sony needs to do the same.
What the end of the joint venture demonstrates, is that Sony now realizes that mobile is no longer a side story as it was ten years ago. Mobile is central to Sony group’s future and as such it’s too important to be left as a part-owned joint venture. Google has a “mobile first” strategy now. The end of Sony Ericsson means Sony is able to do the same. It must.
Now, Sony should be able to speed up decision making and neatly integrate between mobile phone, PC and consumer electronics products. Sony’s corporate history suggests this is easier for me to write than for the company to implement. Combining business units and ensuring that co-operation across groups delivers products that are greater than the sum of their parts is really really hard. Very few companies have cracked it. Sony now has the opportunity to be one of them.
Buying out Ericsson does not make such successful product integration a certainty. Yet it will make the job of creating integrated products a great deal easier with Sony in full control. And, if Sony products fail in the market, now Sony will have no one else to blame.