Sony is nearing a deal to purchase Ericsson's 50 percent share of the Sony Ericsson joint venture, The Wall Street Journal is reporting today. The deal--which could cost more than a billion dollars--is fragile, according to the report.
Mumblings of Sony taking complete control of or abandoning the partnership has been a reoccurring rumor throughout the last several years. Sony Ericsson has struggled to remain a success in recent times, and has posted many quarters of declining sales as the company shifted product strategies. Sony Ericsson only held an 11 percent market share of Android phones last quarter, according to its most recent financial results. The company also sold 7.6 million devices compared to the 11 million it sold the same quarter last year.
While Sony Ericsson has floundered, competitors Apple and Samsung have absolutely dominated sales and mindshare among consumers. With the deal, "Sony aims to integrate its smartphone operation with its businesses in tablets, handheld game machines, and personal computers to save on costs and better synchronize development of mobile devices," says the Journal.
The news of a buyout comes merely a few days after Sony Ericsson celebrated its tenth anniversary, and perhaps the most pivotal time in the company's history of mobile phones.
Sony Ericsson was very successful between 2004 and 2007, posting four straight years of positive annual net income with popular phones such as the K750i, W800i, and a variety of Walkman mobile devices. However, the company fell behind quickly toward the turn of the decade as the world shifted to iPhones and Android-based smartphones, leaving Sony Ericsson with a portfolio of outdated phones running the Symbian OS.
In response, Sony Ericsson finally launched their first Android smartphone, the Xperia X10, in 2010. The X10 was a hit product in several aspects, but burned many consumers with a slow upgrade path and lackluster battery life.
Sony Ericsson's product lineup in recent times has represented a more cohesive strategy, incorporating elements from other aspects of the company. The Xperia Play was the first PlayStation Certified phone, and offered a slide-out panel with dedicated gaming keys. Unfortunately, a general lack of compelling games for the gaming smartphone kept it from being a smashing success.
Obtaining Sony Ericsson phones in the U.S. is often an expensive proposition, as consumers must usually buy the ultra-expensive unlocked version of the phone. Often, Sony Ericsson's most advanced phones will be available elsewhere around the world for many months and few arrive in the States through a carrier with a contract.
Sony and Ericsson did not immediately respond to CNET's request for comment, but a Sony Ericsson spokesman said, "We have a long-term commitment to our joint ventures."