Sony to buy out Ericsson portion of Sony Ericsson for $1.475 billion

by Phil Hornshaw

Mobile device maker Sony Ericsson is likely to soon lose its “Ericsson” moniker, as Sony announced today it would be buying out the Norwegian company’s stake to the tune of $1.475 billion.

Ericsson and Sony were formerly separate handset makers, and merged the two “unprofitable” businesses together in 2001, according to a report on the announcement from Ars Technica. Now, Sony Ericsson will be a wholly-owned subsidiary of Sony. And part of the deal will include patents getting brought into the greater Sony fold.

Patents might be a bigger part of this deal than would they would first seem. The mobile industry is a hotbed of litigation right now, with Microsoft and Apple actively battling with lots of device makers who use Google’s Android operating system. Samsung, HTC and Motorola are slugging it out with Apple – with Samsung devices getting banned in multiple countries in patent infringement cases. Meanwhile, Samsung and 11 other device makers are paying royalties to Microsoft for the use of patents that apparently are part of their Android software.

The patents Sony is acquiring from Sony Ericsson look like they’ll be used to allow Sony’s other departments to start to integrate into the mobile sphere. According to an official statement quoted by Ars Technica, Sony Ericsson as a wholly owned subsidiary lets Sony offer “smartphones, laptops, tablets, and televisions that seamlessly connect with one another.”

Lately, Sony Ericsson has been developing a few new devices with Sony’s familiar PlayStation brand to try to exploit the heavy emphasis on gaming in the mobile sphere. The company released the Xperia PLAY, a PlayStation-branded Android phone that will include Sony’s proprietary “PlayStation Suite” gaming platform. The company also has a pair of recently announced tablets in the works, both with PlayStation branding.

But in the smartphone department, at least, Sony Ericsson has been struggling with the competition. Sales of the Xperia PLAY appear to be somewhat low (Sony has only said the device is “meeting expectations”), though as a whole the company’s share of the smartphone market has increased between 3 and 5 percent in the last year.

The acquisition has been approved by both companies and will close in January, Ars reports. The deal could have a big impact on Sony’s business going forward. With the Sony Ericsson mobile department under its larger umbrella, Sony might be able to leverage its other departments to become something of a mobile juggernaut. But that depends on how well it connects all its devices together, something we’ll have to wait and see.