Mobile phone maker Sony Ericsson will focus entirely on the booming smartphone market, going head to head with rivals like Apple and underlining the importance of a tie-up with Sony amid reports the electronics giant is preparing a buyout. The company said on Friday it would shift all its production to smartphones during 2012 as it reported a swing back to profit of 31 million euros, just higher than forecasts. It said it expected more margin pressure, partly due to a global slowdown. "If the consumer confidence problem continues it will hurt the mobile industry," CEO Bert Nordberg said in an interview.
Last week, a source with direct knowledge of the matter told Reuters Sony was in talks to buy Ericsson's 50 per cent stake in the joint venture. In the Reuters interview, Nordberg declined to comment. Analysts believe the world's ninth largest handset maker can only succeed in attracting avid gadget users away from its rivals by being fully integrated into Sony's wide portfolio of devices and getting access to the Japanese electronic giant's entertainment assets, like PlayStation and music catalogues.
Smartphones currently account for around 80 per cent of all Sony Ericsson's sales and the company said its share of the global Android-based smartphone market during the quarter was approximately 12 per cent in volume and 11 percent in value. "Speculation persists that Sony will buy out the JV," said Geoff Blaber from CCS Insight. "This is arguably the most desirable endgame for a company that needs full access to Sony content and services."
Controlling Sony Ericsson would help Sony recoup ground in the battle against Apple Inc and Samsung Electronics, where it has been hampered by a disjointed strategy regarding mobile gadgets and online content. For Ericsson, a sale would insulate its profit and loss account from the volatility Sony Ericsson has brought and allow it to focus resources on loss-making chip venture ST-Ericsson. A Reuters poll put the price of Ericsson's 50 per cent stake in Sony Ericsson at around $1.5 billion.
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