Sony Buys Out Ericsson Phone Stake to Challenge Apple

Sony-TabletChuckle if you must, but Sony’s just-announced buyout of Ericsson’s stake in the Sony Ericsson phone joint venture is in part an attempt by the great electronics manufacturer to take on both Apple and Samsung, according to a Reuter’s report this morning.  For nearly a decade the two companies shave been partnered on phones, some of which have been far ahead of the market in advancing the Sony cause of entertainment everywhere.

The acquisition from the Swedish firm amounts to about $1.45 billion. Sony Ericsson handsets have a very small fraction of the handset market and never had much of the presence in the U.S. And this piece of the Sony empire has always been apart from the laptop, game console, TV and handheld gaming pieces of the company. Invoking a bit of the old Steve Jobs mystical bravado, Sony CEO Sir Howard Stringer is quoted saying “It’s the beginning of something which I think is quite magical. We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment.”

Yeah, well, at the risk of seeming cruel, Howard, you are no Steve Jobs and Sony is no Apple. But it sure could have been. After all, aside from Apple, Sony probably has one of the most deserved reputations for valuing design. Its “Sony Style” branding online and at retail is credible when you stack the company’s devices like Bravia TVs, the PSP, VAIO laptops and even the PS3 up against its competitors in each category. Eclipsed in recent years by the cultural fetish over Apple, Sony products at least aspire to get beyond the technology and to the experience.

On paper, Sony should have several marches on Apple in terms of its broad plans for entertainment domination. After all, Sony has the connected TVs and the game consoles that Apple likely wants to gobble next. But the integration across these many pieces has been bearish. Just getting my PSP and PS3 to work well with one another has been a challenge over the years. As Microsoft is proving with its upcoming Xbox 360 partnership with major MSOs and content providers, the game console is a staggeringly powerful Trojan horse when it comes to getting a company like Microsoft into the coveted living room.

Ironically, Sony was already in the living room -- both in TVs and a generation of Playstations -- before Microsoft even got there. That the company has not succeeded in making more of its TV/game box presence by mastering the partnerships and technology the interactive living room will require is one of the great misses in corporate history. Why, oh why, wasn’t my PSP able to talk more directly and adroitly to my PS3 long ago? To the company’s credit, the latest firmware updates of the PS3 have included the promise of set-top-box TV functionality.

Whether Sony really can muster a mobile piece here is highly questionable. I don’t see the company making a serious play in the smartphone arena so much as becoming a viable challenger in the tablet space.  The recently released Sony tablets do seem to sport some of that Sony Style that could be leveraged at some point against the mighty Apple. Along with Amazon, what other company is as well positioned to take a bath on hardware margins in the interests of making it up on software sales and licensing? That is the game console model, after all.

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