Thursday, October 27, 2011

Sony's smartphone play: Too little, too late

The Japanese consumer electronics giant is ending its 10-year marriage with network-equipment provider Ericsson, spending $1.47 billion to buy out Ericsson's stake in Sony Ericsson, their mobile devices joint venture.
Sony's hope: that it can move faster alone to revive what was once a healthy business through a tighter integration with its other products and media content.
While many analysts agree Sony's takeover of the business is a positive, they are skeptical that it can actually turn the handset business around. Over the past few years, Sony Ericsson has ceded a significant amount of market share to competitors. It was slow to pounce on the smartphone trend, and even now stands as a second-tier Android player. Its relationship with carriers in the major markets (read: the U.S.) remains weak.

"It's not clear to me that Sony has the juice or the positioning to make a comeback now," said Roger Kay, an analyst at Endpoint Technologies.

Sony Ericsson's rapid decline in the mobile arena is just the latest example of the pitfalls to which joint ventures are often heir. The joint venture is book-ended with struggles, often due to conflicting interests and the frequently halfhearted commitment of its parents.

Once one of the five largest handset vendors in the world by shipments, Sony Ericsson has largely fallen off the radar. In the smartphone business, its share lags far behind its rivals. In the second quarter, its global share of the smartphone market was 3.6 percent, according to Gartner.
In comparison, Apple's share was 18.2 percent, while top tier Android player Samsung owned 15.8 percent of the market. Early Android adopter HTC held 10.2 percent.