Sony Meets Ericsson: A History

Sony Ericsson is a joint venture between the famous Japanese electronics company Sony Corporation and the Swedish telecommunications company Ericsson. It was hoped that the combination of Sony's consumer electronics expertise with Ericsson's technological leadership in the communications sector would provide both companies with much more market share than they have had individually as competitors. Operating out of Hammersmith, London with research and development teams in Sweden, Japan, China, Germany, the United States, India, Pakistan and the United Kingdom, Sony Ericsson was the fifth-largest mobile phone manufacturer in the world after Nokia, Samsung, LG, and Motorola as of 2008. The company had, at that same time, approximately 9,400 employees and 2,500 contractors worldwide.

Back in 2000, Sony was a surprisingly marginal player in the global cell phone market, with a market share of less than one percent. Ericsson had been partnered with General Electric in the U.S. since the early nineties, primarily to establish an American presence with some brand recognition. But by August 2001, both Sony and Ericsson had finalized the terms of their merger, including an initial workforce of 3,500 employees.

Despite the aim of profitability their very first year, Ericsson's market share actually fell and it would be only a year later that the company decided to stop making mobile phones and end the partnership if business didn't pick up, while Sony stated that it was still fully committed to the joint venture and wanted to make it a success. In 2003, the two companies agreed to pump more money into their project in response to continuing losses. The strategy was to release new models capable of digital photography as well as other multimedia capabilities. Several new models were introduced which featured on-board digital cameras and full-color screens, exciting novelties for that time. Despite booming sales, the partnership kept posting ever-bigger losses, with projected profitability rescheduled even further back.

Sony Ericsson's current best-sellers are its Walkman and Cyber-Shot lines of multimedia phones. The company had been on a turn-around until the last quarter of 2008, which saw a devastating 97 percent drop in profits and the layoff of 2,000 employees. Sony Ericsson is the third largest manufacturer of mobile handsets in the world, after rivals Nokia and Samsung, but commands only slightly more than 8 percent of global market share. Figures dropped after three consecutive years of increased sales. There are recurrent fears that Sony Ericsson, along with struggling rival Motorola, may one day bow out of the cell phone industry altogether.