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Sony and Ericsson divorce

Sony gets the business, Ericsson the cash ...

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Sony is paying €1.05bn in cash to buy out its partner in mobile telephony, though it gets ongoing patent rights and ownership of some key intellectual property as security.

The deal has been approved by both sides, and is expected to complete by January, enabling Sony to start dropping mobile phones into its whole product range and letting Ericsson concentrate on the network infrastructure at which it excels.

Sony Ericsson was a jointly owned company that has been making phones for the last decade or so, based on Sony's experience of consumer electronics and Ericsson's knowledge (and patents) in radio technologies. That made a lot of sense 10 years ago, when radio was arcane, but these days the radio component of a smartphone is just a drop-in module along with Wi-Fi, Bluetooth and all the other bits which make up a smartphone.

And it is smartphones that Sony wants to concentrate on. Having demonstrated that its Android handsets can bring in greater revenue from a smaller market share, the company has already committed to making its whole portfolio smart over the next 12 months.

Sony Ericsson was always a marriage of convenience, and frustration: the company lobbied ceaselessly for access to the Sony brands, PlayStation in particular, with little success until very recently.

Which was surely an indication of the way things would go, and have gone. Sony does seem to have got itself a bargain – JP Morgan reckoned Ericsson would pocket 1.3bn and ongoing patent fees – but Sony has negotiated itself a cross-licensing deal along with ownership of key patents, really the most amicable of separations. ®

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