Sony chief Zens away Ericsson phone panic

Sony boss Kunitake Ando has spoken out to quash fears over the future of its partnership with Ericsson to produce mobile cellular handsets. Everything's OK, he insists.

Last week cash-strapped Ericsson - which despite almost a century of pioneering telephony work, is now trading at junk bond status - said it might withdraw from the phone partnership with Sony. The JV employs over 3,000 people and has brought to market the successful T68 handset, and plans to launch the much-hyped P800 smartphone later this year.

"We are now in the process of getting into one and trying to harmonize," said Sony President Kunitake Ando, cryptically: in a statement that only Marin County or Sedona residents could possibly fully understand. With neither a hot tub, nor crystals available for comment, we'll have to bring you a full analysis of this koan later.

But seriously, what's the worse that could happen?

The joint venture was intended to marry Ericsson's long standing radio technology, patent portfolio and carrier relationships with Sony's consumer branding expertise. It was a timely marriage, as Ericsson had quite simply forgotten how to make an appealing consumer phone.

The T68 handset, which was launched shortly before Christmas, was a smash hit and did much to restore Ericsson's position in the market. But the company was soundly slapped by analysts for failing to follow through with bargain basement siblings, and slapped again for failing to upgrade the T68's successor, the T68i. The latter is essentially the same hardware as last year's model: an extraordinary gamble in today's fast moving handset market.

Much attention is now focussed on the P800 smartphone - possibly the most hyped handheld device since the Apple Newton - but this doesn't look like a 2002 product to us, despite its appearance in September's phone catalogs on this side of the pond.

Given Sony's strategic interest in handheld computers, particularly as a gateway to its other content or entertainment assets (games, movies and music), if Ericsson pulls out then the Japanese giant is sure to move in, and pick up the pieces. ®

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