Tokyo, Japan-based Sony and Stockholm, Sweden-based Ericsson will each inject 150m euros ($162.3m) into Sony Ericsson Mobile Communications AB over the January to March period. The cash is intended to put London, UK-based Sony Ericsson on a more stable financial footing and to help it expand operations.
Whether the investment is a sign of confidence in the joint venture, or a desperate attempt to recoup some of the investment already made, is hard to gauge. However, the fruits of the Sony Ericsson partnership are now beginning to appear in the shape of well-received devices such as the T300 multimedia handset and the P800 Symbian-based smart phone.
Sony and Ericsson joined forces to co-develop and market handsets in October 2001 in an effort both to reduce the cost base of mobile phone manufacture and also to increase the market share of both companies.
To date, however, neither effort has been overtly successful, prompting Ericsson CEO Kurt Hellstrom to admit in September 2002 that the company might be forced to pull out of the 50/50 joint venture.
In an interview published at the time with the Wall Street Journal, Hellstrom said he wants to see real acceptance in the market of the company’s new handsets if Ericsson is to continue to throw money at Sony Ericsson. Estimates suggested the company was required to inject around 500m euros ($541m) into the handset venture by the end of 2003.
The proposed move would almost certainly have led to the failure of the company, which has seen its market share eroded dramatically since its formation.
According to figures from Gartner Inc’s Dataquest unit, Sony Ericsson’s unit sales in the third quarter 2002 plunged 30.4% to 5.0 million, giving it a market share of 4.8% and leaving the company trailing in a distant fifth place overall behind Nokia, Motorola, Samsung and Siemens. To put that in perspective, a year earlier Ericsson handset sales alone placed it in close company with Samsung and Siemens.
Source: Computerwire
