SONY- ERICSSON

JOINT VENTURE

SUBMITTED BY- AKSHAY NAGARE

PARESH RAJPUT

PGP/01/008
PGP/01/033

PRIYANSHU NAGAR PGP/01/038

OBJECTIVE OF THE STUDY

The objective of this study about Sony-Ericsson joint venture is to analyse and answer the
following questions

Was the joint venture really successful?

Were they able to fulfil their motives?
How did they take the advantage of each others technical Know-how?
Were they able to expand globally?

RESEARCH METHODOLOGY
The study is done through the secondary data obtained from the internet and the sales figure,
market share and revenues are obtained from the companys website.

INTRODUCTION
Sony-Ericsson joint venture, headquartered in London, was established in October 2001 with
50-50 share. The joint venture held the clear motive to tap the emerging market and to
diversify itself into a new product segment. Both Sony and Ericsson were niche brands in two
areas, whose blend is requisite for manufacturing of quality mobile phones for the customers.
Sony held the experience and expertise in consumer electronics industry, whilst Ericsson had
the know-how of manufacturing telecommunication instruments. Both the companies were
desirous of extending their product base but lacked expertise of other parameter required for
the mobile phones. Sony lacked expertise in telecommunication instruments whilst Ericsson
lacked in aesthetics and designs. Both the companies wished to bolster their abilities with the
blend of their competences, thereby enabling them to enter the market with an impactful
product. The joint venture terminated in 2012 when Sony acquired Ericsson after 11 years
long joint venture.

ABOUT SONY
Sony is a Japanese corporation headquartered in Tokyo, Japan. It has established a cushy
position for itself in the consumer electronics segment. Its diversified business incorporates
consumer and professional electronics, gaming, entertainment and financial services. Sony
enjoyed its major chunk of revenue from the sales of manufacturing electronics goods like
Televisions, Walkman, camera etc. In 2000 Sonys electronics products sales was whopping
4396 Billion yen. In 2000 it was operating in 43 countries and wished to expend its base to the
untouched world, specially the European markets.

ABOUT ERICSSON
Ericsson is a Swedish multinational networking and telecommunication equipment and
services company headquartered in Sweden. The company offers services, softwares and
infrastructure in information and communications technology for telecommunications
operators. Ericsson enjoyed expertise in manufacturing of telecommunication equipment and
hence had 35% market share under its belt in the year 2000. Ericsson entered the mobile
market way back in 1992 and enjoyed up to 15% market share before 2000. Due to financial
crises in Europe in the year 2000-2001 Ericsson suffered miserably fuelling its decision to
come in joint venture with Sony. This was the time when mobile phones were not bought
merely for the purpose of communicating, but they considered other features along with it.
Ericsson mobile phones lacked aesthetics thereby losing a bulk of their customers to their
competitors. Ericsson also lacked marketing expertise, which is pivotal to lure the customers
into buying the product.

MOTIVES OF SONY-ERICSSON JOINT VENTURE

Before the joint venture between Sony and Ericsson took place, Sony had its presence majorly
in the consumer electronics market. Television, Music, Gaming, Camera were the areas in
which Sony had its foothold. However, Market for the above mentioned areas was fiercely
competitive and player such as Samsung were putting up a good fight. This made Sony to look
ahead and expand its product portfolio and what could be better than setting their feet in the
mobile market where Nokia was the market leader.
Ericsson, which was one of the leading mobile market player, on the other hand, faced a
serious supply chain crunch due to a fire incident that took place in Philips chip manufacturing
plant which caused serious disruption to Ericssons mobile phone production. Because of this
event, Ericsson faced financial crunch. Ericsson wanted to accelerate the companys financial
and technological stance. Also, they wanted to take Nokia head on in telecommunication
industry.
The motive of this joint venture was to introduce a range of products that were
technologically advanced.
Both the companies had their level of expectations from the joint venture. Kunitake Ando
(Sonys President) considered cellular handsets as Key strategic areas for the future. Seeking
Ericssons excellent telecommunication technology was the main motive for Sony to form a
joint venture. Also, Sony was looking forward to increase its then miniscule market share and
to improve its position in the global mobile market. Ericsson had almost four times the market
share as that of Sony and Sony was looking forward to leverage this opportunity. On the
hindsight, this joint venture would also mean that Sony would now be able to tap the
European market. The joint venture would also bring the worlds largest existing customer
base to Sony.
Similarly, for Ericsson, the joint venture, if successful, would mean Ericsson tapping their feet
in the Japanese market. This would also mean they will obtain technical know-hows in
entertainment technology and design. Furthermore, Ericsson would be able to leverage on
the Sonys competitive advantage in Imaging, Music, Video and Camera. Also, the joint
venture will help reduce the financial burden from Ericsson.
Together, the joint venture meant that both the partners would now be able to leverage the
technical know-hows of each other. On one hand, Sony would take advantage of the cutting
edge technology of Ericsson. Ericsson, on the other hand, would take advantage of Sonys
competitive marketing campaign. Joint venture between the two parties will also help in the
resource sharing.

SONY ERICSSONS PRODUCT SINCE THE INCEPTION OF THE JOINT VENTURE

The very first handset that the joint venture came up with was the P-series Sony Ericsson P800
in 2002 and later on the T-series Sony Ericsson T68i in the same year.

The joint venture went on to introduce the Z series in 2003, S series in 2004 and V series in
2005. This was a time when Sony had a competitive edge over its competitors in terms of
camera quality. They were able to provide a mobile phone with a 1.3 Megapixels camera
when other players in the market did not even have cameras in mobile phones.
Sony Ericsson came up with Walkman series in the year 2006 with the introduction of Sony
Ericsson W900. This series was widely successful in that it caters to the music lover segment.
They introduced the R series in 2008 with Sony Ericsson R300.
Sony Ericsson left the curve in 2008 by introducing their first Windows phone, Xperia X1.
Realizing the importance of operating system, they went on to adopt Android operating
system in the year 2010 by introducing Xperia X8, X10 and X10i: some of the first Android
phones in the market. These smartphones were among the elite class products of Sony
Ericsson. With 8 megapixel camera and Android system (upgradable to 2.3), this series
represented a status symbol.
Until 2012, when Sony acquired Ericsson, they came up with affordable Xperia series by
introducing Xperia P, Xperia S and Xperia U and went on to further decrease the prices of the
phone by introducing Xperia M series.
In 2013, they left the curve again by introducing the first ever water-proof phone, Xperia Z
which was known as the phone of the year.