So what does the takeover say about the smartphone market at large? This week, of course, Nokia introduced the Lumia 800 and the Lumia 710, the first Nokia phones to run the Windows Phone OS. The Japanese consumer electronics giant is ending its 10-year marriage with network-equipment provider Ericsson, spending $1.47 billion to buy out Ericsson's stake in Sony Ericsson, their mobile devices joint venture.
While many analysts agree Sony's takeover of the business is a positive, they are skeptical that it can actually turn the handset business around. Over the past few years, Sony Ericsson has ceded a significant amount of market share to competitors. Sony Ericsson's rapid decline in the mobile arena is just the latest example of the pitfalls to which joint ventures are often heir. Once one of the five largest handset vendors in the world by shipments, Sony Ericsson has largely fallen off the radar. In the smartphone business, its share lags far behind its rivals. In comparison, Apple's share was 18.2 percent, while top tier Android player Samsung owned 15.8 percent of the market. Early Android adopter HTC held 10.2 percent.
A merger of necessity
Sony and Ericsson got together in 2001 because neither company had a particularly strong mobile devices business. Sony's share in the global market was nearly nonexistent, and Ericsson's own business suffered from major losses. The idea was to wed Sony's consumer electronics expertise with Ericsson's experience in telecommunications and wireless technology while reducing its financial liabilities.
Sony Ericsson focused on the GSM market, looking at emerging markets such as India. Slow in smartphones
Much of the progress made by Sony Ericsson was lost once Apple and its iPhone came on the scene in 2007. The iPhone, followed by the first Android device, the G1 from HTC, which was unveiled in October 2008, put consumers on path to demanding more from their mobile devices.
Sony Ericsson, meanwhile, was struggling to make the transition to the smartphone, finally introducing its first Windows Mobile-powered device, the Xperia X1, in 2008.
While Sony Ericsson was fiddling with Windows Mobile, its rivals were embracing Android. Sony Ericsson didn't introduce its first Android device, the Xperia X10, until March of last year. The Xperia Play, a strange mash-up of a Sony Ericsson phone and Sony's PlayStation controller, was supposed to be its break-out hit in the U.S. Instead, it flopped as consumers embraced more conventional devices.
The reaction to Sony taking over the joint venture was near unanimous approval.
Sony is expected to move quicker than its joint venture to reposition itself in various markets. One key to the handset business's revival is the use of Sony's wealth of content, including a significant library of video, music and video games. The use of Sony's PlayStation brand is another option. Sony has been reluctant to directly link the PlayStation to its phones, but with the company taking full control of the joint venture, that is one possibility. Sony's comments today suggest otherwise.
"We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions that seamlessly connect with one another and open up new worlds of online entertainment," Sony CEO Howard Stringer said in a statement.
A lot depends on how rapidly Sony can move. Even then, it's unclear whether a Sony smartphone will standout in the market to consumers. "I think Sony has largely missed the smartphone revolution," Kay said.
Until now Sony's tablets, games and other consumer electronics devices have been kept separate from the phones sold and created by Sony Ericsson.
"Smartphones look to become more important products for Sony ... and they will probably become the main device people use to connect to the Internet."
"More and more people are watching content on smartphones. The deal will give Sony ownership of certain handset patents held by Ericsson and will enable it to cut costs in the Sony Ericsson business, with Stringer pointing to savings in operations, R&D and marketing.
"Sony now has all the components to compete with Samsung and Apple. Founded in 2001, Sony Ericsson employs some 7,500 and last year took around 2 percent of the global cellphone market with sales of 6.3 billion euros. Ericsson said the deal provides Sony with a broad intellectual property cross-licensing agreement covering all the Japanese company's products and services, as well as ownership of five essential patent families relating to wireless handset technology.
The STOXX Europe 600 technology index was up 3.4 percent.
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