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Sony-Ericsson joint venture story

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Joint Venturehandset production

ContentIntroduction of Sony EricssonStrategic planCompetitive advantageFinancial figuresQuestionsAnalysis

Ericsson Mobile Communications

199920002001

Fire in Philips RFC factory (Ericsson single supplier)Annual losses of b$1.68 3% loss of market share

+-Telecom technology leaderKnowledge and experience in cell phoneLost market share, Negative revenue

European telecom crisis Handset market shareEricsson GE Mobile Communications1989-1993

?Product DevelopmentStrategic Decision

Innovation Management and New Product DevelopmentBy Paul Trott3

+-Consumer electronic expertise

Battery, high resolution screen, camera, entertainment will help development of future cell phones

No expertise in cell phone technology Market share degradation

QuestionsWhat chances did the joint venture have of becoming a successful player on the market?

Which factors were not taken into account in this joint venture?

Product Development

Dear CustomerSorry! we do not have time to investigate what makes value for you.We are too busy to implant PlayStation, Cyber- shot and Walkman to Ericsson phone

Consider value for customers or products integration ?

Price trend

e.g. In US the average price for smartphones fallen by 50% in 3 years

Price trend and Market DynamicQ2-2011

ST Ericsson vs QualcommST-Ericsson was a 50/50 joint venture of Ericsson and STMicroelectronics established on February 2009 and dissolved August 2013.

Solar-UK-Conference

ST-Ericsson

Does Ericsson give major competitive advantages to Sony-Ericsson?

16

Sony and Ericsson financial situation

Degraded Net Margin: No interest for extra operation cost

2008: Laid-off 5000 out of 8500 employees, closed several R&D centers around the world.

The EndSony needed market share, same as Consumer electronic Ericsson wanted to get reputation back

October, 2011: Sony acquired Ericsson's stake

Joint venture without aligned Goal

Current Market Share