Sony Just Bought Its Future

Oct 27, 2011
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Sony, with a $1.47bn check, just bought back its destiny. In agreeing to buy out Ericsson's 50-percent stake in the Sony Ericsson smartphone partnership, the Japanese company brings to an end a decade of collaboration; more importantly, though, it buys the opportunity for Sony to come up to speed with its rivals and - if it leverages its strengths correctly - overtake Samsung, LG and even Apple in the consumer electronics market. "We can more rapidly and more widely offer consumers smartphones, laptops, tablets and televisions" CEO Howard Stringer promised in the announcement, "that seamlessly connect with one another and open up new worlds of online entertainment." Big words, but Sony is one of the few companies that could ever deliver on them.

A lot has changed in the ten years since Sony and Ericsson inked their partnership, and I'm not just talking about that oft-quoted pivotal iPhone moment. High speed cellular networks have proliferated in North America, Asia and Europe, delivering 3G and increasingly 4G speeds not only in patches but more consistently across states and entire countries. Meanwhile user expectations have snowballed, beyond simple calls and the occasional SMS to include multimedia messaging, email and multimedia, along with persistent access to a range of cloud stores containing music, video, documents and other data.

[aquote]No longer is it enough to slap Walkman branding on a basic cellphone and coast through the marketplace[/aquote]

Then there's hardware. A decade ago, sub-centimeter thick tablets with all-day battery life, big touchscreens and processors as fast as computers were, quite literally, the stuff of science fiction. Cameras have gone from being chunky, standalone gadgets to ubiquitous accessories. In short, no longer is it enough to slap "Walkman" branding and a headphone jack on a basic cellphone and expect it to coast through the marketplace.

Sony Ericsson had already confirmed it was shifting its focus exclusively to smartphones in 2012, betting the farm on Android and the increasing demand for handsets that do more than make calls and play music. Nonetheless, the company had struggled as an also-ran, in many cases, against its Android contemporaries.

Samsung led the way in cutting edge hardware, a benefit of its considerable manufacturing heft, while HTC had been in many ways the consumer choice, its efforts with Sense the most compelling and thorough of the UI modifications. Motorola had its close relationship with Verizon Wireless, and now of course is slipping neatly into Google's back pocket. In contrast, Sony Ericsson was beginning to look precariously balanced on the periphery, with no homegrown tablets - only cousins in Sony's line-up - and word of increasing managerial tensions over how well-established brands like Walkman and PlayStation would be leveraged. All the time, Apple continued to build momentum as the wunderkind of the smartphone segment, the "obvious choice" for fashion following consumers.

[aquote]Sony has always been the most likely challenger to Apple[/aquote]

Ironically, Sony has always been the most likely challenger to Apple; in fact in many ways it already had a head start. The company's BRAVIA TVs are well respected, and their position in the gaming segment firmly cemented with the PlayStation range; the VAIO line-up is one of the rare computing exceptions to the adage that only Mac shoppers will pay for styling. Steve Jobs even admitted once that he looked to the Japanese company for inspiration in their consistency of design and purity of product message, factors which have waned over the years.

What Sony has struggled to do is capitalize in its potential, only now beginning to rise to the challenge of interconnectedness across its various ranges. The company's Google TV products sank after making little impact to the smart TV segment, while PC sales across the board have been drearily unimpressive. Standalone MP3 players long ago lost their charm as first the iPod and then smartphones took over their functionality. Most promising has been the DLNA and universal remote support in the recent Sony tablets, taking functionality that has been around for some time but dressing it up in a way that makes it more compelling, more instantly appealing to consumers.

Android will undoubtedly play a significant role in Sony's mobility future, and by bringing Sony Ericsson fully into the family fold the platform's potential can be leveraged. With some clever integration between phones and tablets, for instance, Sony could leapfrog Samsung in tying together ownership of both, similar to how Apple has positioned iPhone and iPad as ideal companions. The Qriocity subscription-based streaming media service begins to look a whole lot more compelling when you have multiple devices you can use it on. Then there's gaming, an area that Apple undoubtedly lags behind in today but is forever rumored to be targeting as the Next Big Thing, and which has the potential for truly engaging multi-device functionality for the company who controls not only your console but your high-powered smartphone, PC and tablet.

In the end, it's control over its own future that Sony so desperately needed: the flexibility to react to the market and rivals by itself, to develop devices it finally considers truly worthy of its coveted branding, and most importantly control over the speed at which it can act. Buying up Sony Ericsson isn't the be-all and end-all of this story - in fact it's just the start of it - but if Sony can deliver on its ambitious "four-screen strategy" of phones, tablets, computers and TVs it could well make this a two horse race between it and Apple.


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