Sony of Japan is holding talks with Sweden’s L.M. Ericsson on merging their handset divisions, hinting at what some analysts perceive as a possible trend in the industry.
Both companies recoiled from revealing details on the talks, a deal from which would promise to leverage the mutual strengths of two companies, whose handset units continue to ail.
“We are talking with Sony, but nothing is decided yet,” said Pia Gideon, an Ericsson spokeswoman.
The news also drew denials of a possible merger between the handset divisions of Japanese electronics maker Mitsubishi Electric Corp. and Motorola Inc.
In a statement, Mitsubishi said: “Mitsubishi Electric has had negotiations with Motorola in the past, but we are not now holding any specific negotiations.”
The trend of alliances falls in line with the recent deal between Toshiba Corp. and German telecom equipment maker Siemens AG. According to that agreement, Toshiba and Siemens will together develop phones with the power to send and receive video.
“So long as the market experiences a slowdown, I won’t be surprised if we see more cooperation,” remarked Sylvia Panayi, analyst with the Strategis Group.
NEC Corp., Japan’s second-largest phone maker, said it is eyeing a U.S. chipmaker to collaborate on producing 2.5-generation mobile phones in Europe. Some market watchers think the partner may be Agere Inc., a subsidiary of Lucent Technologies Inc., although NEC has declined any disclosure.
If the talks between Sony and Ericsson succeed, analysts believe the alliance will allow Ericsson, which has a 10-percent worldwide market share, and Sony, which has a mere 2-percent market share, to have an advantage in the multimedia market expected to dawn in a couple of years.
Ericsson’s phones, which were vibrant in the market a few years ago, are now in disfavor because of their poor design, according to some analysts. Slow time to market and an inability to foresee the market’s movement to low-end phones-an imperfection that likewise has assailed Motorola’s phone unit-also have hurt the company.
Sony’s phones, on the other hand, are dainty, but not very visible because of Sony’s limited market share, although its Japanese market share is 10 percent.
Sony said in a statement: “As 3G is rolled out, if you want to maintain your presence in the market, cooperation with a company like Ericsson can provide an advantage.”
Although some analysts think that the alliance of two big players like Ericsson and Sony could lead to the collision of egos, Strategis Group’s Panayi thinks that Sony will leverage its electronics experience and products to provide more innovative products like gaming and entertainment, including music and video offerings.
Ericsson’s phone division has been ailing and the company recently outsourced production to Flextronics Inc.
