Watch Out For Sony

It seems that the year 2011 is destined to give surprises, for good of course, to the mobile devices ecosystem with some game-changing mergers and acquisitions. First, Nokia surprised everyone early this year when it joined hands with software giant Microsoft to jointly develop next generation mobile devices. Both the sinking ships in their respective business categories-Microsoft in mobile OS and Nokia in mobile phones-partnered to revive each other and to bring back their lost glories. And yes, the partnership has started showing some positive results. Second and most probably the biggest surprise was Google's acquisition of Motorola's mobility division. The US based telecom giant's devices business unit has been struggling for the last few years to cope up with the pace that the handset business is moving globally. Once a pioneer and leader in the industry, it now stands nowhere when compared to Apple, Samsung, Nokia, HTC, or even BlackBerry. With Google's acquisition and looking at the strengths of the merging parties, industry analysts expect a major shake-up in the global mobile devices ecosystem in the coming time. The search engine giant's mobile OS Android has been hugely successful from the word go and its acceptance among the users and the vendors alike has been growing phenomenally and Motorola has been a pioneer in the handset business with plethora of innovations and an array of patents. The future for both the companies, though they are one now, looks quite amazing.

Third and perhaps the most surprising is the recent merger of Sony Ericsson with the Japanese electronics behemoth Sony. The Japanese company acquired 50% stake in Sony Ericsson which was earlier a 50-50 JV between Sony and Swedish telecom gear maker Ericsson. Now, Sony gets the entire control of the handset company.

Sony Ericsson was formed in 2001 as a merger of the unprofitable handset operations from Ericsson and Sony and has contributed some €500 mn to Ericsson's profit. While the Swedish-Japanese hybrid enjoyed initial success with its line of Walkman-branded music handsets and cybershot camera phones, it has struggled to build significant market share world-wide. Like rivals such as Motorola Mobility Holdings Inc and Nokia Corp, Sony Ericsson has recently struggled to compete with Apple in the fast growing smartphone market.

In a management shake-up 2 years ago, Sony Ericsson appointed Nordberg as the CEO. It also decided to drop Symbian as its operating system introducing a smartphone strategy using Google Inc's Android platform. That move saw the company return to profitability, despite a decline in the market share.

According to the research firm Gartner, Sony Ericsson's global market share was 1.7% in the second quarter this year, down from 3% a year earlier.

This merger is poised to shake up the mobile device industry and has the potential to give existing players in the smartphone area like Apple, Nokia, Samsung, etc, a run for their money. Among numerous reasons to answer how, these 2 factors stand out. One, no one has considered Sony as a competitor and Sony Ericsson was no more in competition; second, Sony has all the elements pre-existing in its legacy to be one of the toughest contenders in the mobile devices ecosystem. Its leadership position in hardware design, software, audio, camera, gaming, and experience in almost all kind of communication gadget manufacturing could give Sony more than required confidence to be a serious player in the ever-increasing mobile business space in the long run. Let's analyze these factors one by one.

Hardware Design

It's beyond doubt that Sony can make some impressive hardware for personal communication devices. The Sony Vaio range of laptops are perhaps next to only Apple in terms of design, look, and feel. Its Vaio Z, for example, is one of the best designed laptops available in the market now. With a carbon fiber and metal chassis and some great design makes the laptop stand out in the crowd. And mind you, Sony design is certainly not limited to laptops.

On providing an audio device inbuilt with a mobile phone, the industry would never forget that it's Sony that had invented the portable audio market with its range of Walkmans. Sony Walkman was perhaps the first true portable and pocketable music system anyone would have used. Only after a decade or more, Apple came with iPod and changed the game forever. Though it was late to respond to the iPod in any serious capacity, the capability of Sony can never be underestimated. The current generation of Sony Walkman series with the s-master digital amplifier are really top notch and delivers sound quality that beats basically everything else out there. Sony also manufactures some incredible headphones and it can bundle those with its mobile phone the way HTC bundles beats headphones. So, we can start to imagine, Sony building a great looking mobile with great audio quality and great bundled headphones.

With Sony Ericsson's Xperia Play gaming centric mobile phone experience, without a second thought, we can imagine of a great gaming device. Now, top it up with Sony's PlayStation experience and imagine a phone of that caliber. We are perhaps looking at the best gaming device in the horizon and its unthinkable why Sony would not do that. I think we all know why; we went from a feature phone based company where Sony and Ericsson were bringing equal parts to the table and moved to a smartphone company where Sony had a lot more to offer. PlayStation Suite on Android is currently pretty empty. A pure Sony device with a chip such as Nvidia Tegra 3 could offer PlayStation Vita style performance.

Sony has great OLED capabilities that they use in the current generation Walkmans and PlayStations. They too have the Bravia engine that has got some rave reviews for its performance in Sony Ericsson Xperia Arc. One more important thing to consider is that Sony makes perhaps the best mobile sensors in the world, the Exmor sensors. So, now we have a great looking, Walkman enabled, PlayStation capable, OLED phone with a killer camera.

Software and Content

When Sony and Ericsson joined hands 10 year ago, they used to bring feature phones and as the industry evolved to a smartphone driven market, Sony Ericsson did not stay much away. It dumped Symbian and now Sony is pretty experienced with using Android by itself. The Sony tablets are honeycomb and their new Walkman range is based on Android too.

Finally, last but not the least, we have the Sony content. Sony has unlimited music and video and they also own a massive movie studio. It would not be tough for Sony to aggregate content, both audio and video, and come up with something like Apple's iTunes. Plus, Android market is always open for its customers. It would be interesting to see how they come up with integrating content to their devices.

However counting potentials is one thing and leveraging those potentials on to an execution plan is another. The competition in the market place is fierce and Sony has a long way to go to pull off the ultimate phone but they have the potential. Sony seem to be doing more sensible things everyday as they are integrating their company better than ever and this purchase of Ericsson's share of the Sony Ericsson venture is only going to strengthen things further.