The Sonyericsson Alliance Essay
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In 2001, the mobile phone terminal market world was shaken by the announcement of the agreement between two « giants » of their respective worlds. On one side the telecommunication reference Ericsson, on the other the entertainment and communications company Sony. As the result of the strategic alliance, an agreement focused on their respective mobile phone terminals businesses bringing to life a new joint venture aiming to gain consistent market shares during the next five years of operations. In this analysis I will start from an introduction of the respective companies, a short overview of their market positioning and a brief historical overview of the birth of their joint venture.
Further on I will use the tools taken from (Jolly, 2001) to analyze the conditions and strategic management (steering) of this alliance.
1.1 About the partners
Ericsson, a Swedish based company, is the world-leading supplier in telecommunications systems with the largest customer base, including the world’s top 10 operators. The company provides total solutions covering the whole range, from systems and applications to mobile phones and other communications tools.
Ericsson has been active worldwide for over 1 century and today operates in more than 140 countries, with 95,000 employees based in 24 countries. Annual investments in technical development average 15 percent of sales. These investments contribute to Ericsson’s leadership in mobile infrastructure and mobile Internet, with nearly twice the size of the closest competitor. Four out of every 10 mobile calls are handled by Ericsson equipment. Ericsson has a strong focus on R&D and has filed 1,300 patent applications filed during 2000. Ericsson has set several standards to the mobile communication market, like CDMA2000, WCDMA or Bluetooth technology (see Appendix 1). Ericsson is thus the world leader in broadband technology.2/2
Ericsson supplies operators and service providers around the world with end-to-end solutions in mobile and broadband Internet. Ericsson supplies solutions for all existing mobile systems, including future 3G mobile systems, as well as broadband multi-service networks and broadband access. The solutions include network infrastructure, access equipment and terminals, application enablers and global services to support both business and private communications. (For details see : www.ericsson.com) Ericsson achieved Net sales of 31 bUSD in 2001, but achieved a negative Net Income of -2.8 bUSD. (Financial Report 2001, Ericsson)
Founded in 1946 as Tokyo Tsushin Kenkyujo (Tokyo Telecommunications Laboratory) by Mr. Ibuka , Sony has become the world-leading manufacturer of audio, video, games, communications and information technology products for personal and professional market. Sony has set several standards to the consumer electronics market and driven technology development (see Table 1).