Sony Ericsson's Mobile Music Strategy

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Case Details:

Case Code : BSTR215
Case Length : 19 Pages
Pages Period : 2001-2006
Organization : Sony Ericsson Mobile Communications AB
Pub Date : 2006
Teaching Note :Not Available
Countries : Europe, Asia
Industry : Mobile Phone

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Analysts pointed out that Sony Ericsson's mobile music strategy had once again demonstrated how innovation and the ability to understand customer needs were key success factors. Investors were also pleased to see the company leveraging on the synergies of the joint venture.

Background Note

Sony Ericsson was established in 2001 as a joint venture between Telefonaktiebolaget LM Ericsson (Ericsson), Sweden, and Sony Corporation (Sony), Japan, with both partners having 50% ownership in the company. Ericsson, a leading provider of telecommunications equipment and related services to mobile and fixed network operators globally, was established in 1876 and its headquarters were in Stockholm, Sweden.

The company was present in 140 countries and it was estimated that 40 percent of all mobile calls were made through systems supplied by Ericsson. Sony was established in 1946 in Tokyo, Japan, by Masaru Ibuka and Akio Morita.

The company's lines of business were electronics (audio, video, and information technology products & components), video gaming consoles, entertainment (motion pictures and music), and financial services (insurance and banking).

The world's second largest consumer electronics company, Sony was known for several innovative products like the iconic 'Walkman', the popular 'Playstation'⁷ gaming console, and 'Aibo',⁸ the robot dog. Prior to the joint venture, both Ericsson and Sony were making losses in their respective mobile phone businesses. Shareholders of Ericsson demanded a sell-off of the loss making mobile business in 2001 when it made a loss of more than US$ 1 billion in the final quarter of 2000 and US$ 558 million in the first quarter of 2001. However, instead of exiting the business, Ericsson's board decided to form a joint venture with Sony. The decision was rated as the 5th best management decision in 2001 by Sunday Business⁹...

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7] Playstation is the name of the video game console from Sony. It is an electronic machine designed to play video games. Sony started selling Playstaion in the mid-1990s and by June 2005, it had shipped around 103 million units worldwide.

8] Aibo was the name of a robotic pet dog that was designed, manufactured, and sold by Sony. Aibo could recognize people's faces, move about, and show emotions just like a normal dog. On January 26, 2006, Sony announced that it would stop production of Aibo as a result of its restructuring initiatives.

9] Sunday Business, published from Ireland, was a general newspaper with emphasis on financial and business news.