A factory fire in New Mexico helped push Ericsson into Sony's arms
On March 17, 2000, a fire contaminated a Philips chip plant in New Mexico. Nokia quickly found other suppliers. Ericsson, which bought all its phone chips from that one site, could not, and months of shortages deepened its losses. Within a year and a half it had merged its handset business with Sony's.
Ericsson had built mobile phones since the 1980s, starting with the Hotline Pocket in 1987, and was then the third-largest handset maker behind Nokia and Motorola. But it was bleeding money, struggling to make cheap or stylish phones, and the chip shortage made things worse. Sony, meanwhile, held less than 1 percent of the world market. The two finalised a joint venture in August 2001, with Ericsson contributing most of its mobile unit and Sony its entire handset division, starting with 3,500 staff, headquarters in London and design in Lund, Sweden.
The bet was that phones would become cameras and media players. Early models with built-in cameras and colour screens were novelties, and although losses grew at first, the company turned its first profit in 2003. Walkman-branded music phones and Cyber-shot camera phones followed, and camera resolution climbed rapidly. By 2007 Sony Ericsson held 9 percent of global sales, fourth among vendors. It even paid $88 million over six years to name the women's tennis tour after itself.
The iPhone and then Android changed everything. In the first quarter of 2008 South Korea's LG overtook Sony Ericsson; profits fell 43 percent, then crashed 97 percent in the next quarter. From about 8,200 employees in mid-2008, it shed around 5,000 by the end of 2009 and closed research centres in Britain, the United States, India and Sweden. By 2010 it had moved entirely to Android.
Sony agreed on October 27, 2011 to buy out Ericsson for €1.05 billion, completing the deal on February 16, 2012. The renamed Sony Mobile moved to Tokyo and sold only Xperia smartphones. In late 2015 it earned more per handset than any major Android rival, yet by 2017 its global share was below 1 percent, and in 2021 it was folded into Sony itself.
Source: Sony Mobile
