Sony Begins Entertainment Push After Sony Ericsson Buyout

The electronics giant plans to merge its newly acquired mobile division into its electronics division, bolstering its product line-up and helping the company better compete in the smartphone market. The deal also fuels Sony's migration from low-end phones and puts a renewed emphasis on cutting-edge smartphones like its Xperia handsets.

The buyout figures into Sony CEO Kazuo Hirai's larger strategy to focus on producing high-end devices with unique capabilities that capitalize on Sony's strengths.

Hirai intends to "fully leverage Sony's diverse electronics product portfolio, in conjunction with our rich entertainment assets and growing array of networked services, to engage with our customers around the world in new and exciting ways", a goal the Ericsson deal will help reach by consolidating mobile operations and giving Sony full control over them.

The acquisition arrives at a critical time for Sony, as the company has weathered disappointing sales and a leadership overhaul. The Japanese company is struggling to stay afloat in a competitive market, and the deal confers vital advantages, like cross-licensing and integration opportunities.

Sony is already pursuing aspects of its strategy. This week, Sony granted PlayStation Certification to HTC, allowing the company's devices access to the cross-platform PlayStation Suite. Expanding this gaming suite, which was previously exclusive to Sony's smartphones, to some of the world's largest Android manufacturers is another way the company is getting its software into the hands of more customers and expanding its targeted gaming audience.

At the same time, Sony's decision to license its PlayStation Suite will likely bring the company revenue, which it can use to finance its higher-end smartphones. The company is fine-tuning these higher-end devices, and the licenses are expected to cultivate a market which Sony can capture with its own devices.

The Ericsson deal builds on this strategy since Sony can now employ its cloud technology and bring its gaming and entertainment holdings onto its handsets without working out deals with Ericsson.

Sony paid $1.29 billion for control of the company, which includes comprehensive cross-licensing agreements, and intends to rename the mobile company Sony Mobile Communications. The Ericsson deal was a necessary expense for Sony, as Hirai's plan hinges on substantial strategy shifts, and some of these changes may only be possible with the buyout.