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Sony in talks to buy out phone partner Ericsson

Sony is in talks to buy out partner company Ericsson's stake in their mobile phone joint venture Sony-Ericsson, in a bid to take on rivals such as the Apple iPhone and Android market leader Samsung, after a string of disappointing smartphone launches.

Yoshiharu Izumi, an analyst at JP Morgan in Tokyo, said the deal could be worth more than $1.3 billion, depending on what arrangements the two companies make over the use of Ericsson's telecoms patents.

"Up to now, Sony's products and network services have all been separate. Unifying them would be positive," Izumi said. "If it can leverage its games and other network services I think it can lift its share."

The companies' joint venture began in 2001, and achieved success by porting acclaimed Sony brands such as Walkman and Cybershot into music and camera phones. But after losing out first to Nokia in the budget market, Sony saw a great deal of its market share lost to Apple at the premium end, with the launch of the iPhone. Sony-Ericsson now ranks ninth globally among mobile makers, having dropped from fourth just a few years ago.

Recent Sony-Ericsson releases have suffered from a lack of coordination between the two companies' assets. Handsets such as the Xperia Play (reviewed here), which was intended to capitalise on Sony's PlayStation online gaming network, now sells for as little as £175 - down from a launch price of around £440.

Sony is clearly hoping that bringing smartphone development under one roof will help to boost sales by more closely integrating handsets with the company's online services.

Ericsson and Sony have declined to comment on the talks.