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Two decades ago, an infrastructure company like Ericsson made both handsets and switches.  Made sense back then.  The JV was so quiet I had completely forgotten Sony and Ericsson had one.

The business has changed over the years.  Handsets have always been a low margin high volume business.  The content component today has been able to make Apple profitable in the handset business.  However, many handset makers are just in the process of catching up with the late Steve Job’s content vision.  Because of this Johnny-Come-Lately scenario, most handset manufacturers are experiencing even greater pressures to find ways of increasing margins.  Ericsson left the handset business about a decade ago.  Anyone remember that in the 1990s that Ericsson was one of the global market leaders of handsets; way before Nokia?

To keep a joint venture going when both parties are not benefiting is not wise.  Sony’s buyout of Ericsson’s share just makes good sense.

Handsets today are entering an unusual period.  The handsets are transitioning into full blown computing devices that could replace laptops or even tablets for the younger generation (10 years to 20 years old).

As it stands now the tablets are beginning to look like the old AT&T picture phone the industry had been imagining 40 plus years ago.

The current generation of youths find the small form factor of a handset acceptable.  My own kids find the larger 17 inch screen ideal for two things – writing their school papers and playing these video games.  Their music and entertainment videos are on their smartphones.

The handset makers today are moving towards meeting the needs of two populations: the older generation who have money today and the younger generations that are the upcoming generations that will replace my generation.

Today, the smartphone has replaced the television and the computer for teenagers.  Companies like Sony will need to get into content distribution in order to find their profit margins.  Despite the changes over the years, the handset itself has already been commoditized.  The goal for all handset makers is to get into content.  I have been saying that for the last 5 years; and I still believe that.