Founded in Tokyo in 1946, Sony was the brainchild of two men.

Engineer Masaru Ibuka and physicist Akio Morita invested the equivalent of Yen 190,000 to start a company with just 20 employees. The rest is history! Birth of a Global Brand Behind the phenomenal success of Sony are two men. Masaru Ibuka was an engineer and Akio Morita a physicist when they decided to create a company repairing and building electrical equipment. On May 7, 1946, Tokyo Tsushin Kogyo K.K. (Tokyo Telecommunications Engineering Corporation), also known as Totsuko, was established in Tokyo. The new company had no machinery and little scientific equipment. Possessing only their own intelligence and engineering expertise, Ibuka and Morita set about to create new markets. The company was established as Tokyo Tsushin Kogyo Corporation in May 1946. (The company name was changed to Sony Corporatndia Ericsson received its first order for a manual switch from the Indian government in 1903. At this time, India was a British colony, and Ericsson had very successful sales in Great Britain. It was thus appropriate that the sales office in Calcutta was opened by Ericsson's British company. For a long time, this was one of just two sales offices in all of Asia. The other was located in Indonesia. Not until the mid-1960s were sales offices opened in other Asian countries, such as Thailand and Malaysia. In the early 1970s, when India had been an independent country for some time, a jointly owned production company, Ericsson India Pty Ltd, was formed that sold manual switching equipment to customers that included the Indian defense authorities. The current Ericsson company, the wholly owned Ericsson Communications, was formed in 1996. At this time, the mobile telephone market was being rapidly deregulated, and many foreign experts were employed to enable the company to meet the competition. Over time, these employees left the company and were replaced by local workers, since the level of technical education in India is high. Ericsson has enjoyed considerable success with AXE in India. It is the country's most widely used digital switching system. Since 1993, AXE

systems for the Indian market have been assembled in a plant in Kukas, Rajasthan. Capacity is 600,000 lines a year. Ericsson signed the first GSM contracts with India in 1994 for networks in the three largest cities of Delhi, Bombay and Madras. Ericsson has supplied about half of some 40 Indian GSM networks. The country has never had an analog mobile telephone system, but instead started out with the digital GSM system. By the turn of the century, Ericsson's operations in India included 700 employees at 13 locations throughout the country and with head offices in Delhi. Business operations comprise sales and marketing of infrastructure, installation and service, customer training, software development and distribution of mobile phones. Telephone penetration in the country, which has a population of one billion, is less than two percent, as measured in the number of lines. In Sweden, telephone penetration is nearly 80 percent. This says something about the potential for Ericsson to expand its business in India. http://www.ericssonhistory.com/templates/Ericsson/Article.aspx? id=2068&ArticleID=1341&CatID=365&epslanguage=EN

ion in January 1958)

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History

On the Line On The Line brings Ericssons rich history of innovation to life told by those who helped change the way we communicate. Their story may appear to revolve around technology and engineering, but their impact goes much further, transforming lives for the better. On The Line is not about products or services. Instead it highlights Ericssons personality, its peoples values - and the moments where sparks of imagination and innovation changed everything. The name itself is intended to reflect the risk that Ericsson people were willing to take, and also the more literal interpretation of communicating by phone. Ericssons contemporary innovators are building a Networked Society, standing upon the shoulders of giants. This is their story. About the Contributors to On The Line Our corporate story 187 Lars Magnus Ericsson opens telegraph repair workshop 6 188 First major contracts won in Norway, Russia and Sweden 1 190 1000 employees globally, SEK 4 million in sales and 50,000

Our corporate story 187 Lars Magnus Ericsson opens telegraph repair workshop 6 0 telephones produced 190 Sales office opens in US 2 190 First acquisition made in Mexico 5 1923 First automatic 500-point switches in service 1946 Foundation for research into television established 195 LM Ericsson telephone exchange supports world's first international 0 call 1977 First digital telephone exchange (AXE) installed 198 First GSM system order from Vodafone, UK 8 1991 AXE lines exceed 105 million in 11 countries, serving 34 million subscribers 200 Ericsson becomes world's leading supplier of 3G mobile systems 0 200 Ericsson conducts the first 3G call for Vodafone, UK 1 200 Ericsson wins biggest contracts to date to manage operator 3's networks 5 in Italy and the UK 200 Research center established in Silicon Valley, USA 8 200 Verizon and Ericsson collaborate to carry out first data call on 4G 9 network Our innovation story 187 Ericsson introduces telephones with single trumpet 8 1923 First automatic 500-point switches in service 1977 First digital telephone exchange (AXE) installed 198 First mobile system, NMT, inaugurated in Saudi Arabia 1 1991 First GSM phones in operation 1998 Ericsson introduces the AXD 301 ATM switch to converge voice and data 1999 Ericsson pushes for 3G and mobile internet

Our corporate story 187 Lars Magnus Ericsson opens telegraph repair workshop 6 200 Ericsson conducts the first 3G call for Vodafone, UK 1 200 High-speed broadband (WCDMA) roll out starts globally 3 200 Even faster mobile (HSDPA) broadband is introduced 5 200 Full-service broadband, where fixed and wireless networks converge, is 7 introduced 200 Ericsson pushes for 4G (LTE), the standard the company has helped to 8 form 200 Ericsson wins the IEC InfoVision Award for fiber and backhaul 9 solutions 200 Ericsson launched the worlds first live LTE network in Stockholm, 9 Sweden 201 New world record, 84Mbps HSPA technology was showcased by 0 Ericsson Case Overview Sony-Ericsson mobile phone joint venture dependent on technology transfer This case study provides an excellent example of why firms engage in technology transfer. It also provides practical evidence to illustrate the benefits of technology transfer. In April 2001 Ericsson, the Swedish telecommunications equipment group, and Sony of Japan established a joint venture in mobile phones. The venture, based in London, brought together the two companies' loss making handset businesses. The news was generally accepted as good for both companies. It would combine Sony's consumer products expertise with Ericsson's extensive knowledge of cell phone networks. Ericsson is the world's leading maker of wireless networks. It would give Ericsson access to Sony's multimedia technology, branding expertise and knowledge acquired from Japan's early start in 3rd generation cell phone technology. Sony would gain access to Ericssons telecommunications technology and its distribution. The two companies hoped to create a market leader to threaten the dominance of

Nokia of Finland within five years. In 2000 the two companies together shipped 50m or $7.2bn worth of mobile phones, giving them a 12 per cent market share and third position after Nokia of Finland and Motorola of the US. http://wps.pearsoned.co.uk/ema_uk_he_trott_innmgmt_4/87/22399/5734208 .cw/content/index.html

Cellular technology uses a principle called frequency reuse to greatly increase customers served. Lowpowered mobiles and radio equipment at each cell site permit the same radio frequencies to be reused indifferent cells, multiplying calling capacity without creating interference. This spectrum efficient methodcontrasts sharply with earlier mobile systems that used a high powered, centrally located transmitter, tocommunicate with high powered car mounted mobiles on a small number of frequencies, channels whichwere then monopolized and not re-used over a wide area.There is a requirement to have a large number of base stations in a city of any size to make cell phoneuse function conveniently. A typical large city can have hundreds of towers placed in certain regions tocover most of the areas completely. Central offices called the Mobile Telephone Switching Office (MTSO)handles all of the phone connections to the normal land-based phone system, and controls all of the basestations in the region. Each network operator, such as Vodaphone, 02, Virgin and Orange in the UK runsone (see Figure 1). Moving from cell to cell within a network All cell phones have special codes related to them. These codes are used to identify the phone's owner,phone, and the service provider that they use. Here is what happens when you use your mobile phone:When a person first turns on their phone, it listens for a System Identification Code (SID) on the controlchannel. This is a unique frequency that the phone and base station use to send signals to another aboutthings like call set-up and channel changing. If the phone cant find any control channels to listen to, thenits out of range and will display on the phone a "no service" message. When it receives the SID, thephone matches up to the SID programmed into the phone. If the SIDs match, the phone realizes that thecell it is corresponding with is part of its home system. The phone also transmits a registration request,along with the SID and the MTSO keeps track of your phone's location in a database -- this way it isknown what cell you are in when it

wants to ring your phone. The MTSO gets the call that is calling youand it tries to find you by looking in its system to see which cell you are in. The call is sent to you at thattime. You are now talking by two-way radio to a friend!As you travel and move near the end of your cell, your cell's base station sees that your signal strength isdiminishing. In the meantime, the base station in the cell you are moving closer to sees your phone'ssignal strength increasing. The two base stations coordinate with each other through the MTSO, and atsome point, your phone gets a signal on a control channel telling it to change frequencies. This hand off switches your phone to the new cell with out interruption to you and your call. As you travel, the signal ispassed from cell to cell. Inside a Cell Phone handset Cell phones are some of the most intricate devices people play with on a daily basis. Modern digital cellphones can process millions of calculations per second in order to compress and decompress the voicestream. The cell phone comprises the following key individual parts: A circuit board containing the brains of the phone An aerial Aliquid crystal display(LCD) A keyboard (similar to aTV remote control) Amicrophone Aspeaker Abattery The Circuit Board The circuit board is the heart of thesystem. The analog-to-digital anddigitalto-analog conversion chipstranslate the outgoing audio signalfrom analog to digital and theincoming signal from digital back toanalog. The digital signalprocessor (DSP) is a highlycustomized processor designed toperform signal-manipulationcalculations at high speed. Themicroprocessor handles all of thehousekeeping chores for thekeyboard and display, deals withcommand and control signalling withthe base station and alsocoordinates the rest of the functions on the board.TheROMandFlash memorychips provide storage for the phone'soperating systemand customisable features, such as the phone directory. Theradio frequency(RF)

and power section handles power management and recharging, and also deals with the hundreds of FM channels. Finally, the RF amplifiershandle signals travelling to and from the aerial.Thedisplayhas grown considerably in size as the number of features in cell phones have increased.Most current phones offer built-in phone directories, calculators music and games. And many of thephones incorporate some type of PDAor Web browser. Some phones store certain information, such asthe SID and MIN codes, in internal Flash memory, while others use external cards that are similar toSmart Media cards.Cell phones have such tiny speakers and microphones that it is incredible how well most of themreproduce sound. The battery, is used by the cell phone's internal clock chip. Technology transfer The increasing technological content of cell phones, as illustrated above, has forced many firms in theindustry to search for technology partners who can provide the additional technology required such asmulti-media, digital camera, games etc. For these firms to try to develop expertise in these areas wouldbe too expensive and too slow for the rapid technological changes that are occurring in the cell phonemarket. Indeed, the cell phone market is an excellent example of the increasing complexity of technologies and the increasing range of technologies found within products. This has led to a shorteningof product life-cycles within the cell phone market. Many users now change their handset after 18 months-2 years. In addition, companies are finding it increasingly difficult to sustain R&D capability over all areasof their business as the complexity of these areas increases. Internal R&D is increasingly focused on corecompetencies, while R&D in all other business activities is progressively covered by collaborations,partnerships and strategic alliances.Ericsson is the world leader in cell phone networks and has a long established reputation in themicroelectronics industry stretching back over fifty years. Hence, it has extensive knowledge andexpertise of cell phone technology. Sony on the other hand does not, but it does have an extensiveportfolio of other technologies that may be useful in 3 rd and 4 th generation cell phones. Some of Sonystechnology portfolio includes the following:

 HDTVs, Flat-panel Plasma and LCD WEGA TVs, FD Trinitron WEGA CRT televisions, CRTrear projection TVs, and Grand WEGA LCD rear projection televisions DVD-video players/recorders, VCRs, Super Audio CD players, and home theater-in-a-boxsystems Hi-Fi components (AV receivers), shelf systems and speakers Walkman personal stereos, MiniDisc Walkman players/recorders and personal digital musicplayers Handycam camcorders Cybershot and Mavica digital still cameras Memory Stick flash media VAIO desktop and notebook computers CLI handheld devices Video conferencing products Visual imaging products Professional digital photography systems E-communication and digital signage OEM Li-ion and li-polymer batteries Semiconductor devices, including Sigma RAM memory, ICs, CCD sensors, optical comm. ICs,GPS and cellular/PCs ICs New products emerge from Sony Ericsson In 2002, one year after its launch, Sony Ericsson unveiled its first six new handset models, including threewith colour screens and one with a built-in camera. At the time Nokia, the market leader, did not have acolour screen

phone on the market, although it was planning to launch a camera-phone by the middle of 2002. Sony Ericsson said it would launch its first 3G handset by the end of 2002. It also unveiled analliance with Sony's film business to provide games on its new colour screen phones, which would bebased on the films Men in Black and Charlie's Angels . Further new handset models were planned toutilise Sonys product design strengths. In 2002 the launch of next generation mobile services (so called3 rd generation), were being held up by the financial difficulties of many operators and technical delays inthe development of new handsets. The 3G phones were expected to drive demand for a wider range of applications on mobile phones.In 2003 Sony Ericsson announced disappointing end of year results. Its market share did not achieve 6per cent in 2002, compared with a 7 to 10 per cent target, forcing its owners to plough extra cash into thestartup after it failed to reach profitability as planned. The results placed Sony Ericsson 5 th in terms of market share. The company president, Katsumi Ihara admitted: "Last year wasn't a good year for Sony Ericsson, we expected a better business market at the beginning of the joint venture." But failure is not an option for 2003, he says. "Wecannot accept the fact that Sony Ericsson can continue to lose money. We need to turnaround the business." He points to three main causes of the poor performance; problems integrating teams from Sony and Ericsson market share losses in China strong competition in the US.The picture in 2003 was very different to the one painted in 2001 whenthe two firms got together. The product and brand skills of Sony andthe telecommunication and distribution skills of Ericsson were thoughtto be an ideal marriage. Competing with market leaders Nokia,Motorola and Samsung has proved extremely tough. And now other handset makers such as Alcatel and Sagem are beginning to deliver

new products into an already crowded market place. The signs are worrying for Sony Ericsson. Theremay be job losses ahead. Alcatel and Sagem have much lower market share figures than Sony Ericssonand yet they are both able to deliver profits. Without the success of its T68 handset, which it inheritedfrom the old Ericsson design team, market share would have been several percentage points lower. KurtHellstrm, former Ericsson chief executive and Sony Ericsson chairman, caused further controversy bysuggesting that the Swedish group could halt further investment in the joint venture if there was noevidence of a turn- round. The joint venture is a long way short of becoming the market leader as wassuggested at its launch in 2001 and Sony Ericsson desperately needs to show that it can manufacture abroad range of compelling phones as it tries to revitalise its flagging market share.In 2003 there were signs of a change of fortunes: market share in China climbed on the back of sales of its low-end T100 phone and its upmarket colour screen T68. Also, newly launched handsets such as itstop-of-the-range P800 phone, sold well in early trials. Combined with the launch of "more cute and sexy"models including camera phones "in all price segments". In addition to new products Sony Ericsson islooking to trim costs by moving more handset production to China and cutting other operational expenses. Good news at last In 2003 the Sony and Ericsson joint venture reported its first quarterly profit since its inception in 2001.Sony Ericsson's sales rose to 1.3bn. This improvement was particularly due to high demand for its newcamera phones in Japan and to the success of its T610 series. In 2004 it launched five new mobilephones with in-built cameras to take advantage of the growing demand for sending and receiving picturesover mobile handsets. Its Z200 and Z600 Clamshell handsets also proved extremely popular. It is

alsoplanning to launch a series of very low-cost, entry-level phones for markets such India, China and Brazil.Sony Ericsson is planning to take more of its mobile phone manufacturing plants under its own control tosmooth out supply chain problems and help it take market share. It is in talks to raise its stake in BeijingEricsson Putian Mobile Communication, a manufacturing facility outside Beijing, and could consider other similar deals in the future. The company is keen to avoid a repeat of 2002, when it failed to take fulladvantage of booming pre-Christmas demand for phones because of component shortages, and lostmarket share. However, the decision to bring more factories under direct control is a reversal of parentcompany Ericsson's policy - in 2001 just before setting up the joint venture - of outsourcing all its handsetmanufacturing to companies such as Flextronics. About 30 per cent of Sony Ericsson phones areproduced in factories controlled by the company while 70 per cent of production is ou
Sony is to pay Ericsson more than 1bn to gain control of the companies' 50-50 joint venture for mobile phones and tablets, Sony Ericsson.

Sony is to pay Ericsson more than $1bn to take over the Sony Ericsson brand. Photo credit: Stephen Shankland/CNET News The decade-old joint venture will become a wholly owned Sony subsidiary and will be "integrated into Sony's broad platform of network-connected consumer electronics products", the companies said in a statement on Thursday. The 1.05bn (919m) cash deal, expected to close in January, lays out a broad crosslicensing agreement between Sony and Ericsson. It also gives Sony ownership of five "essential" patent families that belonged to Ericsson, but did not specify which patents are involved.

"This acquisition makes sense for Sony and Ericsson, and it will make the difference for consumers, who want to connect with content wherever they are, whenever they want," Sony chief Howard Stringer said in the statement. "With a vibrant smartphone business and by gaining access to important strategic IP, notably a broad cross-licence agreement, our four-screen strategy is in place." Sony's four-screen strategy entails smartphones Sony Ericsson said this month that it would next year stop making any other kind of phone as well as laptops, tablets and TV sets. Stringer said the buyout means Sony can allow those devices to connect with each other more effectively and to interoperate with the PlayStation Network and Sony Entertainment Network. "We can help people enjoy all our content from movies to music and games through our many devices, in a way no one else can," Stringer noted. Sony Ericsson's latest devices include the Xperia Arc S smartphone, and the Sony P and S tablets, all of which run Google's Android OS.

'Perfect sense'