Having initially opened discussions about a partnership arrangement, Sony Ericsson is now actively considering acquiring a majority holding in the Indian-based cell phone manufacturer, Spice Mobile, for US$165 million. Spice Mobile ships around 200,000 handsets per month to Indian resellers, while Sony Ericsson delivers around twice this volume into the country. If the negotiations are successful, then the combined volumes would lift Sony Ericsson into the number two position in India--overtaking Samsung, but still far behind Nokia which is thought to ship around three million handsets a month.
Sony Ericsson has been suffering financially in recent quarters as margins on its predominantly high-end cell phones come under pressure. This move to acquire a low-end handset maker has been suggested by market analysts as a necessary move if the company is to improve overall profit margin based upon shipment volumes.
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