At a higher level, companies need to consider where to focus their manufacturing efforts. Take the recent announcement that Sony will be selling its battery business to Murata Manufacturing, for example.
Although the scope of the transfer has not been finalized, the companies expect it to include the battery business operated by Sony Energy Devices Corporation, a wholly owned Sony subsidiary in Japan as well as Sony’s battery manufacturing operations in China and Singapore. Assets and personnel assigned to the battery business’ sales and R&D sites will also be included.
However, Sony-branded USB batteries, alkaline batteries, button and coin batteries and mobile projectors are not expected to be included in the transfer.
Why is Sony Selling its Battery Business?
The company has been in the battery business since 1975 and was the first to commercialize lithium-ion batteries in 1991. However, Sony also pointed out significant changes in the competitive environment of the lithium-ion polymer battery business for smartphones. This could be a reference to the decline in smartphone shipments in Q1 2016, a historic first for the global smartphone market.
Meanwhile, Murata emphasized its efforts to “enhance its competitive edge in the communications market” in its joint announcement with Sony. Murata also stated that it intends to expand into the automotive, healthcare and energy markets, suggesting that the company is banking on the growing demand for lithium driven by the demand for electric vehicle batteries.
As a result, we have a classic example of a deal between manufacturers motivated by disparate market strategies.
For Sony, unloading the battery business could be a way to cut its losses and focus on other emerging technologies. Playstation VR, Sony’s entry into the virtual reality market, is slated for October of this year and the company also recently announced that it would be re-entering the consumer robotics market. For Murata, acquiring Sony’s technology, research and sales is an obvious win for a company seeking to expanding its energy business.
So if this deal is a win-win for both companies right now, the lingering question is this: Who will win bigger in the long run? Comment below.