In October 2001, Sony and Ericsson formed a 50/50 joint venture that, for a few years, produced some of the most desirable phones on Earth. Then the smartphone era arrived, and the company that had mastered cameras and music never quite boarded the train.

Ericsson was a telecom aristocrat. It had invented Bluetooth, built mobile networks, and for years sold tens of millions of handsets. Then Nokia ate its lunch. A 2000 fire at a key chip supplier made a bad situation worse. Ericsson’s handset business was losing money and share. Sony had the opposite problem. It owned Walkman, Cyber-shot and PlayStation, but its phones were stylish and almost invisible outside Japan. Earlier phone partnerships had failed. Sony wanted a serious global handset business; Ericsson needed consumer design and brand heat.

Talks began in 2000. A letter of intent was signed in April 2001. On September 11, 2001, both boards approved the deal. Operations started October 1, with headquarters in London and a legal base in Lund, Sweden. Ericsson contributed most of its handset organization; Sony contributed its entire phone division. Ownership and the board were split evenly. About 3,500 people launched the company. The pitch was clean: Ericsson’s radio expertise plus Sony’s industrial design, cameras and music. The early years were messy. Cultures collided. Products slipped. The venture lost hundreds of millions and needed extra cash from its parents. Ericsson even threatened to walk.

The phones that made it cool

The first recognizable Sony Ericsson was the T68i in 2002, essentially an Ericsson T68 with a color screen and Bluetooth — still rare then. The real turning point was the T610 in 2003, the first phone designed from scratch by the joint venture: anodized aluminum, Scandinavian curves, a built-in camera, Bluetooth, a 65,000-color screen and QuickShare photo messaging. It looked expensive without being gaudy. It became the breakthrough product and helped the company post its first profit late that year.

Then came the two lines that defined the brand. Walkman phones put Sony’s most sacred name on a handset. The W800, launched in 2005, had a dedicated Walkman button, a music-only mode, long playback and the orange-and-black look collectors still recognize. The W800 and W810 family sold on the order of 15 million units. For a few years, if you wanted a phone that was also a serious music player, this was the object of desire — until the iPhone made “phone plus iPod” the default.

Cyber-shot phones did the same for cameras. The K750 in 2005 put a 2-megapixel camera with autofocus into a compact candybar and made cameraphones respectable. Later K800 and K850 models added xenon flash. The K750 also sold around 15 million. The C905 in 2008 was billed as the world’s first 8.1-megapixel phone. Sony Ericsson really did lead the “phone as camera” race for a stretch.

There was a third, more interesting thread: the P-series. The P800 in 2002 and especially the P900 in 2003 ran UIQ, a touch-and-stylus flavor of Symbian. Flip down the keypad and you had a PDA-sized screen. They were among the first phones that felt like pocket computers rather than feature phones with extra buttons. They never sold like Walkmans, but they showed Sony Ericsson understood “smartphone” years before the iPhone. What it never built was the software ecosystem around those devices.

By 2006 and 2007 the formula was working. Walkman and Cyber-shot branding, mid-range volume in Asia and Latin America, premium design in Europe. Full-year 2007 shipments hit 103.4 million units and about 9 percent of the world market. Pretax profit for 2006 had already more than doubled to €1.3 billion. The company talked openly about passing Samsung for third place behind Nokia and Motorola. That was the peak.

What they missed

In January 2007 Steve Jobs announced the iPhone. Sony Ericsson, like Nokia, Motorola and BlackBerry, treated it as a curiosity. Its bet remained hardware differentiation — better cameras, better audio, better industrial design — on platforms it already knew: proprietary feature-phone software, UIQ and Symbian, and later a brief Windows Mobile detour.

The problems stacked. Software was never the product. Feature phones could win on a xenon flash or a Walkman key. Smartphones win on the operating system, the app store and the update cadence. Sony Ericsson’s Symbian and UIQ apps were thin. Customizing them was painful. The company kept shipping Symbian devices, including the Vivaz in 2010, even after Android had become the obvious second platform.

Android arrived late and messy. HTC’s G1 shipped in late 2008. Sony Ericsson’s first Android phone, the Xperia X10, arrived in 2010 — and launched on an old version of Android with a heavy “Timescape” skin. The earlier Xperia X1 in 2008 had been Windows Mobile. Too many platforms, too little focus. Meanwhile the brands stopped being unique. By 2008 every midrange phone had a camera and a music player. Walkman and Cyber-shot were no longer a reason to pay extra. Apple had also stolen the “cool portable music” story Sony invented.

The 2008 financial crisis amplified everything. Mid-2008 profit collapsed about 97 percent year on year. Job cuts followed. LG overtook Sony Ericsson. Shipments fell from 103 million in 2007 to 96.6 million in 2008, 57 million in 2009 and the low 40s in 2010, then into the teens. The joint venture itself was a drag. Sony would license Walkman and Cyber-shot but reportedly refused PlayStation branding for a gaming phone unless Sony built it alone. The parents disagreed on how much to invest versus how fast to extract profit. Decision speed suffered at the exact moment the market was being rewritten.

Sony Ericsson did make good late hardware. The Xperia Arc in 2011 was thin, handsome and had a strong camera. It was not enough. Samsung’s Galaxy S II landed in the same window and defined Android for the next several years.

The buyout

On October 27, 2011, Sony announced it would buy Ericsson’s 50 percent for €1.05 billion, about $1.47 billion. The deal closed in February 2012. The company became Sony Mobile Communications. The dual brand was gone by mid-2012. Ericsson exited handsets for good and went back to networks. Sony kept making Xperia phones — some of them excellent, especially on cameras and displays — but never again as a volume player. The division was later folded into Sony proper.

Sony Ericsson is a clean case of a company that won the last war. It understood industrial design, cameras and music better than almost anyone in 2005. It even built early smartphones. What it did not do was treat software, services and a single coherent platform as the product.

The irony is sharp. Steve Jobs had spent years studying Sony. The Walkman was the template for the iPod. Some early iPhone design work inside Apple even used Sony as a visual reference. Sony Ericsson had the ingredients — brand, design, imaging, audio — and still lost the category it helped invent. The orange W800 and the K750 with its shutter-button feel like artifacts from a different industry: phones as beautiful objects with one killer extra feature. The iPhone turned the phone into a computer. Sony Ericsson never fully made that mental switch. By the time it did, the market had already chosen its winners.

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