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Sony Ericsson's fourth quarter was disappointing even in the current downturn, and has reawakened speculation that the joint venture will fall apart over differences between its parents. One key dispute, according to Mobile Today and many Japanese reports, is over the Sony PlayStation Portable (PSP) brand. Although a PSP phone has been widely expected for a year or more, and is seen by many as critical to a Sony Ericsson revival, apparently the Japanese giant is refusing to license the brand to its handset venture, despite the success of similar agreements for the Walkman and Cybershot monikers.

Talk of this falling out comes on top of widespread reports last fall that Sony was looking to break with its Swedish partner. Sony's CEO Howard Stringer sparked off the rumors in early September, with comments that appeared to be challenging Ericsson to increase its efforts or leave the party. He Stringer indicated in an interview with German newspaper Die Welt that Ericsson took a lion's share of responsibility for the difficult year SE was having. "It's certainly been a difficult year, but buying out a partner is never an easy thing," he said. "We have to work together again as we did two years ago, or the joint venture will have to find its own solution."

Now Mobile Today's "sources close to the matter" say Sony plans to test the waters of being a mobile player in its own right, by creating a PlayStation branded phone independently of SE, which could be the prelude to break-up with Ericsson (though financially, that might have to wait for better economic times, since the Swedish firm will hardly be keen to exit a JV into which it has put almost eight years of resources, during a time of rockbottom values).

Sony is apparently arguing that it will only permit the use of the PSP brand if the phone experience matches that of the current gaming devices. "In the past, we have been keen that our product proposition lives up to brand promise, and we feel at the moment the technical specs are not high enough to put such a prestigious brand on a phone," a Sony Ericsson spokeswoman said.

Carolina Milanesi, an analyst at Gartner Group, rubbed salt in SE's wounds, issuing a note that said: "We continue to believe that maintaining the third position in the worldwide ranking achieved in the third quarter of 2008 will be very difficult for Sony Ericsson."

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