During 1998 the company ran into problems in the completion of their next flagship phone model, Ericsson T28. It was initially planned for introduction in time for the Christmas season of 1998, but the launch was delayed until the autumn of 1999. In March 2000 the Philips factory for radio electronics in Albuquerque, New Mexico was hit by lightning and caught fire, which hit the ECS supply chain very hard, and caused further delays in deliveries. The volume loss has been estimated at 7 million phones. Nokia was able to sign up secondary suppliers before Ericsson and could thus maintain their market lead.[11][12][13]
According to a study in 2000, Ericsson was the third largest mobile phone vendor with an 11% market share, trailing Nokia and Motorola.[14]
In 2000 ECS produced its first smartphone, Ericsson R380. It did not meet with commercial success, but was the first phone to use the Symbian operating system, previously known as EPOC. The company also produced a Handheld PC named Ericsson MC218, an OEM-product based on Psion Series 5mx.[15] At this time various experimental projects involving handheld PCs was running: in the annual report of 1999 is a picture of a handheld PC named HS210 cordless display phone which would use Bluetooth to connect to a small base station in a household,[16][17] and another experimental product was the DelphiPad which was developed in cooperation with the Centre for Wireless Communications in Singapore, a tablet computer with touch-sensitive screen, Netscape Navigator as web browser and Linux as its operating system.[18][19]
Immediately after the turn of the century 2000–2001 the European telecom crisis occurred, and hit Ericsson Mobile Communications especially hard. The business unit containing ECS would now come to generate a loss of 24 billion SEK.[11]
In the spring of 2001 the first countermeasures to cut down on the losses began by laying off 600 people in production, while simultaneously outsourcing all production with some 11,000 people to Flextronics.[20] The research- and development office in Lund was not subject to any major layoffs: 100 people were laid off and some 80 people in facility management and IS/IT were outsourced.[21] A few months later however, the huge transformation occurred, splitting the company in two.[22]
As a last countermeasure to counter the economic crisis, Ericsson had to seek a partner for the handset production, and therefore the company was split in two parts on 1 October 2001:
On 12 February 2009, Ericsson issued a press release stating that Ericsson Mobile Platforms would be joined with STMicroelectronics mobile platform company ST-NXP Wireless, forming the new joint venture ST-Ericsson, owned 50/50 by Ericsson and STMicroelectronics.[25]
In February 2012, Sony communicated that they closed the purchase of Ericsson's part of Sony Ericsson, which was consequently renamed Sony Mobile Communications. At this time the company had roughly 8,000 employees globally.[26]
- Production and design of mobile phones was transferred to Sony Ericsson Mobile Communications in a joint venture with Sony.[23]
