Wednesday, August 25, 2004
Motorola, DoCoMo to make 3G phones for business use
Reuters Tokyo, August 25
Motorola Inc and NTT DoCoMo Inc, Japan's top mobile phone operator, said on Wednesday they would jointly develop third-generation (3G) handsets, giving Motorola a way into a market largely out of reach for foreign manufacturers.
The new handsets, scheduled for early 2005 launch in Japan and aimed at business users, will work on both high-speed 3G networks and GSM/GPRS networks -- second-generation standards widely used in Europe and Asia -- making them operational outside Japan.
The widely expected deal is likely to give DoCoMo strong bargaining power in price talks with existing Japanese suppliers and enable it to slash its subsidy payments that are intended to keep handset prices affordable.
For Motorola, success in the technologically competitive Japanese market is expected to raise its profile as a 3G handset maker and help boost its global sales.
Japan accounts for less than 10 per cent of global mobile phone demand but it has been at the forefront of a global shift to high-speed services since 2001, when DoCoMo became the world's first mobile operator to launch a commercial 3G service based on the W-CDMA standard, one of two competing 3G formats.
"At least for the last 10, 12 years, Japan has been a closed market for non-Japanese handset vendors ... The consequence of that was that cost per handset from the vendor to the operator in Japan is by far the highest in the world," said analyst at Dresdner Kleinwort Wasserstein, Kirk Boodry.
Price pressure from Motorola, the world's second-largest handset maker, and possibly Nokia, is expected to push down handset costs in Japan and boost profitability at Japanese operators, he said.
Nokia, the world's top cellphone maker, said in February that it was in talks with DoCoMo to supply 3G handsets.
DOUBLE-EDGED SWORD
The new 3G phones to be developed by DoCoMo and Motorola will be capable of
providing access to regular Web sites and compatible with wireless local area network (LAN) services.
They will come in a shape similar to personal digital assistants (PDAs) and are expected to retail at a premium to existing 3G phones, which sell for around 30,000 yen ($273) in Japan. The companies have yet to set a sales target.
DoCoMo currently sells 3G handsets from five Japanese makers including NEC Corp and Sharp Corp. It procures 3G handsets from Motorola only for limited rental use.
Global mobile phone suppliers such as Motorola and Nokia have had little presence in Japan, in large part because Japanese second-generation mobile phone networks were based on a unique, home-grown technology. But that has changed since DoCoMo introduced the global W-CDMA standard for its 3G service.
The adoption of the W-CDMA format is a double-edged sword for Japanese handset makers. It means that local manufacturers have phones that they can now sell overseas but at the same time it has opened up the domestic market to foreign handset makers.
"The Japanese market is going to be a more difficult one for Japanese handset makers to compete in. But the benefit is that they can also start to export more handsets than they have in the past," Dresdner's Boodry said. Prior to the announcement, shares in DoCoMo closed up 1.45 per cent at 210,000 yen, outperforming the Tokyo stock market's communications sub-index ICOMS, which rose 0.8 per cent.
Asia News © HT Media Ltd. 2004. India News