In line with the comments in the last two posts, Nokia is now having to adapt its production to meet the rapidly growing demand for CDMA based third generation handsets in the third world. I'm no admirer of Rumsfeld, but hadn't ol' Europe better look out. The centralised (Brussels based) infrastructure and the problem of lock-in to prior decisions (ie UMTS) means that the European industry may be ill suited to the kinds of leapfrogging processes which typify the new economy sectors. Is this the shape of things to come? Certainly, in some areas the third world is capable of adapting and catching-up much more quickly than anyone would have imagined just a few years ago.
The world's top handset maker Nokia took steps on Monday to wrest from Motorola the top spot in the huge Chinese market by starting CDMA handset production there and merging its joint ventures. Nokia said it would have over 60 percent ownership in the newly combined company, which will be headquartered in Beijing. "The new company is well positioned to lead China's mobile handset and network markets as well as improve its competitiveness in the global market," Nokia said in a statement. "(It will be) one of the largest foreign invested enterprises, as well as the largest manufacturer and exporter in the mobile telecommunications industry in China," Nokia said. Nokia already dominates the world's largest mobile standard, GSM, but has lagged on phones using CDMA, or Code Division Multiple Access, which is popular in Asia and the United States. The company said earlier this month it wants 15 percent of the CDMA market in 2003 as a prelude to eventually leading the market with over 25 percent. Nokia had a 2002 global handset market share of around 36 percent. A Nokia spokesman said the merging of the joint ventures still needed Chinese regulatory approval, but this was expected soon. He said the company was currently happy with the size of its shareholding in the merged venture. Nokia's 2002 sales in China, the world's largest mobile phone market, were 2.8 billion euros ($3.01 billion), making the country its third-largest market behind the U.S. and U.K. Nokia stock was unruffled by the announcement, which had been rumored in the past week, and traded down 5.4 percent at 12.89 euros as European shares continued to fall on fears that the war in Iraq would drag on. Analysts welcomed the news, saying that while it would take time for the moves to bear fruit, it was a step in the right direction and would help Nokia battle Motorola as well as local Chinese rivals. "Nokia has to come up with something to counter the market share loss to local players," said Evli Bank analyst Karri Rinta, who has a "buy" rating on Nokia shares. "I'd expect to see meaningful handset volumes no sooner than the fourth quarter of this year. The big impact will be seen next year," he said.
Source: Reuters
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Nokia Corp. plans to begin production of CDMA (Code Division Multiple Access) cellular phones in China, the company said Monday. The announcement comes as the country's second largest cell phone operator, China United Telecommunications Corp. (China Unicom), begins a three-month trial of its recently completed national CDMA2000 1X network. While the announcement signals a clear change in Nokia's product lineup, the company did not specify when production of CDMA phones would begin, saying it was awaiting approval from the Chinese government to make CDMA handsets. The phones will be based on CDMA chipsets made by Nokia, it said. Nokia has seen domestic handset makers cut into its share of China's rapidly growing cell phone market. It is looking to CDMA phones as a way to broaden its reach into the market, according to a company statement. Worldwide, Nokia sells handsets that support GSM (Global System for Mobile Communications) and GPRS (General Packet Radio Service) mobile networks. The company also makes a handset that supports the WCDMA (Wideband CDMA) third-generation mobile standard. "(Nokia is) clearly losing market share on the GSM side (in China), both to the local players and to Japanese handset makers," said Ted Dean , managing director of market research firm BDA China Ltd. "There are just more companies making handsets now compared to a year ago."
Domestic handset makers have been successful in China for several reasons, including strong distribution channels and innovative handset design, Dean said. As an example, he cited TCL Mobile Communication Co. Ltd., China's largest handset maker, which produces a clamshell-type phone that has a diamond set into the outside of the top cover. "They're giving consumers more variety," Dean said. But while Chinese handset makers may have grabbed a piece of the Chinese handset market, they are not close to overtaking their foreign rivals, Dean said. "Motorola (Inc.) and Nokia are still by far the No. 1 and No. 2 players in the market," he said. By producing CDMA handsets, Nokia can not only tap into demand from Chinese CDMA users, but it can also push into markets such as South Korea and the U.S., where CDMA is more prevalent than in China, Dean said. "(CDMA is) a growing piece of the handset market that they want to be a part of," Dean said.
China has one national CDMA network, launched in January 2002 and operated by China Unicom. That service got off to a slow start, falling short of initial subscriber targets, and construction of China Unicom's 2.5G (advanced second-generation) CDMA2000 1X network, originally expected to be completed at the end of 2002, was delayed by nearly three months. China Unicom announced that construction of the CDMA2000 1X had been completed on March 28, saying it would begin a three-month trial of the new service, called U-Max. But questions remain as to whether the new service will be a success. "It all comes down to implementation and Unicom's ability to deliver the goods when it comes to new services," Dean said. "Unicom doesn't have a good track record of rolling out new services."
Source: ComputerWorld Hong Kong
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