Matsushita and NEC will team up to develop mobile handsets.
Japanese electronics firms Matsushita and NEC on Tuesday announced they would team up to develop mobile phones. They will jointly design specifications for handsets, as well as cooperating in developing applications and in product testing. The first device they are working on is a 3G handset for Europe.
The two companies, who dominate the Japanese mobile market with 26% and 22% respectively, plan an out-and-out onslaught on Europe, where they have so far failed to penetrate. In particular, they plan to topple handset giant Nokia. There is a very strong company called Nokia and we are all competing against this one company, said NEC executive Mineo Sugiyama.
If there is anyone Nokia should be scared of, it is this alliance. NEC and Matsushita, not coincidentally, were the only two companies to have 3G phones ready in time for DoCoMo’s planned 3G launch in May. They have been working on the technology for seven years, spending tens of millions of dollars a year each.
The companies are also ahead since they have been making miniaturized electronic devices for many years. In terms of power consumption, weight and integration of different electronic functions, a 3G handset has as much in common with a laptop computer as it does with a current mobile phone.
Matsushita and NEC are aiming for 10% and 15% respectively of the $1 billion W-CDMA 3G handset market by 2005. The new alliance should help them achieve this by establishing them outside Asia. Matsushita’s MEI consumer electronics subsidiary, also involved in the alliance, will be a major help here. As the parent of Panasonic and Technics, It knows how to build brands in Europe.
How much the alliance harms Nokia depends strongly on the Finnish firm’s 3G offering. If it’s good (and reports suggest that its impending GPRS handset outclasses the competition), it would still be unwise to bet against Nokia’s marketing skill. If things go wrong, the market will be wide open for the Japanese duo.
