Monday, June 19, 2006


When Nokia and Siemens Join Forces for Handsets....

It looks like Nokia and Siemens will combine their operations to produce handsets in a 50-50 joint venture worth about $31 billion. The handset market is consolidating. This is not surprising given that the handset 'layer' is becoming commoditized. The value is shifting to software (applications) and services (SMS, MMS and ringtones) as well as search and transactions. One reliable estimate of the # of handsets in use by the year 2010 is 4 billion (yes, 4 billion). This clearly has implications for business operations--not just for th emanufacturers of handsets but also for services that can be delivered through the handsets.

This deal follows announcement by a group to create Linux-based software for handsets. This group includes: Motorola, Vodafone, NTT DoCoMo, Samsung, NEC and Matsushita. NTT DoCoMo and Vodafone are operators while others are hardware manufacturers. Clearly, this is meant to challenge Symbian (Nokia-dominant; but Siemens also is a shareholder) and Microsoft Windows Mobile.

Is the Nokia-Siemens merger intended to further consolidate the role of Symbian against competing software standards? It may be curious that Samsung and Panasonic are common members of both Symbian and the new Linux-based software initiative. But, it is expected in dynamic networks.

Positioning in multiple networks may be a strategic requirement for success in the network era. Fixed, static positions under conditions of fast-change may prove limiting.

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