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In the last quarter, the company's mobile phone division lost EUR22 million (USD19.4 million). Siemens had said in the past that it hoped to become the number two maker of mobile phones and it planned to do it on its own. But according to research company Gartner, the industry is now in state of unrest as worldwide mobile phone shipments totalled 94.4 million units in Q3, a nine percent decline.
There has been speculation that Siemens will partner with one of dominant Asian phone makers with Toshiba topping the list of possibilities. However, Siemens would not confirm which companies it is in talks with and Hitachi, Palm and NEC have all been suggested.
With the unrest in the industry, the possibility of a Siemens joint venture does not come as a shock. Already in the year Ericsson and Sony formed Sony Ericsson mobile communications in an attempt to compete with the market leader Nokia. The announcement of that venture followed Philips decision earlier in the year to pull out of handset production all together.
But these kinds of tie-ups can also be risky. In 2000 both Sony and Qualcomm as well as Lucent and Philips attempted similar ventures both of which turned out to be failures.
"The mobile phone industry has been impacted by repeated delays in the availability of general packet radio service (GPRS) terminals and the effect of the widespread economic downturn on regions where mobile connection growth has traditionally been high, such as Latin America," said Bryan Prohm, senior analyst with the mobile communications worldwide research group for Gartner Dataquest.
Ben Wood, another senior Gartner analyst went on to say that much of the slowdown in handset sales has come from "the astonishingly lacklustre performance of the Western European market." That region accounted for about a third of annual mobile terminal sales in 1999 and 2000 which started to fall for the first time in the second quarter of 2001.
Earlier this week Gartner ranked the top five mobile handset manufacturers in terms of units shipped. Nokia led the way with a 33 percent market share, although Motorola had made gains inching up almost two points to reach a 15.7 percent market share. Ericsson, Samsung and Siemens followed in that order.
"Nokia, for the first time, has one of the older product portfolios among the leading manufacturers, a development that undoubtedly resulted in the loss of some global system for mobile communications (GSM) market share to competitors with more contemporary designs," said Prohm.
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