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Siemens and Motorola collaborate on 3G 
Monday, April 15 2002
by Matthew Clark


Siemens, the world's third biggest mobile phone maker, said on Monday that it
will use technology from Motorola to roll out its 3G phones. 





Siemens said that it would use Motorola's i.300 platform, which includes
semiconductors and software, to build its own 3G phones, but will not lunch the
devices until 2004. In the meantime Siemens will simply sell Motorola 3G
handsets, branded with the Siemens logo, until the company is able to build its
own. 



"As our collaboration enables the more rapid adoption of UMTS networks, this
agreement will benefit Siemens, Motorola, our customers and the consumer,"
claimed Edward Breen, president and chief operating officer, Motorola.  Rudi
Lamprecht, member of the managing board at Siemens AG, also claimed that the move
was in the best interest of customers. 



The deal is important on a number of different levels, but first and foremost it
spells bad news for former Siemens subsidiary Infineon, which also makes 3G
chips. Last month Siemens said that it was seeking an extra chipmaker supplier to
reduce its mobile phone division's dependency on chips made by Infineon.  



In a conference call on Monday, Motorola executives declined to say who it beat
out in winning the contact with the German electronics giant. In any case,
investors looked favourably on the news as Motorola shares in New York were on
the rise, up over two percent in afternoon trading at around USD13.73.



The deal also demonstrates how important the handset makers think the 3G market
will be, as the saturated market for 2G inches along. The deterioration in this
market has also forced mobile-makers to slash costs while attempting to remain on
the technological cutting edge of the industry.





Moreover, in the past year several mobile phone companies have announced deals
that mirror this one as the industry looks to cut costs. Ericsson has a similar
cross-licensing agreement with Korea's Samsung and Korean electronics maker LG.
Also, the Swedish company's joint venture, Sony-Ericsson, was only created last
autumn in order for the two parent firms to capture more market share and cut
costs. 



In fact the new deal from Siemens replaces a similar cooperation agreement with
Japan's Toshiba which was put on hold last year.



But these kinds of tie-ups have also proved to risky in the past. In 2000 both
Sony and Qualcomm as well as Lucent and Philips attempted similar ventures both
of which turned out to be failures.