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Last Updated: Tuesday, 14 February 2006, 09:32 GMT
Nokia and Sanyo plan phone tie-up
Sanyo executive Takenori Ugari and Nokia Japan president Tyler McGee
The firms have their different reasons for seeking a tie-up
Finland's Nokia and Japan's Sanyo have announced plans to form a joint venture to develop future mobile phones.

They aim to work together to make new mobile phones for the CDMA standard, the market leader in the US.

The deal, which they hope to finalise later this year, offers distinct benefits to both firms.

It will enable Nokia, which is dominant in Europe, to boost business in its weaker markets, while it could help Sanyo turn around its fortunes.

Last year Sanyo announced plans to cut 15% of its global workforce to reverse falling profits and halve its debts.

You could almost characterise it as a partnership of two weaknesses
Analyst Nick Ingelbrecht

"Sanyo is in a weak financial position and has a dwindling amount of money and resources to put towards developing new handsets," said UBS analyst Fumio Osanai.

"Joining hands with a strong player like Nokia would be a positive move."

'Cost effective'

The deal will also allow the firms to share the high development costs for new phones.

Nokia, whose worldwide market share is about 34%, has so far struggled to gain a substantial share of both the North American and Japanese markets.

Although many Japanese operators use the standard common in 3G in Europe - and a unique standard called PDC for older phones - several mass-market carriers use the US-style CDMA.

Having access to Sanyo's CDMA technology should help it boost its share of these regions, while Sanyo in return should see an increase in its general global sales.

"You could almost characterise it as a partnership of two weaknesses," said Nick Ingelbrecht, an Australia-based analyst for Gartner.

"This is a fairly cost effective way [for Nokia] of extending its presence in the US market and in the CDMA business without making huge new rounds of investments."

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