To: Jim Willie CB who wrote (16399 ) 4/26/2000 4:40:00 AM From: techguerrilla Respond to of 35685
Nokia in one corner, Siemens now in the otherwirelessweek.com Siemens Returns; Nokia Regroups By Monica Alleven Siemens is re-entering the U.S. handset market in a big way. If market leader Nokia's experience is any guide, however, the competition will be tough. Siemens had an abbreviated stint in the U.S. handset business two years ago, but it primarily focused on GSM, not the more lucrative TDMA and CDMA technologies. This time, Siemens will spend $500 million over two years to revamp and broaden its scope beyond GSM. But the domestic handset market is fiercely competitive, particularly in CDMA. Even Nokia has had a tough time delivering handsets for some CDMA operators. What makes Siemens think it has a chance? The company says a lot has changed since 1998. Siemens, headquartered in Germany, has done a fantastic job in doubling its global handset sales, mostly in Europe and Asia, over the past year. If it wants to be one of the top three players worldwide, it can't ignore the U.S. market, which represents some 30 percent of the globe's opportunities. "The intent is to play off a very successful global business," says Glenn Befort, acting CEO at Siemens' new Information and Communication Mobile Group. Siemens' plans include a CDMA/GSM world phone, and its stake in upstart NeoPoint Inc. will help. But CDMA is not an easy technology to create. Ericsson until this year had no U.S. CDMA offering. Motorola, now considered the largest producer of CDMA phones for the U.S. market, has in-house semiconductor expertise that gave it an edge in CDMA chip development. But even so, its early CDMA product deployment was no breeze. Now, it's becoming clear that similar challenges are affecting Nokia. The Finnish manufacturer has sponsored CDMA research projects dating back to the late 1980s, but it still apparently isn't satisfying every U.S. CDMA operator. Nokia inked a big contract with Sprint PCS last year, but it has yet to deliver an impressive new digital model for Verizon, now the largest U.S. wireless carrier. "They haven't performed up to our company's specifications," says Verizon spokesman Howie Waterman, referring to Bell Atlantic Mobile, one of Verizon's parents. Nokia phones are sold only in select Verizon markets, says Nokia spokeswoman Megan Matthews. Nokia is aware of its problems; hardly a quarterly conference call goes by without at least one analyst inquiring about its CDMA chip set plans and whether it will buy from Qualcomm. Nokia insists it will not. "We have had great successes with some carriers and we have had our challenges with others," Matthews says. Part of the difficulty is that one CDMA phone model doesn't work the same way on every operator's network, and adjustments must be made. Analysts estimate CDMA is a single-digit percentage of Nokia's total handset sales. But Nokia, which reports earnings this week, says there's no reason it can't have a global CDMA market share one day that matches its overall global market share. The company is hiring new engineers and going back to the lab. It plans to deliver new CDMA models in the second half of this year. Some analysts say Nokia may have burned bridges by stubbornly refusing to turn to Qualcomm. Many manufacturers, including Motorola, have bought chips from Qualcomm. "Qualcomm really holds the keys to the kingdom of CDMA, at least on the handset side," says Dataquest analyst Bryan Prohm. Interestingly, both Siemens and Nokia have a presence in Qualcomm's hometown of San Diego. Siemens' Befort wouldn't comment as to whether Siemens will buy chips from Qualcomm, but he said Siemens will look for partners and deals as needed. Analysts suggest that Siemens has as good a chance as anyone at succeeding in the U.S. market. For Siemens, the second time around could be the charm as long as it includes a viable CDMA product.