To: Mika Kukkanen who wrote (4544 ) 2/22/2001 7:24:08 AM From: Jim Oravetz Respond to of 5390 Cell Phone Makers Pair Up With Computer Manufacturers By Lucas van Grinsven, TechWeb News Feb 21, 2001 (5:53 PM) URL: techweb.com CANNES, France—If you think the future of mobile phones lies within the mobile phone industry, think again. Cell phone makers are no longer just eyeing each other to bulk up and cut costs, but are increasingly pairing up with computer makers such as Hewlett-Packard and Casio. Even Dell Computers (stock: DELL), which has long restricted its vision to bulky laptops, recently held talks with Japan's Mitsubishi to bring small phone-enabled computers to the market. Cell phones can't get much smaller, but they will get cheaper—analysts expect the price of an average mobile phone to drop by 25 per cent each year. Cell phone makers see adding computer innovations as a way to avoid having their product become a cheap commodity like the disposable camera. And consumers and corporate users will benefit from these add-ons, since they'll be able to carry their diary, address book, and e-mail in their phones, or they can make a call with their handheld computer. The snag is that few cell phone makers are knowledgeable about computer technology and fewer still have a strong computer unit. One exception is Japan's Toshiba, which makes both phones and computers. Lately, though, there's been much talk about tie-ups between cell phone makers and handheld computer manufacturers: • Hewlett-Packard (stock: HWP) said on Tuesday it would work with an unnamed cell phone maker to launch a mobile phone-enabled handheld computer this autumn. • Late last year, Siemens said it would work with handheld computer maker Casio to launch a similar cell phone computer. • Philips said on Wednesday it was looking beyond fellow cell phone makers to find a partner for the next generation of mobile phones, which have a memory to store diaries, e-mail, and music. The company said it would look at computer makers and software houses. • Ericsson (stock: ERICY) is also talking to various players, including Asian cell phone peers and computer makers. For cell phone makers such as Ericsson, who are losing money in the handset business, having partners to share costs for developing third-generation mobile phones could be the boon they need.