Siemens Won't Get Out of Mobile Handset Business: CEO

Mobile handsets are an essential part of the mobile solutions value chain and Siemens has no plan to quit that business, said Dr Heinrich v Pierer, president and chief executive officer of Siemens AG. He was replying to a question posed by Voice & Data whether mobile handsets, which are fast becoming consumer durables, really fitted into Siemens' portfolio of business infrastructure solutions offering.

"We have gained market share in the mobile phone business. There is no question of quitting the segment," he said. 

While Lucent and Nortel have quit the handset business long back, Ericsson has recently entered into a JV with Sony to outsource the manufacturing of mobile handsets. 

Dr Pierer clarified that Siemens was not even planning to outsource manufacturing. "I believe that development, manufacturing, and marketing should be done under one roof," he emphasized. "I do not think you can outsource an essential part of your business like manufacturing." He, however, clarified that, the company may, at any future date, may look at outsourcing a maximum of 20-25 percent of the manufacturing for the sake of learning and creating internal competition. 

The strong statement of Siemens CEO denying any possibility of moving away from mobile handset business is interesting in the wake of a growing opinion that mobile handsets are fast becoming consumer items and requires different set of marketing skills than infrastructure business. Many observers feel that the Ericsson-Sony arrangement is an interim step before Ericsson finally decides to quit the handset business completely. It can be mentioned here that a few years back, Lucent had also started with a joint venture with Philips to manufacture handsets. Lucent subsequently got out of the JV, thus quitting the handset business altogether. 

Many observers feel Sony and other consumer electronics companies like Samsung and LG are likely to succeed in the handset business in the long run because of their strong brand recall and better understanding of consumer market. From the telecom world, only one company Nokia has been able to build a strong brand and is today seen more as a consumer electronics company.

(CNS)