3G Handset alliances bloom despite Mitsubishi denial

date: April 20, 2001

Mitsubishi Electric, Japan's third-biggest cellphone maker, denied a report on Friday it was set to ally with Motorola, but that does not mean the industry's enthusiasm has waned for tie-ups in next-generation devices.

Business daily Nihon Keizai Shimbun said Mitsubishi Electric Corp was in the final stage of talks on a tie-up with Motorola Inc to develop and manufacture third-generation (3G) handsets, including a joint venture in North America that could be set up by the end of the year.

The Japanese electronics maker said in a statement: ``Mitsubishi Electric has had negotiations with Motorola in the past, but we are not now holding any specific negotiations.''

Such nay-saying aside, handset makers are busy forging alliances to meet the daunting challenges of 3G and an interim technology, dubbed 2.5G, that require cellphones to support high-speed Internet and data services.

Finland's Nokia , Motorola and other European and U.S. manufacturers now dominate the global handset market, but Japan leads in mobile Web connections with services such as NTT DoCoMo's ``i-mode'', and Japanese manufacturers' expertise will be sought as wireless service enters the Internet era.

``I think European manufacturers want handset models with high-level functions like Japan's i-mode,'' said Societe Generale Securities analyst Mamoru Takagi. ``The focus now for Nokia, Motorola and Ericsson is voice, but for 2.5G and 3G they'll need the sort of things that are on i-mode.''

On Thursday, Sweden's Ericsson , the world's third-largest handset maker, and Sony Corp said they were in talks about joint cellphone operations.

No more details were available on Friday, but such a deal would allow Ericsson's loss-making handset arm to tap Sony's marketing savvy in an attempt to buck a slowdown in the mobile phone market with innovative, mass-market consumer products.

Sony's funky handsets have won the respect of the Japanese market, but the group still has less than a two percent global market share.

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