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BenQ-Siemens Mobile Takeover

 BenQ-Siemens Mobile 8th June 2005

After several months of speculation, Siemens have finally announced the effective disposal of their mobile phones division to BenQ of Taiwan. Siemens will transfer control of the division to BenQ along with 250 million of support, and they will also buy 50 million of BenQ stock as part of the deal.

It's hardly a vote of confidence in Siemens Mobile - BenQ are basically getting the business plus a dowry. In the short term, these handsets will continue to be branded as Siemens, but after that as BenQ-Siemens until 2010.

 

As a technological tie-up it makes a great deal of sense - Siemens own a substantial amount of intellectual property rights that BenQ would like, BenQ is also shows some imagination in individual products, and Siemens more an understanding of product ranges as a whole. BenQ also has very little penetration of the lucrative European marketplace, which Siemens has a large proportion of. Quite how BenQ intend to turn the loss making Siemens Mobile around is not certain.

As part of the deal, the Siemens-BenQ Mobile operation will be headquartered in Germany and it will maintain the Siemens manufacturing plant in Germany, at least at present. This is a smart move, because Germany is a hugely important marketplace for Siemens Mobile, and some effort is being made to maintain the new organisation's "German-ness".

BenQ is certainly a better respected partner than the Chinese Ningbo Bird or Haier companies that had been previously rumoured, and it's easy to see that there are some useful synergies (a horrible word, but one that's appropriate) between the two businesses.

There's an obvious comparison to be made between the BenQ-Siemens tie-up and the creation of Sony Ericsson. In each case, the European part of the deal was a fading industry giant seeking a partnership with a more dynamic Asian partner. However, the BenQ-Siemens arrangement is basically a takeover of the Siemens business, where Sony Ericsson is much more of a true joint venture (JV).

There are other significant business too.. with Sony Ericsson, Sony added its own highly respected name to the brand. BenQ is much more of an unknown, and doesn't add at all to the branding. Both companies had a measurable share in Europe, but BenQ is almost invisible.

It's impossible to say if the BenQ-Siemens business will be able to make a success of it. Siemens Mobile has been losing market share as well as money, and has had difficulty in getting operators to take up some of its models. There have also been questions over BenQ's build quality, especially with the handsets supplied to O2 and branded as the X1i, X2, X3 and X4. It seems clear though that the BenQ-Siemens business will be in for a bumpy ride.

 

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