With the announcement of a joint CDMA handset venture between Sanyo Electronics Co. Ltd. and Nokia Corp., U.S. CDMA carriers could benefit from increased competition among vendors, and mobile virtual network operators might have a new option as they seek exclusive handsets to attract customers.
The new company is expected to combine Nokia CDMA’s business with Sanyo’s handset division and is expected to be the No. 2 global CDMA handset manufacturer, according to Lehman Brothers. However, the company’s business plan on whether it will provide low-, middle, or high-end handset lineups, or a combination thereof, is not yet clear.
Sanyo currently has an exclusivity agreement with Sprint Nextel Corp. and supplies about a third of the company’s CDMA lineup. Nokia has far less penetration into the top three CDMA carriers’ lineups; Sprint Nextel sells one low-end model, and Verizon Wireless and Alltel Corp. each offer two Nokia handsets. The handset manufacturer’s CDMA operations in the United States have struggled, according to senior analyst Brad Akyuz of Current Analysis, due to Nokia’s reluctance to bow to carrier demands related to user experiences, or to use chipsets from Qualcomm Inc.
Sanyo, on the other hand, has been quite responsive to operators’ wish lists, Akyuz said. The handset manufacturer provides the sole handset for the recently launched Mobile ESPN L.L.C. MVNO, which operates on Sprint Nextel’s network. If the Sprint Nextel/Sanyo exclusivity agreement extends to MVNOs operating on the carrier’s network, as it appears to, that could lead to new potential customers for Sanyo and possibly a leg up for the joint venture.
Other MVNOs expected to use Sprint Nextel’s CDMA network, such as Disney Mobile, have not yet announced which handsets they will offer-but unique or exclusive phones are one of the promises touted by many MVNOs.
The joint venture was a necessary move for Sanyo, according to Akyuz, because the company could soon begin to see pressure from Motorola Inc. Motorola is the exclusive supplier for Sprint Nextel’s iDEN network in both handsets and infrastructure. Sprint Corp.’s acquisition of Nextel Communications Inc. may end up changing the handset playing field by giving Motorola-which before the merger only supplied Sprint with a basic voice handset-a better position in Sprint Nextel’s CDMA operation.
“Competition is definitely going to get fierce in the Sprint retail space,” Akyuz said.
He noted that other CDMA carriers, such as Verizon Wireless, also will have a larger selection of handset vendors to choose from and could use that for negotiating power. Sprint Nextel, meanwhile, may lose some of the advantages of being the exclusive provider of Sanyo’s phones, which have a reputation for reliability.
“From Sprint Nextel’s perspective, there are no immediate impacts and this is viewed as a positive for the industry,” said Sprint Nextel spokeswoman Jackie Bostick.
