Lucent Technologies Inc. said it doesn’t expect to renew its original equipment manufacturer contracts with Nokia Mobile Phones and Oki telecom at the end of the year when the agreements expire.
Lucent said it is making good progress on establishing a factory in New Jersey to manufacture dual-mode handsets for the U.S. digital marketplace. The company’s initial emphasis will be cellular phones.
“Our intention is to be a major player in the digital handset market, and capitalize on the evolution in U.S. cellular,” said John Skalko, spokesman for Lucent’s wireless products group.
The OEM contracts were originally made with AT&T Corp.’s consumer products division, which was melted into Lucent Technologies when AT&T spun off several units in February.
When Nokia announced its OEM handset contract with AT&T in April 1994, it valued the agreement at $170 million. Nokia has reacted to Lucent’s recent stated goal of making its own handsets by saying, “never underestimate new entrants to the market.” Oki had no comment.
As a handset manufacturer, Lucent will take on Nokia as well as competitors Motorola Inc. and Ericsson Inc. However, Lucent has announced only one major handset contract-a two-year agreement with AT&T Wireless Services Inc. for one million cellular phones, with initial deliveries scheduled for later this year. The contract is valued at $300 million.
Lucent will provide AT&T Wireless with dual-mode portable phones that will operate on both analog and Time Division Multiple Access technology-based networks. The phone, model 6720, was developed by Lucent’s Bell Labs. It also will accommodate Interim Standard 136 TDMA technology.
The phones will be branded AT&T on the front, Lucent on the back.
“It’s difficult to control the flow of product when someone else is doing the manufacturing. And you can’t make the margins,” Skalko said. As a phone manufacturer, Lucent can make decisions more quickly, he said.
For about a year, Lucent has been building analog handsets in its plant in Guadalahara, Mexico. Many of those phones were for AT&T Wireless and were branded AT&T. Some are sold in retail outlets, such as Best Buy.
But Lucent is winding down the analog production and expanding the plant to concentrate on cordless and corded phones, and answering machines, Skalko said.
