Matsushita and NEC form pact on 3G handsets

Two of Japan's biggest mobile phone companies yesterday joined forces in an effort to crack the global handset market currently dominated by European and US brands.

NEC and Matsushita, best known for its Panasonic brand, said they were forming a development alliance to strengthen their mobile handset businesses by jointly developing new products and designing common specifications for third-generation handsets.

"This co-operative agreement brings together the expertise of both Matsushita and NEC in development engineering and product planning, and will focus primarily on 3G mobile handsets," they said. "Pooling together their creative visions, resources and desires to succeed, Matsushita and NEC each aim to become the world's leaders in advanced mobile handsets, jointly creating and enhancing the expansion of the mobile multimedia field."

In a further effort to grab market share, the pair said they planned to make the development results of their alliance available to other manufacturers.

Analysts interpreted that move as a major threat to the current mobile phone makers, saying it would remove barriers to entry and would enable a plethora of new companies to enter the market. The global market is dominated by Nokia of Finland, Motorola of the US and Ericsson of Sweden.

While NEC and Matsushita have a very small share of the global handset market, they control around 50 per cent of the Japanese market.

Analysts at Dresdner Kleinwort Wasserstein said the tie-up marked "a further step-up in the global rivalry for supremacy" in next-generation technologies. "By pooling their impressive R&D resources, amplified by both companies' intimate ties with NTT DoCoMo, they should take a distinctive lead in the direction of technology standards for the new generation of data-centric gadgets already in trial operation in Japan," they added.

Sony, which had also failed to make an impact on the global handset market, recently announced a tie-up with Ericsson in a similar attempt to create the definitive next-generation handsets.