Diverging Fates for BenQ, Sony Ericsson
The Taiwanese manufacturer's mobile joint venture with Siemens will file for bankruptcy, while the No. 4 handset maker targets the top three
by Jo Best , Business Week
Two of the top 10 mobile companies are shaping up for some major changes: BenQ Mobile has filed for insolvency, while Sony Ericsson's CEO is predicting the company will enter the ranks of the top three handset manufacturers within the next five years.
BenQ Mobile was set up as a joint venture between Taiwanese hardware maker BenQ and Siemens, created when the German conglomerate sold off its struggling Com unit. BenQ Mobile has now filed for insolvency after just a year in business.
BenQ has announced it will not be making any further payments to BenQ Mobile, saying: "Both revenue and margin development will fall far short of expectations in the important Christmas quarter." As a result, BenQ Mobile Germany will now be forced to file for insolvency.
There will be around 3,000 staff affected by the change although BenQ Mobile intends to carry on operations under the brand name BenQ-Siemens. Siemens has also reportedly started a hardship fund for the staff, with some top execs donating planned pay rises.
Meanwhile, Sony Ericsson's CEO Miles Flint has told the Financial Times that the company is planning to become one of the top three mobile manufacturers. The company is currently number four by sales, according to analyst IDC, behind Nokia, Motorola and Samsung.
Flint told the FT: "Over time we have to become one of the top three manufacturers in the industry. I am reluctant to put a date on it but yes, given we are at the fifth anniversary [of the company's creation] it is logical to talk about the next five."
Flint is planning a new media campaign and is considering opening new stores across western Europe and Asia.
Comments
I found this article interesting, both of the joint venture were culture mix of one eastern company and one western company in very similar industry, moreover, they were competitors before M&A. However, their fates are very different. SonyEricsson became top 3 in the market, while BenqSiemens filed bankruptcy.
Benq acquired Siemens cell phone department and launch new cell phone as “BenqSiemens�, even it was joint venture, but the company is main running by Benq which owned larger share portion. On the other hand, SonyEricsson is the Joint venture between two strong companies. Sony is in charge of product appearance design, sales and marketing, while Ericsson is focus on new product development.
Several reasons come to my mind while wondering why the two companies have such different future. Integration process is a key; willingness to totally transfer core competence to business partner is another, and “trust� that’s what our strategy professor phrased it.
Posted by: Pei-Shan Tsai | February 28, 2008 3:14 AM
Good job! I totally agree
Posted by: Ran Duan | February 28, 2008 3:20 AM