Vodafone to increase dependency on Asian handset suppliers

8 Sep 2003

UK-based mobile operator Vodafone [VOD.L] has revealed plans to use an increasing proportion of handsets from Asian suppliers Sanyo, Sharp and Samsung in its drive to get subscribers connected to third-generation (3G) services. Although Vodafone has said it will continue to use handset market leaders Nokia and Motorola as suppliers on a limited basis, it is said to be negotiating deals with a number of Asian equipment manufacturers, under which they will provide the bulk of terminals for Vodafone’s push into the 3G arena. The decision by the operator to reduce its level of business with global market leader Nokia is based on the fact that the Finnish company has been largely reluctant to tailor its next generation handsets to Vodafone’s needs. By way of contrast, the success of Vodafone Live!, the operator’s initial 2.5G offering, has been mainly attributed to a Sharp handset designed specifically for Vodafone. Analysts are predicting strong growth over the next few years in the ‘white-label market’ for mobile phones tailored to specific operator’s needs. At the same time they are suggesting Nokia needs to undertake a radical overhaul of its 3G handset strategy if the company is to avoid losing considerable market share to its more flexible Asian rivals.