Taiwan Maker of Cellphones for Others Is Venturing Out on Its Own

The New York Times profiles Taiwanese manufacturer BenQ, who primarily made handsets for companies like Motorola, and then "formed the intercontinental venture with Siemens so it could sell its own branded phones beyond Taiwan and China. But by trying to reach consumers in the West, BenQ now competes more directly with the companies it used to sell to, and some are taking their business elsewhere."

The article looks at BenQ's efforts to "marry the expertise it gained mass-producing phones for others with the distribution system and brand recognition that Siemens has built in Europe." The company "wants to duplicate Sony and Ericsson's cross-border success, or become the next Samsung, which has transformed itself into a chic global brand."

BenQ, which was spun off from Acer in 2001 is tackling the handset biz because the industry is "still relatively profitable because they are being packed with more and more sophisticated software, chips and screens." Kirk Yang at Citigroup said, "Cellphones are about the same as PC's in the 1990's because they are both transitioning in technology."

Hugues De La Vergne at Gartner said, "With the consolidation in the U.S. market, these carriers can really use their buying power to get the best prices out of handset producers. With the economies of scale in the industry, Siemens has had difficulties competing with the Nokias and Motorolas of the world."

Ittai Kidron at CIBC World Markets added, "The question is whether Siemens and BenQ can come up with something that the average person thinks is cool. To introduce phones with a wow factor will be difficult."