Japanese Handset Vendors Officially Announce Joint Venture

In what was a poorly kept secret, perhaps by design, a trio of struggling Japanese mobile-handset vendors finally have announced that they will merge their manufacturing operations into a joint venture.

In reports published by the Associated Press and Agence France Presse, the three companies — NEC, Hitachi and Casio Computer — said they have agreed to merge their handset-manufacturing operations by April next year in a bid to boost their competitiveness at home and abroad.

The move effectively sees NEC take nominal charge of a preexisting mobile joint venture, established in 2004, between Casio and Hitachi. That faltering JV has made modest impact in the Japanese market. There is no guarantee the new combination will do anything other than reduce operating costs for the companies involved.

Still, on that basis alone, it was a good move — at least until one or all of the partners decides whether it should remain a player in the domestic and foreign handset markets.

Much will depend on NEC, which will own 70 percent of the joint venture by next June. Hitachi seems to be furtively edging toward an inconspicuous departure from the handset market, whereas Casio seems unsure of its strategic commitment to the space.

By word and deed, NEC seems most serious about turning the joint venture into a meaningful top-three player in the Japanese market. If it can use that position as a springboard into higher-growth developing markets, so much the better.

Always difficult beasts to steer successfully, joint ventures are prone to internal backbiting, organizational dysfunction, and bureaucratic paralysis. What’s positive about this one is that NEC clearly has taken the captain’s chair. We’ll see now whether it can get the ship on course for adventure and profit.

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