Qualcomm Inc (QCOM)

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Nokia chooses CDMA to launch its least priced handset

CORPORATE BUREAU
Posted online: Friday, September 08, 2006 at 0000 hours IST


http://www.financialexpress.com/fe_full_story.php?content_id=139783

MUMBAI, SEPT 7: The world's largest handset maker, Finnish giant Nokia, which is exiting CDMA handset manfucturing globally, is launching its cheapest handset in the Indian market. It could also be a strategy designed to clear the inventory of its CDMA chipsets. Nokia could not be reached for comments.
In what is probably its lowest pricing for a handset so far, Nokia on Thursday announced an entry level CDMA handset for Rs 1,999 through a tie-up with Reliance Communications (RCL). RCL's CDMA subscriber base is second only Bharti’s GSM subscriber base in the country. Nokia’s least priced GSM handset in the country retails at around Rs 2500. India is one of the fastest growing mobile markets in the world and Nokia, the world’s largest cell phone maker.

The CDMA handset launched by the Finnish vendor is a Nokia 1255, an entry level black & white model targeted at first time mobile phone users. It has a two-way hands-free speakerphone and a voice recorder.

"Nokia is committed to provide the mobile phone users in India a high quality and affordable mobile experience. We are confident that our alliance with Reliance Communications to promote the Nokia 1255 at a never before price point, will be well received by our discerning customers." Nokia India, director, sales, Sunil Dutt, said in a statement. Ironically, both Nokia and Reliance have had a prolonged battle with Qualcomm over royalty and patent issues. CDMA handsets are based on Qualcomm patented technology.

While Nokia has claimed Qualcomm’s policies make it unviable to launch low-cost handsets in price-sensitive high growth markets such as Brazil and India, Reliance has also cited high royalties and high handset prices as the reason for its GSM services foray. The operator plans to launch GSM services in all 21 circles, starting with Delhi and Mumbai, and has asked the government for spectrum in the GSM band.

In all likelihood, the Nokia 1255 model announced by the handset major will not be manufactured by it but by third party manufacturers.

This is because Nokia has already cut down on its workforce at its CDMA factories and re-deployed the facilities towards GSM handsets.

Media reports quoted the handset major as downsizing its workforce at the 185,000-square-foot CDMA handset facility in San Diego. It has also shelved its proposed joint venture with Sanyo of Japan to manufacture CDMA handsets.

Multinational rival Motorola has a more aggressive pricing strategy for the Indian GSM market with handsets priced at around Rs 1500. However, it does not have a CDMA handset at this price point either.