On June 7, Siemens AG and Taiwanese electronics maker BenQ Corp announced an agreement that would transfer Siemens' mobile phone division to the Taiwanese company. The deal will transform BenQ into the world's fourth largest handset maker.
BenQ will acquire rights to the Siemens trademark for 18 months, and co-branding rights for five years. The Taiwanese company will also gain access to Siemens' intellectual property, including its CSM, GPRS and 3G patents. Also as part of the deal, Siemens will purchase 50 million euros of BenQ stock.
Mobile phones will now become BenQ's core market. Armed with a world-famous name, new technology, and access to Siemens' extensive customer base in Europe and Latin America, BenQ expects to be a major player in the global cell phone market.
Siemens has provided no guarantees to BenQ about the profitability of the business, which has been a money-loser for the German company. Market leaders Nokia, Moto-rola and Samsung, which currently command about 60 per cent of the worldwide handset market, have been steadily pulling away from their smaller competitors. It is not clear how the Taiwanese company plans to turn around Siemens' losses.
Professor Jagdish Sheth, co-author of The Rule of Three, said further consolidation of marginal players would be required if BenQ is to succeed: "Another option would be for BenQ to become a market specialist -- for example, to focus only on the Chinese or Asian markets."
Martin Roll, CEO of VentureRepublic, said BenQ would have to make long-term costly investments in innovation, technology and design if the company is to emerge as a serious contender for global market share.
"Merely acquiring a well-known brand will not compensate for these factors," he said. "Siemens brand equity will give BenQ a major push in its stride to gain credibility in the European and US markets. But if BenQ wants to be counted among the global leading brands in its sector, it must invest in R&D, design and consistent brand activities," he said.
BenQ will acquire rights to the Siemens trademark for 18 months, and co-branding rights for five years. The Taiwanese company will also gain access to Siemens' intellectual property, including its CSM, GPRS and 3G patents. Also as part of the deal, Siemens will purchase 50 million euros of BenQ stock.
Mobile phones will now become BenQ's core market. Armed with a world-famous name, new technology, and access to Siemens' extensive customer base in Europe and Latin America, BenQ expects to be a major player in the global cell phone market.
Siemens has provided no guarantees to BenQ about the profitability of the business, which has been a money-loser for the German company. Market leaders Nokia, Moto-rola and Samsung, which currently command about 60 per cent of the worldwide handset market, have been steadily pulling away from their smaller competitors. It is not clear how the Taiwanese company plans to turn around Siemens' losses.
Professor Jagdish Sheth, co-author of The Rule of Three, said further consolidation of marginal players would be required if BenQ is to succeed: "Another option would be for BenQ to become a market specialist -- for example, to focus only on the Chinese or Asian markets."
Martin Roll, CEO of VentureRepublic, said BenQ would have to make long-term costly investments in innovation, technology and design if the company is to emerge as a serious contender for global market share.
"Merely acquiring a well-known brand will not compensate for these factors," he said. "Siemens brand equity will give BenQ a major push in its stride to gain credibility in the European and US markets. But if BenQ wants to be counted among the global leading brands in its sector, it must invest in R&D, design and consistent brand activities," he said.
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