Ericsson`s recently-announced deal to outsource handset manufacturing to Singapore-based Flexitron deftly re-positions the company to retain its global dominance in the cellular market.
One of the most important benefits of this deal is that it will enable Ericsson to cut the time-to-market of new products and allow it to sharpen its own focus on the development of technological innovations.
Peter Brasnyo, director, southern Africa, consumer division at Ericsson explains: "We spent over a year on outsourcing trials prior to the Flexitron sale so we has experience of the benefits of outsourced handset manufacturing. It made business sense to consolidate manufacturing in the Far East, as many components were already being produced there."
The cost savings created by this deal are projected to amount to $1.5 billion per annum by 2002 and Ericsson is forecasting a return to profitable handset production by 3Q, 2001. The company also found reliability and quality improved with outsourced manufacturing.
Apart from cutting handset costs, the deal enables Ericsson to focus on R&D, and marketing and sales activities. "Our customers will benefit from high-performance, low-cost handsets while the company will increase its market share by remaining at the leading edge of developments in new functionality and infrastructure as well as through improved customer service levels," adds Brasnyo.
The outsourcing deal is viewed by Ericsson as the cornerstone of an aggressive five-year delivery plan that will see seven new models launching in SA this year alone. The new cellular phones are targeted to meet the specific needs of a wide range of users. The new phones range from small and desirable status symbols and funky fashion accessories to the truly rugged water- and shock-proof models.
All the new models are fully WAP-enabled and have SMS capabilities. Proximity-switching is another new feature where, if the phone moves away from the ear, the volume automatically goes up until it switches to hands-free broadcast mode.
Ericsson`s R&D into G3/G4 technologies means that many new concepts will be coming to market in the next five years." Brasnyo comments: "The possibilities are endless but you`re likely to be watching TV on your cellular phone, for one thing!" Another sure thing is that cellular telephony is set to explode in sub-Saharan Africa, as well as China and India.
Brasnyo concludes: "The dynamics of the cellular market have moved from a specialist to a mass market. This means that cellular services are now within the reach of many millions of people that have never had access to any type of phone.
"Ericsson is committed to continue delivering the right product at the right price at the right time. But it`s not just about desirable product anymore - it`s more about giving consumers exactly what they want."
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