Service firm cooperates with Quanta

Local mobile-phone-service giant Taiwan Cellular Corp (台灣大哥大) entered into a strategic alliance with notebook and mobile phone maker Quanta Computer (廣達) yesterday, to cooperate on customized cellphone manufacturing.

"Our cooperation will efficiently bridge the gap between mobile services and handset designs," said Joseph Fan (范瑞穎), president of Taiwan Cellular.

He said that inconsistency between cellphone software and hardware has been a hinderance to the development of more advanced mobile services.

The problem is that handsets need to be designed to match the parameters of content providers.

"Our company started to advertise multimedia short messaging services [SMS] last year, but not many mobile phones are equipped with color screens."

The two plan to work together on research and development, manufacturing and marketing, Fan said.

Cellphones services include short messaging, ring-tone downloads and multi-color graphics.

The practice of combining services with handset designs has already proven successful in Japan.

"Handset manufacturers such as NEC, Panasonic and Sony have worked with mobile operator NTT DoCoMo in service development and phone design for years," said Alex Cheng (程懷山), public relations director of Taiwan Cellular. "That's why DoCoMo services have such a good track record."

NTT DoCoMo is Japan's leading mobile-phone operator with 37 million subscribers -- approximately 58 percent of Japan's domestic market.

The arrangement will benefit Quanta as well, with the company expected to get more than 500,000 handset orders from Taiwan Cellular this year, Fan said. Although the alliance doesn't involve any capital investment, Taiwan Cellular's chairman said the deal may be expanded in the future.

"Manufacturing is the first stage of our cooperation, while further talks or investment projects are possible," said Sun Dao-tsun (孫道存), chairman of the Taiwan Cellular Group.

Following yesterday's alliance ceremony, the two companies displayed their first handset, featuring a color screen and multimedia graphics.

The company is banking on "color" this year.

"I believe color-screen handsets will be the most important stimulant in this year's mobilephone market," Fan said.

Taiwan Cellular may receive dual benefits from the deal.

"If they can spur demand for color content, users will spend money on downloading graphics or buying new phones with color screens," said Nathan Lin (林宗賢), a telecom analyst at National Securities Corp (建宏證券).

The companies are also pinning their hopes on a jump in cellphone sales this year.

"With the life cycle of handsets averaging about two years, people who bought their first phone in 1999 are expected to purchase a second one sometime this year," Lin said.