Motorola Inc, the world's second-largest mobile phone vendor, plans to order more handsets from Compal Communications Inc (華寶通訊) to boost sales of cheaper phones targeted for customers in countries such as India and China.
Schaumburg, Illinois-based Motorola plans to increase sales of handsets with a wholesale value of under US$40 each, which are manufactured by Taiwan's Compal, said David Taylor, a Motorola director in charge of high growth markets, in an interview in Singapore. He declined to comment on specific figures such as sales projections.
Chief Executive Ed Zander is banking on cheaper phones to help Motorola compete against rivals such as Nokia Oyj, the world's largest mobile phone vendor, and Sony Ericsson Mobile Communications Ltd in countries such as India and China where most people don't own a mobile phone.
"There's probably about 3 billion [people] who have got mobile phone coverage but can't afford to buy a mobile phone," said Taylor, who spoke on the sidelines of the CommunicAsia 2005 conference.
Growth in cheaper handset sales is outpacing that of more expensive phones "by a factor of several to one."
Under an exclusive contract, the under-US$40 C115, C116, and C117 models are designed by Motorola and produced by Compal's Chinese plants, Taylor said.
"We're all after a very, very large pool of potential consumers if we can get the product right, with the right brand," said Neil Stewart, a marketing director of high growth markets for Motorola.
Compal Communications, a handset unit of notebook computer contract maker Compal Electronics Inc (仁寶), recently overtook BenQ Corp (明基) as Taiwan's biggest handset maker and Motorola's biggest partner in designing and making middle-range handset models.
The company targets a shipment of over 25 million units this year, a
Chinese-language CnYES Web site reported yesterday, citing company chairman
Ray Chen (陳瑞聰) as saying.
Chen made the remark after the company held an annual general meeting in
Taipei. During the meeting, Compal Communications decided to distribute
NT$3.5 dividends to shareholders, including cash dividend of NT$2.5 per
share, Chen added.
Looking ahead, Chen said the demand remains strong for the third quarter,
and the firm is targeting 3 million units in shipment for the quarter
through September. For the year of 2006, the shipment is expected to grow by
30 to 40 percent from this year, he said.
To maintain a stable profit, Chen said the company has not ruled out
possibility to team up with domestic handset component makers. He didn't
elaborate.
Gross margin, percentage difference between a company's sales income and its
cost of goods sold, is expected to stay above 10 percent in the second half
of the year and throughout next year, Chen said. The company reported an
around 13-percent gross margin in the first quarter, according to Chen.
Shares of Compal Communications dropped 0.65 percent to NT$92.4.
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