3GSM: Siemens defiant despite handset doubts

Siemens has spoken openly about the options for its mobile handset arm, bristling at the thought of closing the loss-making division altogether.

Speaking at the end of the first day of the 3GSM show in Cannes this week, Siemens Communications CEO Lothar Pauly focused on the company's mobile infrastructure business - selling equipment such as 3G base stations - which has been doing well.

Conversely, the German vendor will only bring out two 3G handsets in Europe this year - against 16 stated by rival Motorola - and it was inevitable that the future of the mobile handset arm was the subject of most attention.

"Both the old and the new CEO [of Siemens group] made it clear that we are evaluating all four options: partner, sell, fix or close," said Pauly. "We don't want to close it. It would destroy too many values."

He admitted that while his communications business overall still looks healthy - it brings in €18bn in revenues - mobile handsets were losing the company €1m every day.

He said "sharp" cost cutting and a product offensive, for example upcoming data cards and redesigned software, will make the Mobile Devices division "more successful than today".

There have been rumours that partner NEC could buy the unit or that another vendor from the Far East such as LG might see Siemens as a bridgehead into Europe.

One source at a network operator who declined to be named told silicon.com: "My bet is that they will try to sell [the unit]. But they will have to show it can do better first."

In communications, out of eight units only Siemens' mobile devices and fixed networks businesses have been making a loss but there is a perception 3G hasn't treated the company kindly.

On the contrary, Pauly pointed out the vendor was the top seller of W-CDMA 3G network equipment for the last calendar year.

Moreover, it has announced a data card for the second half of this year based on silicon from Qualcomm and the bearer technology HSDPA, sometimes referred to as 3.5G.

The first day of 3GSM also saw Siemens take the lid off an end-to-end WiMax solution it has dubbed SkyMAX for the same period and say it is the world's leader in machine-to-machine (M2M) communications, this week partnering with Orange and citing Konica Minolta as a customer.