BenQ will struggle to attract bids for mobile division, says Gartner

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Although its insolvency administrator raised the possibility of a sale, BenQ’s mobile handset division is unlikely to attract many bidders, according to Gartner.

“It’s hard to imagine anyone wanting to buy it as a functioning business given its tiny market share, poor track record and high-cost base in Germany,” the analyst firm stated in an advisory note.

The division, which BenQ inherited from European electronics firm Siemens AG in 2005 and which it recently decided to stop funding, was fast losing market share, according to Gartner, dropping from around 4.5% of the global market in the fourth quarter of 2005 to 3.3% in the second quarter of 2006.

Gartner said the outcome had some interesting implications for the rest of the mobile phone industry, however.

“This event illustrates just how competitive the mobile phone business is, and how you need to have massive volumes to support the research and development necessary for a broad consumer product range,” the research note stated.

“This is an industry where it’s likely the top three (Nokia, Motorola and Samsung) will grow stronger. This isn’t the end of consolidation; it’s very probable we’ll see further changes in the market landscape around the smaller tier two and three manufacturers such as LG, Sharp, Sagem, Panasonic and NEC,” the note added. BenQ Corporation announced at the end of September it had decided to stop funding BenQ Mobile, the German mobile phone division it took over from Siemens, citing “unsustainable losses” as making the decision unavoidable.

Siemens paid BenQ approximately US$317million to take the unit off its hands, but the Taiwanese firm has been unable to restore it to profitability. BenQ estimated it had lost US$760million at the unit since it took it over.

Shortly after its parent company’s announcement, BenQMobile filed for insolvency protection.

“Siemens must feel that the 300 million euros it paid to rid themselves of the ailing handset division in 2005 was money well spent,” added Gartner.

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