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Siemens would like to offer CDMA networks

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CIOL Bureau
New Update

Lucas van Grinsven

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BARCELONA: German electronics conglomerate Siemens AG said on Monday it would

like to offer a mobile phone technology which dominates the Americas and South

Korea, but would not comment on rumors it might seek to buy a unit from Motorola

to achieve that goal.

US giant Motorola, which said last week it wanted a partner for its mobile

infrastructure business, offers the CDMA network technology that Siemens does

not have at the moment.

Siemens Mobile chief operating officer, Lothar Pauly said CDMA and CDMA 2000

technology would be used in 20 or 30 per cent of the wireless networks around

the world, remaining a small challenger to the current standards GSM and new

UMTS networks that will be used in the remaining 70 to 80 per cent of networks.

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"It's not a necessity (to have CDMA), but it would be nice to have

it," he told investors at a conference organized by investment bank Credit

Suisse First Boston in Barcelona.

He added Siemens was not going to develop the technology itself, which

immediately raised questions if the German company was in talks to buy the unit

from Motorola. Motorola and Siemens are already cooperating in mobile handsets,

with Motorola providing Siemens with new third generation phones and chips.

"We're not going to develop CDMA. It would be crazy to spread our

research and development on more than two technologies, GSM/GPRS and UMTS,"

Pauly said. "I have no comment on rumors," he said in reply to the

questions if it was interested to take over Motorola's unit.

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Motorola phones



Pauly also gave an update on the new Motorola phones Siemens will rebrand
and sell as of the fourth quarter of this year. The new dual-mode phones,

capable of working on existing second generation wireless networks as well as

soon-to-be-launched third generation (3G) networks that are designed for data

communications, will come out of interoperability tests in June.

"They will be workable in a commercial way in the fourth quarter,"

Pauly said, putting the company on a par with Nokia and Sony Ericsson.

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He added a second 3G model, with all of Motorola's hardware inside, but

designed by Siemens and with Siemens software inside, will come out in the third

quarter of 2003. Siemens will move to its own model by early 2004 with only a

Motorola semiconductor inside.

Pauly added he expected another 10 per cent decline of the average price of

its mobile phones this year, as the company continued to move to lower priced

models for developing markets.

"Average selling prices might go down by another 10 per cent maximum

from now until Christmas. In the fourth quarter I expect an increase, not driven

by (recovering) demand, but because several new handsets, that we have not yet

shown, will come onto the market," he said.

Global mobile phone sales are expected to remain little changed at around 400

million units this year. Rapid growth has stopped in the wake of lower subsidies

by operators and high penetration in developed markets, without new services to

drive replacement sales.

Siemens sees continued growth in developing markets for which it produces

cheaper phones of less than $100 on which it claims to achieve good profit

margins. Pauly said the low-end market will be 40 per cent of the global market.

Siemens is the world's fourth largest mobile phone maker with a market share of

around eight per cent, challenging the recently combined mobile phone operations

of Sony and Ericsson.

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