19 June 2006

Siemens and Nokia

The merger of Siemens' and Nokia's mobile phone divisions is all over the news today (see, for example, this). As this BusinessWeek article points out, this isn't the first merger in the telecom equipment sector.

Do you think that this merger will provide benefits for innovation? Who do you think benefits the most from this merger? Do you think that this is significant in changing the competitive dynamics of the telecom equipment industry?

Update: This article adds a bit more dimension to the industry environment ...

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1 comment:

KuangChiu Huang said...

Too many mergers in telecom industry with mega scale make them normal not mania. They might be the chain effect from liberalization and privatization. After the reshuffle of telecom service providers, mergers of telecom equipment vendor could be a prescribed story. Buyers and sellers in telecom equipment market pursue for economies of scale from the fixed strategy, merger and acquisition (M&A), to gain strong bargain power, full product line, complete customer network and relationship, and efficient operation from cutting off duplicated positions. Innovation in technology, however, may not be significant benefit of a merger.

The boundary of telecom sphere collapses by the convergence of telecom services. It means the competition could come from different sectors. (Fixed telephone, cable TV, Satellite, Internet, mobile phone) The merger from Cisco/SA and Siemens/BenQ could be the forerunners to indicate that M&A would not be restricted in the same sector as Nokia and Siemens. Mergers in the future could expand to different sectors and news regions. (From America & Europe to China and developing countries)