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> Why is it so hard to build a 3G phone?
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ZDNet Australia
By Angus Kidman, ZDNet Australia
01 December 2003
Shortages of 3G phone handsets are likely to continue in the short-term as manufacturers iron out glitches in product design and tighten manufacturing processes, industry experts concede.
A lack of available handsets has often been cited as a roadblock to the uptake of 3G, which offers much higher transmission rates and increased network efficiency. This in turn enables features such as video calls and real-time streaming media.
However, to get those features, callers need a dedicated 3G phone. Hutchison, which runs the 3 network in Australia, offers phones from just two manufacturers: Motorola and NEC. Vodafone last week announced plans to build its own standalone 3G network, but hasn't yet revealed which manufacturers it will contract, while Telstra's future plans also remain shrouded in secrecy.
In part, the availability of handsets is a chicken-and-egg problem: manufacturers don't want to invest large sums of money in developing new models until the market is larger, while network builders need a range of handsets available to woo consumers in the first place. "Chipset costs will tumble as volumes start to ramp up," Ovum analyst Neale Anderson wrote in a commentary earlier this year. However, the switch to 3G also poses unique challenges. Simply manufacturing a 3G handset is two to three times more complex than a current GSM phone because of the technology involved, according to Robert Parris, general manager of the Beijing factory which produces Sony Ericsson phones. The site has begun prototyping the 3G manufacturing process but is not yet in full production.
Despite those difficulties, phone production is expected to eventually increase. IDC has estimated that global shipments of 3G phones will top 48 million in 2004, up 140 per cent on this year. Ericsson chief executive officer Carl-Henric Svanberg has predicted that there will be around eight full suppliers to the 3G handset market by the end of 2004.
Angus Kidman visited Beijing as a guest of Ericsson.
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Posted: 2003-12-01 06:14:49
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