[3GScottishUser]

From Mobile News (21/09/2006):

Japanese manufacturer NEC is pulling out of the UK and European handset markets because of production costs and competition within the market place.

NEC contacted all UK operators last week to inform them of its decision. It will honour existing supply contracts, but will not launch new products or seek new supply deals for at least 12 months.

UK MD David Payette, who joined NEC from Avaya a year ago, called the move a "hiatus", so NEC could reassess the European market to better cater to the demands of network operators.

He said: "It is a streamlining exercise and there will be a hiatus from new business directions for about 12 months while we re-examine our position in the UK and Europe. We will look at profitability, product sets and market features wanted by the network operators.

"The mobile device arena is extremely price-competitive and there has been a period of consolidation and commoditisation. The Japanese cost of production has not been ideally suited to the European market. Most of our relationships in the UK and Europe have not been sustained through the handset arena, but through infrastructure and support of new network technology. That is where we will continue to focus."

According to sources close to the situation, there will be around 31 redundancies at the company as a result. Payette said the number would be closer to 20, and that NEC would attempt to redeploy staff elsewhere within the corporation.

"About 20 roles will be impacted, but NEC is a large corporation so there should hopefully be opportunities to redeploy staff," said Payette.

NEC was the first handset manufacturer to produce 3G phones, which 3 took to launch the network in March 2003. Motorola, Nokia and LG were soon competing in the 3G space as well, however, and NEC launched its last 3G model, the NEC e338, in November 2004.

Refurbished NEC handsets still appear in the channel on pre-pay, but the 3G market is dominated by the major handset manufacturers now. NEC has turned out GSM models in the meantime, almost unnoticed.

One distributor source said: "It is probably overdue. It has no footprint at all. It initially had a semi-exclusive deal with 3, but that has run its course and NEC hasn't launched a 3G handset for a long time."

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