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Speculation rife over £15bn Motorola/Siemens tie-in

But does joint handset/wireless venture make sense?

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Motorola and Siemens are looking at creating a new joint venture to cover their handset and/or wireless infrastructure business, according to the Wall Street Journal.

A joint venture would be valued at between £14 billion and £17 billion, the article says. The talks have been going on since the start of summer but have apparently reached a critical point - which may explain the sudden leak.

People involved in negotiations say that a merger is definitely not on the cards. Officially, neither company is saying anything.

Question is: does such a tie-up make sense? Or is this just another round of talks over nothing so over-paid execs have something to talk about?

Well, we don't see what exactly the two have to gain by linking up. Yes of course there will be cost savings and the chance to take a bigger chunk of the market but for it to make real sense, you would have to assume that the market couldn't sustain the number of mobile manufacturers already in the market.

Besides, Motorola already announced its future business approach in July - it will sell its proprietary 2.5G and 3G phone technology to third parties. The idea being that the mobile market will become like the PC market and the real competition will be on design, price, software and brand rather than the actual technology.

At the time, Motorola VP Fred Shlapak said: "We see this as the beginning of a major discontinuity that parallels the PC industry in the early 1990s with the rise of the motherboard industry and major branded assemblers."

This idea was further supported just a week later when Ericsson announced essentially exactly the same approach. ®

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