NEC and Matsushita are to work together in developing 3G software. The software will concentrate on getting video to the handsets - something that will remain a main selling point when the networks and handsets are finally available.

The link-up was first reported by Japanese newspaper Nihon Keizai Shimbun, which said a formal announcement will be made tomorrow. NEC has already admitted the joint venture.

The decision for two such big companies to work together on 3G is most likely a sign of things to come. The huge cost of rolling out 3G has everyone involved in it panicking. The companies behind infrastructure have already announced a wide range of partnerships. Now it's the turn of software and hardware manufacturers.

The next-generation networks may well start off with the cheapest rather than the best software. Large scale link-up will help companies lower price while not taking such a hit in investment.

It doesn't help either that demand for other mobiles is falling, leaving companies with less money to invest in development. ®