Sagem Finds It's Better Off With Its Brand In The Back Seat
French vendor Sagem was never much more than a bit player in the handset market, but a couple of recent deals suggest the company could be finding some success with a new strategy as on ODM (original design manufacturer) creating handsets for companies with stronger brands. It’s announced today that it will build a low-cost handset for Vodafone that the operator will sell under its own brand beginning in June. Sagem’s done work with Vodafone before, building its Vodafone Simply handsets, designed for people looking for no-frills and simplified devices. The Vodafone news comes a week or so after Sony Ericsson said it would outsource development and manufacturing of its low-end devices to Sagem. This deal lets Sony Ericsson build up its low-end portfolio — which has been fairly thin to date — and make a bigger play in high-growth emerging markets like India and China. For Sagem, emphasizing its ODM business is a smart move as it allows the company to leverage its expertise and manufacturing capacity and sell handsets without having to worry about marketing its relatively weak global brand. Still, some of the same factors are at play here as in the wider handset market, meaning margins will be pretty thin. However, if it can make them work, it may find more interest from other handset vendors looking to outsource their low-end handset business, while the interest from operators in low-cost white-label devices will remain strong.