Nokia, Siemens To Merge Networks Units

Nokia and Siemens have announced they plan to combine their perennially underachieving network infrastructure units in a joint venture. Despite Siemens' unit being much bigger, Nokia looks to be getting the bigger say in its management, perhaps reflecting Siemens' CEO's desire to do just about anything to give the unit a boost and follows his deal to get rid of Siemens' mobile handset unit by essentially paying Taiwan's BenQ to take it. On paper, the deal sounds good -- particularly combining Siemens' strength in fixed networks with Nokia's mobile expertise in light of the growing trend of fixed-mobile convergence. The JV has its sights set on Ericsson, the market's top dog, but it's easy to be skeptical that the combination of two laggards (though slightly profitable ones), will pose that much of a threat to the company. Some analysts are pointing out that the deal should bring more pricing stability to the market, but again, this is far from assured, should the Nokia-Siemens JV come out very aggressively. The biggest impact may be felt by what are now second-tier manufacturers like Motorola and Nortel, which have thus far resisted consolidation, and now lack their rivals' scale and scope.

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