NEC FACES LONG ODDS WITH U.S. STRATEGY

NEC has its sights on the U.S., hoping to leverage its experience with 3G operators in Japan and Europe. But with just one phone to market and a foreign management team, the mobile phone company will find the U.S. challenging turf.

Unlike Kyocera, which tapped former Ericsson and Teligent executive Skip Speaks to lead its U.S. operations, NEC America's wireless division will continue to be managed from Japan.

“Kyocera has been helped along by the fact that it is linked to a U.S.-based wireless company like Qualcomm,” said Allen Nogee, an analyst with Cahners In-Stat Group.

T.C. Robillard, a wireless equipment analyst with Salomon Smith Barney, agreed that it would make sense to have some U.S. representation on the management side.

“If you look at all of the successful global corporations, they all tend to look for local talent when it comes to local marketplaces,” Robillard said.

In the mobile handset market, however, it's not a hard and fast rule. Ericsson CEO Kurt Hellstrom has served as head of wireless sales and held positions all over the world for the Swedish giant.

“I don't think there is any right or wrong answer,” Robillard said. “I think NEC's mobile interests are more global than anything else.”

NEC maintains it has been a part of the U.S. wireless market since the mid-1980s. The company stopped selling products domestically in 2001 but kept some of its research and development and customer support in the U.S. for existing customers. The company believes its domestic departure provided it with an opportunity to regroup its U.S. efforts.

NEC is counting on its GSM experience to win favor in the U.S. market today, said Jose Sosa, vice president of marketing for NEC America's wireless engineering division. “Before, we were chasing TDMA and CDMA in the U.S., and GSM in Europe and PDC in Japan. We didn't have the resources to be successful in all of those standards.”

The company expects to launch its first phone, the N515, in the U.S. market by the fourth quarter. The 2.5G quad-band phone will come equipped with a color screen.

History isn't on NEC's side, however. Several Japanese companies, including Oki Telecom, Denso and Sony, have tried but failed to make much of a dent in the U.S. market in the past, Nogee said. Sony in fact tried to reclaim its position last year, but only after teaming up with Ericsson on a joint venture.

A potential roadblock could be securing relationships with U.S. carriers, most of which have grown accustomed to dealing with long-time players Nokia, Ericsson and Motorola. NEC, which has a penchant for mobile computing devices, also must get its products in the hands of large systems, said David Berndt, director of wireless mobile technologies at The Yankee Group.

Still, Robillard believes NEC's move could have big implications for current market leader Nokia. “A Japanese manufacturer like NEC does represent a credible challenger especially because the industry is moving from a voice-centric type of device to an integrated data device,” he said. “Companies like NEC bring expertise in terms of entertainment-geared devices.”

Although traditional handset players are adept at the actual radio frequency technology, Japanese vendors are known for their consumer electronics expertise, Robillard said. “It will be interesting to see how it plays out. The industry needs both of those things to be successful in 3G.”