Nextel Communications Inc. finally found another vendor willing to manufacture handsets incorporating Motorola Inc.’s proprietary iDEN technology.
Nextel and Kyocera Corp. signed a letter of intent last week calling for the Japanese vendor to produce a small high-end integrated Digital Enhanced Network phone by late next year.
The announcement may be a bit premature since Nextel’s new vendor has yet to sign a licensing agreement with Motorola.
“We don’t have a license agreement,” said Peter Aloumanis, director of U.S. customer operations for Motorola’s iDEN Subscriber Group. “We’re in discussions. The way we wanted to structure this was for Nextel and Kyocera to reach an agreement first.”
Aloumanis said he expects Motorola to hammer out an agreement with Kyocera within the next 30 to 60 days. Nextel has searched many months for another handset vendor to support its rapidly growing subscriber base and give consumers another choice. Motorola since 1995 has offered iDEN technology for licensing, acknowledging that doing so would create a more competitive environment and attract more network operators to the technology. Four years later, nationwide operator Nextel and Southern Linc are the only carriers in the United States to deploy the technology, and Kyocera is the first vendor willing to license it.
Aloumanis explains: “The industry has viewed Nextel as a niche player, as an oddity. This year, Nextel has demonstrated it is a national player and international player. All of a sudden it might just be one carrier that has iDEN, but it’s the carrier the size of AT&T and Sprint. It’s not this small quirky thing anymore.”
Motorola’s technology always has garnered a lot of interest from other vendors, but the iDEN market still is too small to support a number of vendors that must pay royalty fees to Motorola, analysts have said.
Aloumanis, however, is confident other handset manufacturers will come on board as they witness Nextel’s success. The operator added 1.3 million customers in the first three months of this year, ending September with 4 million digital customers.
The iDEN market may be the most attractive way for Kyocera to enter the U.S. handset market, according to analysts, since the U.S. CDMA, TDMA and GSM handset markets are highly competitive and overpenetrated.
“It gives Kyocera the opportunity to enter the U.S. market in a more substantial way,” said Matt Hoffman, analyst with SoundView Financial Group in Stamford, Conn.
Kyocera, a long-time handset supplier to the Japanese market, supplies satellite handsets to Iridium L.L.C. The vendor is rumored to be on the short list to acquire Qualcomm Inc.’s Code Division Multiple Access handset division.
