UPDATED: M1 could be turning point for Sanyo, Sprint Nextel

UPDATED December 7, 2006
OVERLAND PARK, Kan.-Sprint Nextel Corp. and Sanyo Electric Co. introduced the latter’s M1 handset, a high-end multimedia phone with lots of onboard memory and a two-megapixel camera, for $200 with a two-year contract.
The phone may provide the gotta-have-it crowd with another device for enjoying Sprint Nextel’s video and music offerings, though in the current handset pricing environment, $200 is considered a relatively high price for American consumers to pay. Meanwhile, Sanyo continues to deal with large losses from weak sales in its digital camera and mobile phone businesses.
Sanyo-the world’s ninth-largest handset vendor-announced in November that it projects a net loss of $435 million for the fiscal year 2006-2007.
While Sanyo has a strong foothold in its native Japan, its global market share is only about 1.3 percent-a position characteristic of second-tier handset vendors beyond the top six players. Unlike other second-tier handset vendors, Sanyo’s market share actually grew by one-tenth of one percent over the past year, from third quarter 2005 to third quarter 2006, according to Strategy Analytics. The company was dealt a blow earlier this year when a planned joint venture to deliver CDMA handsets to the United States market for Nokia Corp. was cancelled by both parties in June.
Sanyo has supplied the bulk of Sprint Nextel’s CDMA mobile handsets-up to one-third of the carrier’s portfolio-and thus its fate is closely tied to the carrier’s recent, uneven performance. Whether Sprint Nextel’s business has suffered from its handset offerings, which it has recently succeeded in expanding with several popular Motorola Inc. models, or whether Sanyo is paying the price for Sprint Nextel’s performance is a matter of speculation.
Meanwhile, the M1 arguably represents the apex of the two companies’ cooperation to date. It provides 1 gigabyte of internal memory, or storage for approximately 16 hours of music, and provides users with an external display and music controls, as well as text messaging, Bluetooth and GPS functions.