Nokia & Sanyo Venture Successfully Minimizes Cannibalization

In the wake of Nokia and Sanyo's announced partnership, Compete analyzed actual shopping behavior across all major carriers to determine the other manufacturers' handsets that shoppers tended to compare against Nokia. Compete found that Nokia shoppers were least likely to cross-consider a Sanyo handset - only 9% of Nokia shoppers also evaluated Sanyo phones. In contrast, nearly half of Nokia shoppers also considered a Samsung phone.

Sanyo's exclusive carrier partnership with Sprint naturally limits its overlap with Nokia, since Sprint only offers one Nokia handset. Still, Nokia's VI-3155 is more likely to be compared to LG's PM-225 and Samsung's A560 than it is to be shopped against a Sanyo device.

For future partnerships, analysis of actual shopper behavior will be even more valuable since few OEMs with exclusive carrier relationships remain. As a result, calculating overlap is more complicated. By merging companies with the smallest shopping overlap, manufacturers can maximize the benefits of cost savings while minimizing the degree to which their combined portfolio will compete for the same consumers.

According to data from Compete, Motorola's RAZR series continues to lead U.S. consumer handset demand, a first place ranking it has held since Thanksgiving (and for 12 of the prior 15 weeks).

Looking at performance of the top five devices, the RAZR series saw a more pronounced impact from the increase in holiday shoppers than any other device. After a lull in January, demand for RAZRs bounced back to almost pre-holiday levels in early February with the roll-out of the pink RAZRs at Verizon Wireless and Cingular.

Motorola also enjoyed success with the strong launch of the SLVR with Cingular. In the first and second weeks of its launch, the SLVR was the second most popular device series overall and the most popular device to be offered exclusively on one carrier.

With its emphasis on unique design and the increased cost of designing truly original handsets, Motorola has moved toward a "blockbuster" approach to device differentiation. This approach (similar to the movie industry) increases the importance of each individual release and requires Motorola to milk strong performers for as many "sequels" as possible. Thus far, it appears that different colors and other line extensions will be the key to maintaining the RAZRs' popularity, as the pink RAZRs successfully did heading into February."

Posted to the site on 8th March 2006