Partner Selection Criteria in Strategic Alliances When to Ally with Weak Partners



Sony Ericsson marketed its first 3G handset, the Z1010, in June 2004. Katsumi
lhara, president of Sony Ericsson, admitted it had experienced difficulties in stabilizing
the hardware and software in what he refers to as a
“very complex new technology”.19
Thus, again, the firm may have lacked advanced research and development skills but its
strong presence and the associated competencies plus the unique combination of knowl-
edge from the European and Japanese markets made it appear as a strong partner.

Comparatively, Motorola was a global leader in 1995 with a 60 percent market
share. Yet, in 2003 its market share had dropped to 15 percent. It has been argued that
Motorola failed because “
it misread consumer preferences, alienated telecom companies,
and stumbled in developing new products”
(Tulsian, 2004). Motorola was the first hand-
set manufacture to ally with “3”. For Motorola the partnership was a good way of pursu-
ing its ambitious goal of increasing its European market share from 10 to 20 percent from
2003 to 2004. Motorola Nordic mentioned that “3” is highly prioritized, because “3”
drives the Nordic 3G market.20

Japan’s NEC was once a major player in Europe’s mobile market, but the firm
was slow to build phones for the GSM networks that emerged in the 1990s. Conse-
quently, NEC, which ranked sixth in units sold in Europe in 1995, saw its market share
collapse, and pulled out of Europe.21 With little market share and a potentially large 3G
market in Europe, NEC regarded allying with “3” as an attractive opportunity to penetrate
the market.
“We hope 3G will allow us to become a top three player in the world again”
said Hideyuki Tsunoda, general manager of NEC's mobile terminals division. Jenny
Nielson NEC’s Nordic marketing director commented that NEC has high expectations for
the market, because it is among the first on the market.

Sharp did not have any significant presence in Europe before it allied with Voda-
fone. In April 2001, Sharp Telecommunications of Europe Ltd. was established in order
to bring 2.5G Sharp GSM/GPRS mobile phones to the European market. Although Asian
handset producers such as NEC and Sharp potentially had knowledge advantages in terms
of 3G handset requirements from their home markets, a comparison with the European
incumbents made them look as inadequate contesters. They basically lacked what was

19 Financial Times, ”The Next Generation Finally comes of Age ”, February 18 2004, Survey Edition, p. 1.
20 B0rsen, January 21 2003.

21 Wall Street Journal Asia, August 29 2002, p. 4.

19



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