Commentary: Will the co-brand strategy for handsets work for Garmin and Asustek?
The early February announcement of a strategic alliance between Asustek Computer and PND vendor Garmin to develop and market co-branded LBS (location base service)-centric mobile phones looks to complement both companies. But the reluctance of the companies to reveal more details of their business model, and a lack of a new entity to spearhead marketing of the co-branded products may eventually cast doubts over the prospects of the joint effort.
For Asustek, the alliance may turn out to be the best solution for its money-losing handset unit as it can, from now on, leverage Garmin's established channel network to expand its handset sales, especially in the US market. It is also a reasonable option for Garmin, a newcomer to the handset market, to team up with an OEM partner that has strong design and manufacturing capabilities.
While Asustek and Garmin have pledged to share expenses as well as profits from their joint efforts, the companies have decided not to establish a new entity to run the co-branded product business, and instead, will form a virtual operating committee comprised of top executives from the two companies. Many industry watchers and analysts at institutional investors are skeptical over the effectiveness of this kind of cooperation model.
In the meantime, the companies have also shied away from the question as to who will be responsible for consolidating and distributing resources to advance the product image of the Garmin-Asus Nuvifone series handsets.
Some observers have pointed out that Garmin and Asustek may have decided to leave this issue open to pave the way for the formation of a new joint venture, probably in 2010, to operate the co-branded business.
Planning to launch the first Garmin-Asus Nuvifone G60 handset in first half of 2009, both Asustek and Garmin are confident over the development of LBS-centric handsets, predicting the number of LBS handset users to grow from 320 million in 2007 to 1.9 billion in 2013.
However, there remains one critical question: Will the Garmin-Asustek tie-up be able to catch up with High Tech Computer (HTC) or other vendors who are far advanced in the development of Android-powered handsets if Garmin and Asustek decide to focus on Linux-based products?
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For Asustek, the alliance may turn out to be the best solution for its money-losing handset unit as it can, from now on, leverage Garmin's established channel network to expand its handset sales, especially in the US market. It is also a reasonable option for Garmin, a newcomer to the handset market, to team up with an OEM partner that has strong design and manufacturing capabilities.
While Asustek and Garmin have pledged to share expenses as well as profits from their joint efforts, the companies have decided not to establish a new entity to run the co-branded product business, and instead, will form a virtual operating committee comprised of top executives from the two companies. Many industry watchers and analysts at institutional investors are skeptical over the effectiveness of this kind of cooperation model.
In the meantime, the companies have also shied away from the question as to who will be responsible for consolidating and distributing resources to advance the product image of the Garmin-Asus Nuvifone series handsets.
Some observers have pointed out that Garmin and Asustek may have decided to leave this issue open to pave the way for the formation of a new joint venture, probably in 2010, to operate the co-branded business.
Planning to launch the first Garmin-Asus Nuvifone G60 handset in first half of 2009, both Asustek and Garmin are confident over the development of LBS-centric handsets, predicting the number of LBS handset users to grow from 320 million in 2007 to 1.9 billion in 2013.
However, there remains one critical question: Will the Garmin-Asustek tie-up be able to catch up with High Tech Computer (HTC) or other vendors who are far advanced in the development of Android-powered handsets if Garmin and Asustek decide to focus on Linux-based products?
source
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