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  • Kyocera focus is on smart phones

    Six years before Apple launched the iPhone, San Diego-based Kyocera Wireless had a smart phone on the market running on Sprint and Verizon networks.

    Six years before Apple launched the iPhone, San Diego-based Kyocera Wireless had a smart phone on the market running on Sprint and Verizon networks.

    But Kyocera abandoned smart phones in 2005 — two years before the iPhone ignited the smart phone firestorm in the United States — to concentrate on less-expensive flip and slider phones, which sold in greater volume at the time.

    Today, Kyocera is back with the Sanyo Zio by Kyocera, an Android smart phone selling on Cricket Wireless and Sprint.

    But instead of leading the charge as it did in 2001, Kyocera is trying to figure out its place in a crowded market dominated by Apple, BlackBerry maker Research In Motion, HTC, Motorola and Samsung.
    Kyocera Wireless’s arc from technology leader to follower highlights how drastically its cell phone business has changed since the Japanese company entered the cell phone business in the U.S. 10 years ago with the acquisition of Qualcomm’s handset manufacturing business in San Diego. Back then, Kyocera Wireless employed about 2,400 workers locally making and engineering mobile phones. At one time, Kyocera trailed only Qualcomm for patent filing among San Diego companies — a rare thing for a manufacturer.

    Now Kyocera Wireless — renamed Kyocera Communications — employs about 300 in San Diego. It outsourced manufacturing in 2006. Its primary focus has been selling low-cost phones to regional carriers and no-contract operators such as Virgin Mobile.

    “These guys were early leaders in the smart phone space,” said Michael King, an analyst with technology research firm Gartner. “And then they kind of lost focus after a little while.”
    Kyocera says it has regained focus and is committed to competing in the cell phone market. In 2008, it purchased the handset business of Sanyo Electric for $375 million — expanding its cell phone lineup and helping it get better deals from suppliers because it can buy parts in greater volume.

    Speaking through an interpreter, Kyocera Communications President Eiichi Toriyama said the company’s strategy involves not only the North American market but also Latin America, Asia and other parts of the world.

    “We are the only Japanese manufacturer that has survived” in the U.S. market, he said. “We are proud of ourselves for having survived in this market for 10 years. We would like to be the front-runner of Japanese companies in the wireless space.”

    Kyocera is a Japanese industrial conglomerate that makes everything from ceramics to solar panels. It has been making cell phones in Japan since the 1990s. After Kyocera bought Qualcomm’s handset business in 2001 for $242 million, it established Kyocera Wireless in San Diego as its North American cell phone headquarters.

    Initially, it sold handsets to Verizon and Sprint, whose networks use Qualcomm’s Code Division Multiple Access, or CDMA, technology.

    But competition was fierce among handset makers on these nationwide networks, and Kyocera struggled against Korea’s Samsung, LG and other large phone makers that were aggressively seeking market share. “You could argue that LG and Samsung sacrificed significant revenue and even profitability to own that business, but in doing that they really put the wood to Kyocera,” said King, the Gartner analyst.

    Kyocera stopped selling phones on Sprint’s network in 2004 and on Verizon’s network in 2007. Instead, it focused on regional carriers and no-contract operators such as Virgin Mobile.

    The company forecast that no-contract service would be the next wave of growth for the industry. And indeed, it has been a fast-growing segment for subscriber additions over the past couple of years in the United States.

    “When you look at the (number of phones) they were carrying, it was much less than Sprint or Verizon,” said Tom Maguire, vice president of global marketing and product development for Kyocera Communications. “So we were a bigger fish in a smaller pond.”

    At one point, Kyocera supplied 50 percent of Virgin Mobile’s phones, with many of those models targeting hip, young consumers. In addition, no-contract carriers were selling more phones at big box retail stores, which Kyocera thought would fuel growth.

    “It was showing up more in your Best Buys and Radio Shacks,” he said. “We felt that trend was going to continue. We saw the volumes increasing. And we saw a distribution model going in a way that we believed in.”

    The company doesn’t reveal exact market share numbers, but shipments have remained relatively steady at about 10 million handsets a year in North America, said John Chier, a company spokesman.
    In 2008, it bought Sanyo’s handset business, which got the company back into the Sprint network. It consolidated wireless engineering at facilities in Japan, where Sanyo already had a large engineering team. That led to more layoffs in San Diego. What remains locally is product planning, customer-facing engineering, sales and marketing.


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    This article was originally published in forum thread: Kyocera focus is on smart phones started by MCF-News View original post
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