Nokia, Sanyo Form CDMA Phone Spinoff

In an effort to take on CDMA market leader Samsung, mobile phone manufacturers Sanyo and Nokia announced Tuesday that they would be combining their respective CDMA businesses to form a single entity separate from its parent companies.

Both companies have struggled to compete with Samsung -- Nokia due to its resistance over using Qualcomm chips, which ended up causing delays in bringing phones to the market. Sanyo, while doing well in the US through its partner Sprint Nextel, has run into troubles in attempting to expand its reach elsewhere.

The combined company would have offices in San Diego, Calif., as well as Osaka, Japan. While the agreement is preliminary, it is expected to be finalized by mid-year with operations beginning in the third quarter of 2006, pending regulatory approval.

Each manufacturer brings something different to the table, say the two companies. Nokia would bring the strength of its brand and solid entry-level and mid-range CDMA phones, while Sanyo's strength in mid-level and high-end phones, as well as its relationships with CDMA carriers in Japan and North America, would bolster the new company.

"We identified this new entity as the best way to create an attractive CDMA phone portfolio for our customers with the widest possible product offering at the high-end, mid-range and entry levels," Nokia president and COO Olli-Pekka Kallasvuo said in a statement.

Details such as branding would not be finalized until the agreement closes in the second quarter of this year, the two companies said.