China's Huawei to make 3G phones for Vodafone

Vodafone has tapped China's Huawei to manufacture 3G handsets.

Chinese telecommunications maker Huawei Technologies this week signed a five-year contract to supply 3G (third-generation) mobile handsets to Vodafone Group.

In a statement, Vodafone said the deal with Huawei will allow it "to offer even better 3G phones at more competitive prices."

The Huawei-made handsets will be sold under the Vodafone brand, a first for Vodafone in the consumer market, according to Vodafone. The first handsets, which will be sold in 21 countries, are expected to be available in September, it said. The company did not provide details regarding the handsets or identify the specific countries where they will be sold.

Huawei is relatively new to the handset business, having so far introduced four WCDMA (Wideband Code Division Multiple Access) models, Beijing-based Norson Telecom Consulting said in a research note about the Vodafone-Huawei deal.

Huawei is making handsets as part of a goal to become a "full-service" provider of telecommunications equipment and handsets for operators, Norson said, noting that this strategy has been employed by the company in China. "Huawei still has a long way to go, though, to be a major player in 3G handsets," it said.

At present, Huawei's main advantage in the international handset market is its ability to undercut competitors on price, Norson said. However, Huawei doesn't have the systems in place to produce several handset models based on a common platform, it said.

To compete with rivals Motorola Inc. and Nokia Corp., Huawei will have to adopt this method of product design, Norson said.

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