Siemens aims at high end with BlackBerry phone

Further shaking speculation that it might dump its loss-reporting mobile handset division, Siemens AG said Monday that it has "intensified" focus on the high-end mobile market and launched a new phone with full BlackBerry functionality to prove it.

The SK65 is a tri-band phone and the first to feature a full suite of BlackBerry applications, including e-mail, calendar and browsing, provided under a new licensing program from Research in Motion Ltd. (RIM), the company said.

The handset was introduced by Siemens' newly-formed Communications group as an example of how its mobile phone unit will emphasize high-end, converged devices. The German engineering conglomerate said on Thursday that it was merging its mobile and fixed communications businesses into a Communications group.

The move came on the same day Siemens reported that despite ringing in strong third-quarter earnings overall, it lost €88 million ($106.2 million) in its Mobile Phones division due to falling handset prices. Despite speculation that Siemens might drop out of the handset game, the placement of its devices business in the new Communications group and the introduction of the SK65 shows that the company has a long-term commitment to the market, according to Gartner Inc. analyst Ben Wood.

"Siemens' device division is alive and well," Wood said.

Siemens said Monday that it plans to continue to round out its portfolio with entry-level and mid-level products, but it is now focusing on higher-end handsets. A company spokesman said that Siemens sees strong growth for what it calls "intelligent devices," or smart phones, predicting that the category will comprise 20 percent of the mobile market by 2006, compared to 2 percent now.

In addition to the SK65, Siemens recently debuted the higher-end S65 compact business handset, and SL65 "slider" style phone. Additionally, it plans to launch another dressed up model in September but it will not have BlackBerry functionality, the spokesman said.

The SK65 takes advantage of the new BlackBerry Built-In licensing program introduced by RIM on Monday, which lets mobile device manufacturers incorporate BlackBerry applications into their own devices.

Other handset manufacturers such as Nokia Corp. have integrated BlackBerry e-mail functionality but this is the first time the full suite of BlackBerry applications will be available on a mobile phone, Wood said.

"This product is firmly positioned against the Nokia 6800 series but it takes a different approach," Wood said.

Wood added that the SK65 is not expected to sell millions of units but is aimed at filling a niche and rounding out the company's portfolio with a high-margin product.

According to the Siemens spokesman, the SK65 will go for an unsubsidized price of €300. The handset will be available in mature mobile markets in November, and later in developing markets such as South America and India, the spokesman said. The phone has a "candy bar" design that can be twisted into a cross form, allowing users to type on each side of the display, and will be available in a variety of versions.

"It will be interesting to see if the SK65 is compelling enough that it will convince users who have both a mobile phone and BlackBerry to switch," Wood said.