Some smartphone vendors, such as Motorola, Sony Ericsson, LG Electronics, Hewlett-Packard, Dell and Acer usually release ODM orders for outsourced production, while others including Nokia, Samsung Electronics, RIM, Apple and HTC undertake in-house product development and release EMS orders, according to Taiwan-based makers.
Each handset vendor has different product development strategies for different regions, said Taiwan's handset manufacturers, noting that volatility in global market shares further adds difficulty in component and material procurement for various orders.
The popularity of smartphones has positively impacted players throughout the supply chain, but the ODM sector probably has seen the least benefits, the manufacturers pointed out. Most smartphone vendors still prefer to control product development and have mostly outsourced EMS orders, and hence, smartphone ODM orders have yet to increase substantially. Moreover, the manufacturers also have to take into consideration the risk of committing development and production resources for the wrong platform and client.
The handset and smartphone markets are fickle, which require the vendors to constantly adjust strategies for different countries. For example, the rise of the Android operating system around the world and Nokia's rapid market share erosion and adoption of Windows Phone 7 all affected the contract manufacturer sector.
Motorola develops medium-to-high-end Android-based products in house and mainly outsources models below US$150. Though the company is looking to raise the cut off point to US$250, order volume has remained small because it is still struggling to raise sales in Europe and Asia.
Since LG Electronics was a late comer to the smartphone market and initially targeted the medium-to-low-end segments, handset manufacturers thought the South Korean vendor would source high-end smartphones. However, LG has since introduced dual-core and 3D smartphones on their own in 2011 to strengthen its high-end portfolio.
Though Sony Ericsson had previously outsourced high-end Windows Mobile models, the company is now focused on the Android platform and has yet to release plans for Windows Phone 7. Sony Ericsson has only outsourced some low-end phones based on Android.