Asian ODMs turn to Android

TAIWANESE SMARTPHONE MAKERS are betting on Android to keep their production costs down.

It seems that ever shrinking prices in the Taiwanese original design manufacturers (ODM) market have had a knock on effect. The Asian ODMs are looking to save some money while their revenues take a hit and they're hoping Google's open source Android is the answer. Android is of course free, so companies don't have to fork out for OS licensing costs in their bills of materials.

According to Digitimes, ODM prices for smartphones are way down, having been cut by 50 per cent over the last three years. To keep on a level playing field and stay competitive, vendors like Nokia, Apple, RIM, HTC and Samsung are now designing and building hardware and software in-house. The vendors are also holding back on releasing orders from Taiwanese ODM houses and Digitimes' sources reckon they will continue to hold back unless gross margins drop to 15 per cent.

This means Taiwan-based makers can only compete for ODM orders from Hewlett-Packard (Palm), Dell, Lenovo, Motorola, LG Electronics and Acer, the sources indicated..

ODM orders from HP, Dell, Lenovo, Motorola, LG and Acer are small now, with monthly shipments allegedly only around 200,000 to 300,000 for smartphones. Some vendors have agreed on research and development costs with ODMs to sort the problem out and keep those production bills lower.

This is a rather shocking state of affairs for Taiwanese ODMs but Google must be pleased. µ