VK Mobile bankruptcy highlights tough market for smaller manufacturers

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News:

The Korean Times has reported that mobile phone manufacturer VK Mobile has filed for bankruptcy in the face of rising debts.

VK started making mobile phones in 2002 having originally made batteries for mobile phones since 1997. In August 2005 it announced an agreement with global distributor Avenir Telecom to supply 700,000 handsets.

More recently it has rapidly expanded it portfolio of products while pursuing an aggressive marketing strategy culminating in the sponsorship of French Football Club Olympique de Marseille and a large stand at CeBIT 2006 where it had nearly 20 different handsets on show.

Its focus has been on thin products winning a 2006 Red Dot Design Award for its 8.8mm VK2000 music phone. More recently it has been marketing the VK2020 in Europe, a product which is similar to the Motorola SLVR. Its products are being sold in the UK by Virgin Mobile and more recently Vodafone in association with Woolworths.

Less than a month ago it was reported by Telecoms Korea (a subscription newsletter) that Motorola was about to invest in VK acquiring convertible bonds in the company and agreeing to a major ODM (original design manufacturer) agreement. Nothing was confirmed officially and the latest news to emerge from Korea is VK’s bankruptcy.