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issue: June 2003 APPLIANCE Magazine

European Report
The Successful European Mobile Phone Market


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Where traditional white goods markets may be "moving sideways," one successful product is the mobile phone.

What is the situation in Europe, and where does the mobile phone stand compared to the U.S. and Asian markets?

First, Europeans use the digital GSM standard, which is not different than older analog systems like those used in the U.S. A built-in text-message system called Short Message Service (SMS) was an unexpected success with (mainly young) users. Now, the successor of SMS is Multimedia Message Service (MMS), also called Picture Messaging, where one can attach pictures or audio files to a text message made by the phone's built-in camera. Most new phones are ready for MMS, and top models now use the Bluetooth wireless connection standard. Successful gimmicks are downloadable ringtones, screen savers, color screens, animations, and replaceable covers. The next big step will be video transmission using the broadband UMTS (G3) technology.

Bob Schukai, product director G3 for Motorola Europe, Middle East, and Africa recently told APPLIANCE, "You could say that current technology is General Packet Radio Service (GPRS), the data-extension of the digital GSM standard, the cellphone standard in Europe. This technology powers the MMS features. Nearly all new handsets have GPRS. However, use is not widespread."

He said that the launch of G3 just began in the UK and Italy. It is a soft launch, without large campaigns. Clearly, the phones are expensive, and coverage and content are limited. Yet, other markets will soon follow.

"The providers learned from the WAP (the GPRS predecessor) debacle," he said. "Back then, WAP was marketed as 'Internet on your mobile.' As the product was not satisfying and failed in the market, providers are now more careful."

Motorola has a 19-percent share of the global handset sales, after Nokia and Samsung. In Europe, its market share is lower. However, in G3 products, Motorola expects to be number one in Europe.

Regional Differences

Consumer tastes with cellphones vary widely between Europe, the U.S., and Asia. Sandra Grohmann, public relations for Siemens Mobile, said, "The U.S. market does not have a single standard, and compared to the European market, new technologies like picture messaging (MMS) are more difficult to introduce. Still, we expect MMS to kick-off by the end of this year in the U.S. as well."

Within Europe, even the names for "cellphone" vary. The British say "mobile phone" as do the Dutch ("mobile telefoon"). The French talk about a "portative," the Italians use a "telefonini" (little telephone), and the Germans topped everyone by inventing a non-existing English-sounding word: "Handy." Mr. Schukai commented, "The Italians tend to see style as a main concern; there our clamshell models do very well, as it has a different visual appeal. In Turkey, the population is very young, and they tend to be excited about features such as games and ring tones. In Germany and its surrounding countries, consumers are more focused on technology; they want to understand the functions and look for sensible business applications. German-based Siemens is strong there, but we are proud to supply our I300 UMTS platform to them. Maybe it helps to boost our image."

Ms. Grohmann added, "The emerging Eastern Europe markets have the need for products that are less technology driven; they prefer entry level phones but still want a nice design. Marketing-wise, Siemens (number two in Europe, after Nokia) defines five lifestyle segments. For instance, a so-called Social Nester, which we define to be 58-percent female in age between 26 and 45, is focused on family, friends, and quality of life. This target group wants basic convenience, simplicity, and security, and we designed the C class phones for them. Considering production, we follow the markets and manufacture in three locations: in Germany (Kamp Lintfort), Brazil (Manaus), and China (Shanghai)."

So what is the perspective for the future of this appliance market? "In general, the business is much more cautious then a few years ago," Ms. Grohmann said. "In technology, we see open platforms and different mobile devices, such as PDAs and handhelds, sharing platforms. Applications from different developers will run on all devices. In features, gaming and picture messaging will be important, as well as color screens."

This report is filed by Paul Roggema, European correspondent, APPLIANCE magazine.

 

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