With its large population and current low penetration rate, Indonesia is among the most attractive markets for mobile phone makers in the Asia and Pacific region.
It is no wonder, then, Indonesia has become the battleground for some of the world's biggest mobile phone producers, including Nokia, Motorola and Samsung.
Market analysts estimate with a present penetration rate of between 25 and 35 percent, the Indonesian mobile phone market will remain attractive over the next three years.
With an average growth of 26.7 percent a year, mobile phone user numbers are expected to reach 122.1 million by 2010 from around 66.5 million in 2006 and 46 million in 2005.
PT Motorola Indonesia president director Robert van Tiburg shared his views on the country's growing cellular phone market during a recent interview with The Jakarta Post. The following are excepts of the interview;
Question: How do you see the cellular phone market here, particularly for Motorola? Answer: It is always exciting. It has been exciting for a number of years and it is definitely more exciting now because there is more competition.
Indonesia is also the largest untapped market and the fastest growing market in Southeast Asia.
Indonesia has low penetration, with only 25 percent penetration currently from 250 million people. There is a lot of untapped potential. But don't you think the market is going to saturate at some point?
No, not really. Research indicates there is still potentially 50 percent penetration. So, we still have at least 70 million phones to sell before we can reach this 50 percent.
In the meantime, the original 70 million phones will be replaced, because people upgrade their phones every three to six months. So, it's a continuous cycle.
Even European countries have over 100 percent penetration -- 110 percent or 120 percent penetration. This means everybody has 1.2 phones. What is your strategy to build your market and deal with other competitors?
We have our own strategy. We have a very wide portfolio of products.
We have ordinary black screen phones or basic color screen phones with FM radio features. Then the next gear up would be a phone with an MP3 player, a phone with a basic camera, and at the high-end there are music phones for youth.
For the youth sector we offer various colors. Besides the traditional black and silver, we have introduced a pink RAZR. We sold an incredible amount of pink RAZRs to people like Paris Hilton in the U.S. and we sold an incredible amount of pink RAZRs here as well.
For the business sector we now have MOTOQ, which is available in both CDMA and GSM. Our business proposition for two versions of the MOTOQ is the very slimness.
And then there is what we call the fashionista sector.
I always adore people who have bought our RAZRs. That is how we sold a hundred million RAZRs worldwide. People finally saw the product as a fashion statement.
So, those are the four sectors. They are very broad.
One of the keys is you have to offer (something different) in every sector because the consumer that starts at the low-end level ultimately will graduate to the next level, and then to the next level and to the next level.
Also, a lot of our competitor phones support (operating system) Symbian. In this case, we are going with Windows mobile. But we also have Symbian and Linux in other products.
So, we support all three operating systems in general the world has offered. We are prioritizing diversity. How do you respond to the characteristics of the Indonesian consumer?
Indonesian consumers are what I would say are very technology heavy.
I have been in this country since 1995. Back then we had the NMT system and AMPSM system. Then we got the GSM, the CDMA and the HSDPA.
Indonesia has every viable technology available and is looking at WiMAX technology and UMPS. Indonesian consumers are very used to technology. They're very technology savvy and they're very aspirational.
There is also a consumerism factor in which Indonesians tend to use cell phones for other reasons than their basic usage.
They want the greatest, latest phone. On one hand, they want it for themselves. On the other hand, they want to show it off to their friends.
And three months later, they are looking for the next latest phone.
I think the fashion piece plays a big role in Indonesia too. People want to be seen with different colors.
One of the most unique things we see here that we have not seen anywhere else is a lot of Indonesians carry two phones -- CDMA and GSM phones. People make calls in CDMA and receive calls in GSM.
In general, I think they want the more high-end phones, fashion-oriented or status-oriented phones. Status is a very key factor among Indonesians.
Indonesian consumers are also very brand-oriented. This is why three brands control over 90 percent of the business in Indonesia and four brands control 95 percent. That has not changed over the 13 years I have been here and it is not going to change. Do you have any plan to build an assembly factory here?
We have two plants. The manufacturing one is in China and our distribution one is in Singapore. All phones for Asia are produced in China and distribution for Southeast Asia comes out of Singapore.
Many years ago, we consolidated for our manufacturing. We have manufacturing for South America, manufacturing for Europe, manufacturing for Asia. At this point, the capacity in those factories is enough to support those areas.
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