Mon, 18 Sep 2000

Siemens targets 3rd position in mobile phone market

By Hendarsyah Tarmizi

VENICE, Italy (JP): After success with its WAP-enabled handsets, German mobile phone supplier Siemens will soon enter the market with a more stylish model in another move to lift the company's position into the third largest player in the world's cellular phone market.

The new SL45 series, which was unveiled in Venice last week, offers the latest technology and entertainment as the first smart phone with built-in MP3 player.

Peter Zapt, the president of Siemens Communication Devices said that the 88 gram-handset would be available some time between October and December this year.

"The SL45, a youthful, dynamic and stylish model, is another breakthrough to position the company to be the third largest player in the cell phone market," he said at the launching of the new instrument.

The MP3 player-backed cell phone is the latest generation of the mobile device after the introduction of the Wireless Application Protocol (WAP)-enabled handsets late last year. The new model provides a technology that allows users to access Internet and download CD-quality music. With the MP3 player, users can also enjoy music through a multi media card (MMC).

Siemens' SL45 will compete with other MP3 player mobile phones which will also enter the market before Christmas. Ericsson will, for example, come with its T-28 series, with a MP3 player added on while Samsung will enter the market with its MP3 player built in SPH-M2100 model.

Siemens' SL45 and its two competitors will carry a price tag of between US$200 and $400 each.

Zapt said he was quite optimistic that new Siemens cell phones will be able to compete with the other two brands.

He said numerous changes have been made to enable the company to fulfill the target to become the third largest player, such as by consolidating the marketing strategy in Asia and Pacific areas where the demand for the cellular phones continued to increase despite the economic crisis in some parts of the region.

The dynamic markets in the region have experienced a strong economic growth, creating a large subscriber-base for cellular operators. Although some countries still feel the pinch of the crisis which hit the region in late 1997, the growth of cellular subscribers continues.

Cellular subscribers in Asia and Pacific areas will continue to grow, albeit at a slower pace, but growth will still keep ahead of Europe, with 252 million by 2003, a 280 percent increase over 1998 forecasts.

The number of subscribers in the Asia Pacific region passed Europe's total by the end of 1996 and passed the United States' total at the end of 1997, according to the study made by global research firm, ARC Group.

In Asia alone, the number of subscribers is likely to expand to 167 million by 2005. There is no reliable data on the total sales of the handsets in the region. But analysts believe that the actual number is far higher than the number of cellular subscribers because many people prefer to use pre-paid cards.

With its massive population and promising economic growth, the Asian region has become a fierce battle field for mobile phone suppliers. Major players such as Nokia, Ericsson, Siemens, Motorola and Samsung have all intensified their marketing in order not to risk losing the chance to tap the market potential.

Wu Jian-Hui, Siemens' marketing director for Asia and Pacific, said that the company would come with more aggressive strategy to win a larger share in the region's handset market.

Retail outlets will be increased as well as advertising in newspapers, television and athletic competitions.

She said changing the image of Siemens will be an important approach in winning market share. "At present, to many people, Siemens is much more popular as power or telecommunication infrastructure provider, rather than as the brand name of a stylish and sleek handset," she added. "So the launching of the stylish SL45 series will help change the image that Siemens is also about life style, not only as a technology laden company," she said.

According to her, lifting the company's market share to the third position in the region would not be too difficult.

"In some Southeast Asian countries, Siemens has even taken over second place," she said while acknowledging that Siemens' aggressive marketing approach could receive strong competition from its close rivals Ericsson and Motorola.

Wu said that in Southeast Asia, the growth in demand for handsets remained high although some countries like Indonesia and Thailand had yet to recover from their economic crises.

She estimated that in the next two to three years, when the economies in the region returned to their pre-crises levels, the demand for mobile phones could exceed the growth in other parts of the world.


In Indonesia, sales of mobile phones is still dominated by standard brands. Many WAP-enabled handsets have been available but they have yet to gain popularity, in part due to the high cost of accessing the Internet.

In developed countries where telephone charges are low and telephone traffic is not a problem, the WAP-enabled handsets are much more popular. With this technology, a handset is no longer limited to simple phone calls, but can also be used to send e- mail, check bank accounts, surf the Internet or for e-commerce purposes.

PT Dian Graha Elektrika, which handles the distribution of Siemens' mobile phones in Indonesia, expects within one or two years the sales of WAP-enabled handsets would exceed those with standard applications.

Farid Manan, the company's marketing manager, said that the sales of WAP-enabled handsets had started to grow as reflected by the increase in the demand for Siemens' C-35i and M35i series, which are both WAP compliant.

He estimated the demand for WAP-enabled handsets would be even higher when the existing GSM operators upgraded their technology with the General Package Radio System, a technology that could speed up the telephone access into the Internet.

"In general, sales of handsets in the country are quite promising," he said, adding that although Indonesia has yet to fully recover from its worst ever crisis, the sales of mobile phones showed a continued increase.

He said that the sales of GSM cell phones in the country suffered a decline in 1998 due to the crisis but in the following year, sales started to increase again. The monthly sales of handsets by authorized dealers in the country reach between 50,000 and 60,000 units at present, Farid said. "If included with the sales in the gray market (the sales by unauthorized dealers), the monthly sales could reach over 80,000 units a month," he added.

The country's cell phone market is still dominated by Nokia, with Ericsson, Siemens and Motorola positioned in the second, third and fourth places.

The government's decision to allow state owned telecommunications giants PT Indosat and PT Telkom to enter mobile phone services later this year is expected to further boost handset demand.

According to him, the inability of the existing cellular operators to expand their infrastructure is one of the reasons why the growth of cell phone users in Indonesia is not as high as in other countries.

"Hopefully, the increase in capacity after the entry of Indosat and Telkom will result in a higher number of subscribers," he said.

The association of Indonesian cellular operators estimates the number of subscribers in Indonesia, including users of pre-paid cards, will increase to 3.5 million this year and to about 4.5 million in 2001 from about 2.05 million in 1999.