With the gradual shift away from voice-oriented handsets towards more 3G influenced designs, the major players in the handset market are developing strategies for the European marketplace. And, according to Tony Dennis, keep a keen eye on east Asia where some companies could be as much as two years ahead in 3G development
The emphasis within the European handset market has very noticeably shifted over the last two years away from ‘voice-centric’ handsets. Nowhere has this been more apparent than in the provision of mobile phones for 3G services.
Virtually all of the major market trends are directly reflected in the sales
of 3G handsets. For example, providing users with bigger colour screens,
building in digital cameras and offering a choice of a handset operation
system (o/s) have all become key factors in 3G handset design. Indeed, the 3G sector has become the ideal mechanism for viewing the direction handset technologies will take in the European market as a whole.
Presently the leading market research firms still show that the traditional
handset vendors — like Nokia and Motorola — are retaining market share. Nonetheless, there are very clear indications that other suppliers — particularly Asian manufacturers — are beginning to make inroads into the
European market. Strategy Analytics, for example, predicts that 65 million
cameraphones will be sold worldwide in 2003 (although the main growth is in Japan and Korea).
Significantly it is two Japanese vendors — NEC and Panasonic — who were the top two cameraphone vendors worldwide, each with 15% market share during Q1-Q2 2003. By comparison Nokia was in third place with a 14% market share.
“The whole 3G handset sector is ideal for Asian manufacturers because they
are effectively two to three years ahead (of Europe),” Paolo Pescatore, a
senior research analyst for EMEA wireless and mobile communications with IDC, maintains. “They’re exporting their 3G experience and knowledge and keeping one step ahead of the likes of Motorola and Nokia. For example, they’ve been testing [longer lasting] batteries and larger screens with 3G handsets for over two years. I see [the Japanese suppliers] playing a much bigger role in this [sector] than many other people believe.”
One dissenting viewpoint comes from Ron Schaeffer, head of product planning and strategy with handset vendor, Sendo, who argues that “With regard to the Japanese and Korean manufacturers taking the technology lead, this is partially true with respect to features like cameras and colour screens. But this is not the case with respect to mobile telephony knowledge.”
Most observers also remark on the growing popularity of the clamshell style handset (which helped to boost Samsung to third largest handset supplier worldwide) compared to the traditional ‘candy bar’ shape which Europeans still appear to prefer. Sony Ericsson maintains that 18-20% of all handsets now sold in Europe are clamshells compared to 50% in Asia Pacific and 30% in the US.
But Sony Ericsson maintains it is a growing market. Nokia, which dominates European handset sales at present, obviously doesn’t agree with this assumption. Anssi Vanjoki, a vp with Nokia’s Mobile Phone division, was asked back in June 2003 if Nokia ever intended to launch a clamshell handset. Vanjoki replied very scornfully that his designers “aimed a little bit higher than [designing] silver clamshell phones”. So it’s definitely a market that Nokia doesn’t intend to play in currently.
Another crucial trend is the desire among the mobile network operators to dictate the look and feel (user interface) of the handsets they supply to customers. And, in the case of T-Mobile, this even applies to some Nokia handsets! Ron Schaeffer claims that his company “anticipated that operators would want to dictate features. This is the basis of our business model.” He also suggests that the reason why some Asian produced handsets are now outselling the big brand names “has everything to do with the dominant role of the operator in relation to the end-user.”
Steve Ives, CEO with handset software supplier, Trigenix, pointed to the way
NTT DoCoMo is going in Japan with Symbian. The two companies have recently reached an agreement whereby DoCoMo will effectively develop its own user interface (UI) for the Symbian o/s and hand that code over to its own handset suppliers. “No operator has taken that step in Europe yet but it’s significant for 3G,” Ives suggests. He described Trigenix’s own offering as providing “around 10 per cent of the UI real estate” in handsets which have been specially customised for an operator. To date, only TMN in Portugal (with its Inove service) has officially announced that it is actively using Trigenix software in conjunction with Siemens handsets.
However, Ives argues that European operators are moving towards offering customers handsets based on standard platforms — Symbian, Microsoft and Java MIDP 2.0 — which will make it much easier to brand handsets with an operator’s UI. “I’d suggest that [other manufacturers] take a leaf out of Sharp’s book in what it is doing with Vodafone,” says Paolo Pescatore. “The close relationship with Vodafone has seen its handsets feature in [Vodafone’s] advertising which might otherwise have gone to publicising Nokia’s phones.”
Ron Schaeffer is in general accordance with such a view. “If an operator supports a model and puts its marketing power behind it,” Schaeffer says, “the less well-known operator branded phone can and will outsell phones from better known hardware brands (such as the Swing 620 from KPN, which is actually our Sendo P200).”
Trigenix’s Ives is not so sure that Sharp’s approach is correct. “There’s few manufacturers willing to step up and make changes directly to a real-time o/s based handset,” Ives claimed in an obvious reference to Sharp’s handsets for Vodafone Live!. “It’s too time consuming and costly for both parties involved.” Ironically Ives claims
that 3G handsets are actually lagging behind 2.5G handsets in customising
the user interface. “There’s such a shortage of 3G handsets it’s enabled the few suppliers to remain in the driving seat.” Hence even though Motorola has launched a Symbian powered 3G handset for 3 in the UK, it hasn’t been heavily customised. “They’re too worried about getting the handsets working and aren’t interested in the extra overhead,” Ives suggests.
Probably the most vocal of rivalries in this market is being fought over the
choice of ‘operating system’ for 3G handsets and 2.5G smartphones. The
current market leader is Symbian, an o/s owned by a consortium of the
leading handset vendors. Significantly, no sooner had Motorola delivered its
first Symbian based 3G handset — the A920 — to its major customer (Hutchison 3G in the UK) than it announced its decision to sell its shareholding in Symbian to Nokia and Psion. The reason given by John Thode, general manager for Motorola’s 3G, networking products, was that “We want to love all operating systems equally.” He also played down Motorola’s participation with Symbian products.
The company also said that it intended to concentrate on ‘Open’ operating systems — such as Java and Linux — in contrast to Symbian which is very definitely proprietary. Symbian’s arch rival is, of course, Microsoft with its Windows Mobile offering (the
successor to Smartphone 2002 and Pocket PC Phone Edition). Motorola once again proves to be a typical player and has announced the MPX200 smartphone which it claims will be one of several models (which will probably include a 3G handset) that will utilise Microsoft’s o/s. Showing that it has no
favourites, however, Motorola has also launched the first ever Linux powered handset, the A760, which is available in Asia but has yet to reach European shores. To complicate matters further there is a fourth potential o/s in the shape of Savaje. This is an o/s which is designed to run Java applications efficiently. It might sound somewhat obscure (coming from a small Californian company) but its backers include Orange and Vodafone.
To date the prominent features of a 3G handset have been its battery life,
signal reception and video capability. However, in launching its latest 3G
handset, the A835, Motorola emphasised the handset’s integrated MP3 Player and ability to download games such as Alien Swarm or Play Golf. This handset also supports Assisted GPS for location based applications too.
However, Andrew Wyatt, vp of marketing with Intuwave, believes that operators are walking into a support nightmare with the ever increasing complexity of today’s handsets. “There are tales of some support agents talking to customers for 45-60 minutes just to get the phone going,” Wyatt explained. His company’s solution is novel. It is a Symbian based application that allows the support agent to take full control of the customer’s handset
remotely. “It’s like PC Anywhere for mobile phones,” he claimed. The
advantage to Intuwave’s product is that via remote control the support agent
can actually test a facility — such as email — to prove it works before
completing the support session.
One handset vendor that is firmly convinced that 3G handsets will definitely succeed is Siemens — which recently launched its second 3G handset, the U15.
The company has been working very closely on 3G, however, with Japanese
handset supplier, NEC, of course. Rudi Lamprecht, a member of the Siemens
board, says, “According to our forecasts, every mobile handset in
Europe will be 3G capable by 2010. We anticipate that there will be some 40
million users in 2005 and that the 100 million mark will be reached by year
With those kind of numbers the influence of 3G on general handset design across Europe is certainly indisputable.