Things are going well for most mobile companies around the globe. Penetration rates are increasing, subscriber numbers are reaching all-time highs and wireless data holds future promise for the industry. The last year has been especially profitable for wireless handset manufacturers.
Nokia reported its strongest annual operating results in the company’s history for 1999. Net sales grew 48 percent for the year from US$13.4 billion in 1998 to US$19.9 billion in 1999. The Finnish company also increased its lead in the mobile handset market in 1999, with 26.6 percent of the total 253 million handsets sold worldwide being Nokia’s.
Motorola was second in worldwide 1999 handset sales at 17.4 percent. After seeing its stock significantly drop in 1998, the U.S.-based company increased its fourth-quarter 1999 earnings by 233 percent to US$514 million, compared with US$159 million a year earlier.
And although Ericsson saw its market share for mobile phones decrease during 1999, it still enjoyed total 1999 sales of US$24.4 billion, a 17-percent increase over 1998 sales.
Will the coming year be as lucrative for the handset vendors? The ongoing global consolidation will no doubt affect manufacturers in 2000.
In addition, operator-branded phones are becoming more prevalent. Could this marketing shift mean an erosion in consumer recognition for handset vendors, or does it represent a channel to sell even more phones?
In the United Kingdom, Virgin Mobile has signed up 200,000 users on its virtual network operator (VNO) system. The Richard Branson-led company is selling Virgin Mobile-branded phones on the Internet and in its retail stores. In addition, Virgin recently announced its second VNO venture-in Australia-which will be similar to the U.K. initiative. U.K. wireless operator Orange also sells Orange-branded phones.
And the trend is not isolated to Europe. NTT DoCoMo and Matsushita are partnering to launch new music-distribution services with PHS terminals. The data-capable PHS phones prominently sport NTT DoCoMo’s name (see photo on page 26); Matsushita’s logo isn’t visible on the front of the handset.
There’s no question operator branding is an excellent way for carriers to build brand recognition with their subscribers, but what will be the effect of customers asking for an Orange phone instead of a Nokia?
In the future wireless data environment, the consequences could be substantial, particularly as carriers attempt to become Internet portals and further develop subscriber relationships. The industry may see a shift in power, albeit subtle.
Carriers should capitalize on that shift by closely monitoring customer wants and catering services and programs to fulfill those requests. At the U.S. Wireless 2000 show early in March, Steve Case, chairman and chief executive officer of America Online, summed up the key to his company’s consumer success as “the ability to look at things how consumers look at things.”
