LONDON-A new study by Strategy Analytics reports that players in Western Europe’s cellular handset market will survive only if they develop product lines offering a well-segmented approach to the customer and ditch previous efforts of product segmentation along simple business and consumer lines.
The report, “European Cellular Handset Market: Assessing Vendor Performance,” noted there remains clear separation between the segmentation strategies of top-level and second-level vendors in Western Europe. While many of the smaller vendors, such as Siemens and Samsung, can compete with the big boys on technology and handset functionality, a lack of depth in their product offerings will leave them behind the big three-Nokia Corp., L.M. Ericsson and Motorola Inc.-in the face of targeted marketing strategies.
“Siemens had a great year in Western Europe in 1999, emerging as the strongest challenger to the big three vendors,” noted Phil Kendall, senior industry analyst for Strategy Analytics. “It has also made some sensible strategic moves for 2000, not least the decision to push [Wireless Application Protocol] functionality into its consumer handset lines.”
However, Kendall predicted Siemens’ two-pronged approach to a business and consumer product line will hurt the company in the medium term as it competes with bigger companies taking a more lifestyle-oriented approach to the market.
The study also suggested to keep up with the fluctuating tastes of the wireless market and maintain a credible presence, vendors need to introduce at least two new models per year into the Western European Global System for Mobile communications market. Successful players should introduce as many as eight new models annually.
