DENVER, United States-Competition in the world’s cdmaOne handset markets is expected to heat up this year as more countries deploy commercial systems and manufacturers battle it out for market share.
Ray Jodoin, senior analyst with InStat in Scottsdale, Arizona, expects some 8.9 million cdmaOne cellular and personal communications services (PCS) handsets to be sold worldwide this year, compared with 3.7 million sold in 1997. The CDMA Development Group said manufacturing capacity worldwide will approach 15 million units per year by the end of this year.
Analysts expect the United States to be the most competitive cdmaOne handset market in 1998. The Yankee Group, a market research firm in Boston, projects total U.S. handset sales to reach 4.9 million this year and 8.3 million in 1999. About 1.5 million handsets were sold in 1997.
While U.S. consumers had access to a limited variety of cdmaOne handsets last year-about four models-Phil Redman, senior analyst with the Yankee Group, expects this year as many as 25 models to become available, which is about the same number of Global System for Mobile communications (GSM) handsets currently available. CdmaOne innovator Qualcomm Inc., Motorola Inc., Nokia Corp. and Philips Consumer Communications L.P.-a joint venture between U.S-based Lucent Technologies Inc. and Netherlands-based Philips Electronics-are among the big contenders for the U.S. market.
“CDMA in the U.S. is going to be the biggest market,” said Redman. “More POPs (percent of population) in the U.S. will be covered by CDMA. Wider distribution adds for faster growth.”
Also driving the growth in the United States will be South Korean manufacturers exporting their way out of the currency crisis affecting their country, say analysts. One analyst in South Korea anticipates South Korea’s four main manufacturers-Samsung Electronics Co. Ltd., LG Information & Communications Ltd., Hyundai Electronics Industries Co. Ltd. and Maxon Electronics Co. Ltd.-to export more than half of the total volume of cdmaOne handsets they manufacture this year.
“It’s likely that Samsung, LGIC and Hyundai will try to push their handsets hard in the U.S.,” said Robert Purcell, analyst with the Yankee Group in Japan. “They have a natural advantage in that (Korea’s) won has been devalued, so their products are more competitive from a price standpoint.”
Samsung, one of the first to offer handsets in the United States, currently is a dominant player in the world’s CDMA markets. The South Korean powerhouse expects to manufacture about 3.5 million handsets this year for its own market, which added 3.7 million cellular and PCS
cdmaOne subscribers last year and ended the year with about 7 million customers. It plans to export about 3 million units this year. In the United States, Samsung’s U.S. telecommunications business, Samsung Telecommunications America, has set a goal of grabbing a 40-percent market share. It has launched a $10-million branding campaign with plans to introduce new handsets every quarter. The vendor also is a strong supplier in Hong Kong, where a number of PCS and cellular operators operate commercial cdmaOne systems.
Japanese vendors also will be working hard to grab a share of the world’s cdmaOne handset markets. “The U.S. market is starting to see an influx of Asian manufacturers that never made it big in the United States before,” Redman said.
Sony Wireless Telecommunications Co., which teamed up with Qualcomm Inc. about two years ago to produce cdma-One handsets, recently announced a multimillion-dollar branding campaign to promote in the United States its new line of D-Wave products, which include a number of cdmaOne handsets. Denso International America Inc., a division of Japan-based Denso Corp., signed a purchase agreement last month with Sprint Spectrum L.P., a U.S. nationwide PCS licensee, to co-develop cdmaOne handsets. NEC Corp., Fujitsu Ltd. and Oki telecom also are among those expected to enter the market.
Two major carriers in Japan, Nippon Idou Tsushin Corp. (IDO) and DDI Tokyo Pocket Telephone Inc., plan to launch cdmaOne networks, and handset competition there will be strong as well. Matsushita Electric Industrial Co., Toshiba Corp., Kyocera Corp. and Denso are slated to provide dual-mode cdmaOne/JTAC handsets to DDI, which plans to launch cdmaOne service in April, said Purcell. IDO will launch service next year, he said.
“Japan hasn’t taken off yet, but I suspect a flood of manufacturers will come out with handsets,” said Perry LaForge, executive director of the CDG.
Redman said he expects Japan will become a large cdmaOne handset market because “Japanese vendors are getting into the handset market today to be prepared for the next-generation market that will take off in the next two to three years.”
