Multimedia mobile phones grab lion's share of the market

Tag : Mobile Phone CDMA

Feature-rich phones match demand for multimedia applications,pushing value-line units up the supply chain.
The economic slump in many regions worldwide and the sluggishperformance of replacement handsets in highly penetrated marketsare slowing down the market growth of mobile phones. One of fewareas where healthy growth seems poised to continue is themultimedia mobile phone sector, whose market share has been risingin step with demand for rich multimedia capability on handhelddevices.
Global shipments of multimedia mobile phones are projected to reach380 million units this year for a value of about $76 billion, basedon a survey from IDC. To match the bullish market, suppliers inmainland China and Taiwan are boosting their production. MainlandChina's 2008 production of multimedia mobile phones is estimated atmore than 300 million units, or 60 percent of its projected overalloutput of 580 million mobile phones. The region's multimedia mobilephone production this year represents an increase from its 46percent share of production in 2006.
In Taiwan, multimedia phones account for about 98 percent ofsuppliers' total production. The island's multimedia phone sectoris following the footprints of high-end mobile phones such as smartphones and 3G/3.5G phones. Makers noted a jump in demand formultimedia phones along with the growth of 3G and 3.5G phones.W-CDMA phones, almost all of which support high-end multimediafeatures, will account for 40 percent of Taiwan's market.
With multimedia support becoming nearly standard in most phones,suppliers are faced with the challenge of differentiating theirproducts. Many companies are moving upmarket with high-end modelsthat pack not only rich multimedia features but office applicationsas well. Most of these units are targeted at mature markets, wherethe stiff competition will force suppliers to integrate as manyfeatures as possible.
Stronger multimedia functionality in many low-end units is,meanwhile, pushing this line up the value chain. With their betterprice positioning, low-end but multimedia-enabled mobile phones arenow building a presence in emerging markets, whose high growthpotential augurs well for suppliers' margins.
Irrespective of market positioning, multimedia mobile phones comewith cameras, wireless connectivity, A/V playback and large memorycapacity. The camera resolution, wireless technology, A/V formats,memory size and other features are dictated by the productcategorization, whether high end or low end. More new releases nowhave larger screens and higher resolutions for better viewing. Someunits deliver video streaming.
Makers nurture value-line phone sector
Taiwan suppliers beef up high-end segment
Multimedia capability increasingly a must
Cameras a basic feature
Larger screens up the ante in viewing experience
Facing up to R&D, production challenges
Banking on export markets
back to top Makers nurture value-line phone sector


Since 2007, the global market for mobile phones has been graduallysegmenting into two sectors: high-end and value-line or low-endunits. This market development is strongly reflected in Taiwan'smobile phone industry, where these two phone categories arecreating their respective niches and pushing midrange mobile phonesslowly out of the picture.
High-end mobile phones, which are equipped with comprehensivewireless and personal data management capabilities, will likelytarget mature markets. Value-line products, which pack multimediaentertainment and basic office applications, are expected to caterto emerging markets and slowly encroach into the high-end phonesector.
Value-line or low-end customers in mature markets have become thenew growth drivers in the overall smart cellular device industry.Value-line mobile phones are carving out a niche in mature marketsas well, where consumer spending has been considerably weakened bythe US subprime mortgage crisis and the US dollar depreciation.
Low-end and midrange multimedia mobile phones currently driveproduction in mainland China. These phones are targeted mostly atexport markets in Asia, the Middle East and South America, all ofwhich are considered growth areas for mobile phones where demandfor low-end and midrange units is high. Some makers ship high-endphones to Europe and North America.
Mainland China has more than 500 mobile phone manufacturers anddesign houses. Many of these companies carry multimedia mobilephones in their product catalogs. About 80 companies produce theirown brands.
About half of the mainland supplier base is based in Guangdongprovince, and most companies are clustered in Shenzhen. Othermakers can be found in the Bohai Rim and Yangtze River Delta. back to top Taiwan suppliers beef up high-end segment


In spite of the thriving value-line phone segment, many suppliers,particularly in Taiwan, are increasing their investments indeveloping high-tech mobile phones to follow the iPhone trend andbolster their margins.
Taiwan has about 10 major mobile phone suppliers, all of which canprovide multimedia mobile phones. Not only EMS and OEM/ODM solutionproviders such as Hon Hai Precision Industry Co. Ltd and QuantaComputer Inc. are focusing on high-end units, but also own-brandsuppliers such as High Tech Computer Corp. (HTC), BenQ Corp. andAsusTek Computer Inc. These suppliers are developing high-endmobile phones with strong multimedia functions, particularly smartphones and PDA phones. Compal Communications Inc., ArimaCommunications Corp., Inventec Appliances Corp. and Foxlink Groupare also actively pursuing high-end multimedia phones.
Aside from mature markets such as the US and Europe, high-endmobile phones are penetrating emerging markets, which is creatingopportunities for Taiwan suppliers. This segment is projected toplay a significant role in expanding the industry in the future.
Smart phones with multimedia functions, in particular, have madesignificant inroads into emerging markets. For instance, throughcollaboration with Reliance Communications, Taiwan makers havelaunched two CDMA smart phones in India, priced at $389 and $460each. back to top Multimedia capability increasingly a must


3G deployments worldwide are cementing the foothold of multimediamobile phones. The advent of mobile TV, whose hype grew evenstronger with the Beijing Olympics, will further push this line.Mobile TV is also fast-tracking the release of mobile phones withlarger screens—even touchscreens