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Siemens and a new strategy on mobile market
First time for many years Rudi Lamprecht, Member of the Managing Board at Siemens AG and President of the Board, Siemens Information and Communication Mobile Group, made a visit to Moscow. This visit is really an event and it underlines an interest of the company to Russian market. Mr. Lamprecht said in his opening speech that it pleased him to meet with journalists but very often he had to limit such contacts, as usually there were many untimely questions. We (journalists) didn’t learn much about new models and their launching from this presentation. But those data, which we could read between the lines, were much more valuable. In every considered speech and short answer, there are concealed facts, which could be compared with other sources of information. Let’s analyze, what Siemens introduces in 2003 and what would be the priorities. We are not going to describe the presentation in chronological order, because we think that correspondence of facts is more interesting. May be one will think that we have a free interpretation of this presentation, but it’s only our opinion and our view on Siemens.
According to Siemens mobile phones market will change in the near future. Handsets will be more different; they will differ in shape, color, materials and so on. “Tomorrow” the market will be polarized; technological advanced models and very simple phones will be much in demand, middle level phones won’t be very popular. For example, we have off-road cars, family cars and finally, sport cars. May be high-tech phones can be compared with the latter kind of cars. Look, Lamborghini owner, mostly drives at a speed of 150 kilometers per hour, such restrictions are placed in many countries. But the full speed of his car is about 250 kilometers per hour. This car capability is used rarely. The same is with high-tech phones. They are the most advanced ones and rich in features, but now brand image and model novelty are becoming decisive success factors, not a possibility to use all available technological features of the phone. Naturaly, such consumers always exist and they don’t change their habits. But now high-end phones must have an attractive design. And namely design, not technologies will sell phones tomorrow. Design will play an increasing role and not only in the high-tech segment.
We can see that there will be also an increasing demand on cheap models, but these consumers also need various design. Here we can compare the phones with watches. It doesn’t play any role today, what kind of watches do you have: plastic chronometer or simple mechanic watches; both of them can display right time. But people get used to have several watches, for swimming, every-day purposes or ceremonial occasions. When a person chooses a phone, his/her choice can to considerable extent depend on his/her mood. For example, a woman cay purchase a phone in tone with her dress. On the one hand, it’s a bold statement, because today it’s rather expensive to buy several phones and besides, phones are not watches yet. On the other hand, personalization of phones is becoming more important now. Many interchangeable covers, including translucent ones, appear on the market. The next step is appearing of interchangeable covers, which will change the phone shape. Probably, Siemens will show such accessories suitable to new youth models; we can’t expect that consumers will have several phones in the near future, you know. Similar decisions with interchangeable covers, which can change a shape, were introduced by Motorola in C33x and earlier by British company - Sendo.
On this slide we can see that middle segment will be the smallest one, probably, it will include only business phones. There is a constant user’s group of these phones and demand on business models doesn’t depend on season or other factors. So, it allows us to make such an assumption.
Now let’s view which models will be sold in different segments. We’ve already known about Siemens A50 – rather cheap phone for every day use. The same characteristic we can give to C45 and C55. Siemens S55 is a handset of a middle segment; it is a business phone with attractive design. Today Siemens S45i, ME45 belong to the same group. Disappearing of these models will cause falling of price to Siemens S55 and its shift to a real middle segment (by price). Now the company doesn’t have a fashion phone, which will have both interesting technological and design features. Siemens SL42/SL45 are rather old models and they are not so popular as they were in the beginning of sales. Soon Siemens will launch Siemens SL55, which is a “fashion” phone even according to the company. In this model you will see the same opening system as in old Siemens SL10.
If to look at the slide and try to imagine how this polarization will occur, you will understand that in short terms demand on the models of the middle class will be still rather high. So, the company would unveil new phones in this segment too, for example, we can expect such model as M55. It’s logical if apart from design, different materials will be used for decoration of the phone. What will be the materials? To say the truth, I don’t know, many variants are possible.
Siemens detects all important trends in lifestyle and tries to make respective phones. It’s interesting that instead of answering one of the questions about design, Mr. Lamprecht showed how to dial a number using only one hand. According to his words, phones could be created to use with one or both hands. Folder type phones are mostly the second type of handsets. As appears from the above it’s doubtful that Siemens unveils a new folder type phone soon.
And what about Siemens CL50? This phone is aimed to European market and moreover, it is a folder type phone. This fact can be easily explained. Originaly, this model was created as a phone for Asiatic market, but it wasn’t very successful there. Psychology of local users, who mostly prefer larger phones, played a mean trick with the company. As a result, this model was just reoriented to European market.
If to say about regional elaborations, it will be logical if C55 is launched in Asia too. Namely this phone is discussed now as M55, though it’s not really this model. Look at the previous slide from Siemens and you will understand that it is only one draft for Asiatic market.
Siemens is presented in more than 200 countries and it is an active participant of many sport events. It sponsors both single players and whole teams. It is one of the ways to increase brand awareness of the company. Another way is Limited Edition phones productions. Moreover, the company states that co-branding with other companies is possible, not with rivals, of course, but with many leader companies, which deal with fashion, music, sport and etc.
Nevertheless, Siemens admits that some rival companies have more attractive elaborations. For, example, Siemens licensed 3G platforms to create UMTS-terminals from Motorola. The company decided not to waste time and just bought a necessary elaboration. Today, UMTS networks are not commercial, terminal are needed only to test these systems and absence of own elaboration doesn’t play any role. When it is important, Siemens will introduce an own product.
It’s interesting that brand awareness is constantly increasing; here are data of the company.
Market share is also growing. Pay attention that figure 9% is an estimated value for the whole world. Final values are not known yet. .
And now some words about Russian market. You can see an estimation of subscribers’ growth, which is made by ACM-Consalting. According to Mr. Lamprecht it’s a pessimistic estimation and in reality the growth will be higher in 2007.
And here you can see how the company estimates its own Russian market share. Though it’s not clear, how the company counted a whole market volume and what were the final results. We think that presented value of market share (30%) is a little bit overestimated. According to our estimation a real Siemens market share is about 25% but this value is comparable with Nokia market share.
In the near future the company is going to gain 15% of world market share, and Russian market is a key one. At last I would like to show a slide, which illustrated evolution of mobile handsets from Siemens.
In whole presentation was really captivate and cognitive. Unfortunately, it happens so rarely today. Mr. Lamprecht gave an opportunity to feel spirit of the company and was able to show Siemens plans. We hope that we also could do it, to some extent, at least.
Published 16 January 2003
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