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VK Mobile a new a new mobile phones manufacturer in Europe and Russia

VK Mobile is almost not known on the European market, they are also not famous in Russia. This trademark is not renowed among professionals (other manufactures and distributors). The reasons of such low level of awareness are the following: firstly, VK Mobile is a very young company, secondly it is a niche brand; today it is available only in several countries.

Originally the company was established as lithium-polymer batteries maker (1997). In 1998 VK-Mobile began production of these accessories. Only in 2001 the company purchased mobile phones productions and this time onward first phones under this trademark have been launched. Since December 2001 first mobile phones produced by VK-Mobile have been promoted in China, a sales license was acquired only in March 2002 in China. Since September, the company has started its inroad to European market. In December 2002 VK-Mobile also has started CDMA-phones development.

In the end 2003 productive capacity of the company was about 150000 mobile terminals per month (1.8 million a year), in 2003 the company is planning to increase its capacity up to 3 million mobile terminals a year. Just simple comparison of maximum productive capacity and whole market volume shows that VK Mobiles market share could be not more than 0.4% (in case of 100% sales). Its a low market share and even if the company 10 times increases its productive capacity, it wont be a large worlds mobile terminals manufacturer. Take into account that price of components is rather high when production volume is not large. Price of new models development is also rather high, as the company is only a niche player on the market.

According to the companys presentation, its distributor in Italy is Mastercom, which promotes such models as CG107, VG107, VG207. It is indicated that Mastercom has a plan to realize 600 000 of mobile terminals. Unfortunately, the year is not indicated, but we think that they mean 2003. The main distributor in Scandinavia is Merco, an approximate quantity of sold phones is 100 000. In Asia, for example in Taiwan, the distributor is Toplux (CG100, VG100, VG200C) and a plan is 500 000 of phones. A Chinese distributor is Chabridge (CG100, VG100, D1) and it could sell about 300 000 handsets a year. In India phones from VK Mobile are sold by such company as Munoth (CG107, VG107, VG207). Taking into account a rapidly increased Indian mobile phone market, the company estimates an approximate sales quantity as 1.5 million per 3 years. If you just sum up all these figures, they will equal about 2 million (its a little bit more than productive capacity of the company for today). It means that VK Mobile should improve its productions to hit a target. So, the company stated that it would increase the production.

Notify that mentioned figures are not real, these are just design data. The proof of this fact is a data of inroad to Europe. The practice shows that first deliveries of not famous manufacturers are much higher than the following. We think (we hope that we are mistaken) that the company didnt pay into account reducing of orders, which are caused, firstly by large wholesale lots and slow retail sales. In this case the company could realize the plan only if it finds new distributors or develops markets of other countries. The first assumption is contrary to the rules of the company, which declares that it will have only one distributor in each country. The second way is more interesting and logical. Among new invaded countries VK Mobile named Russia.

What about business concept of VK Mobile? The company is positioned its phones as high-end brand name phones, which are bought for replacement (instead old models). It is indicated that it is not users first phone. Sales policy is similar in all European countries; the company concentrates on various color solutions and exclusive design.

Lets think together about these statements and begin from exclusive design. Of course, VK Mobile offers interesting design solutions, but we couldnt classify these phones as outstanding or not typical representatives of folder phones. To some extent they are a copy of more famous models (for example, VG207 is a small copy of Samsung T500), or just apply revising versions of new solutions (mirror on the external cover of CG107). So, the design cant be the main reason to purchase the phone, if to take into account that a customer, firstly, thinks about a brand and only after that about design while purchasing the phone.

If to speak about various color solutions, its a typical feature of Korean manufacturers; European companies apply this idea only today.

To say the truth, there are not so many offers of different phones in the line; models of 100 series are based on the same platform and they are differed only in design. In VG207 engineers add a color screen and almost the same features, so, now phone line consists of only two phones. Its difficult to promote not balanced phone line, because in this case a manufacturer could promote only niche solutions. Unfortunately, we dont know any successful niche solutions on the market. Remember, Benefon, which stopped to produce users mobile terminals, or reducing of Sony Ericssons market share last year, which doesnt have a balanced phone line.

VK Mobile selects its target group among fashion clamshell phones users, namely ladies. First three models, which are launched now, are aimed only to women. Design and such features as biorhythms and biocycles counters are the proofs. It means that the company wittingly reduced its market share and tries to rival with other manufacturers in this small segment. Such narrow specialization allows differing from other companies and presenting the production at the special angle. So, its a good idea.

But we think that its not reasonable to position the phones as brand name solutions. Usual customers are not aware of such company as VK Mobile and as a result its production is not popular. To increase brand awareness, the company should make much efforts, put up much money and it also needs time. Its impossible to make a popular brand within one year, because market is very inert.

VK Mobile tries to copy Samsungs strategy. When the company invades to the European market, it positioned itself as a manufacturer of high-quality and not cheap handsets. But Samsung put up much money in advertising of the brand (not only as mobile phones manufacturer, but as consumer electronics maker). This company needed about 5 years to become one of the leaders. During this time it introduced many models and many new developments. VK Mobile is not an industrial monster and it couldnt repeat this strategy. So, in our opinion, the company cant be successful, unveiling high prices and having low band awareness.

Generally speaking, VK products are always behind Samsungs phones. The company introduced similar and less functional phones later than Samsung. But the price of them is comparable.

Phone line

Now lets overview a phone line 2003. We should notice that mentioned below release data are preliminary and they could be postponed. I would like to add that VK make phones of good quality, but very often they are not so advanced as phones made by other companies.

Such models as CG107/VG107 can be found in European and Russian shops already today. Delivery kit of the smallest clamshell phones contains 2 batteries, which operate about 2 days in case of 20 minutes of talking. CG107 has a mirror on the front cover. Both phones have 7 different colors of external display backlighting. An internal screen supports 4-gray level and has a blue backlighting. The phone has only 4-tones polyphony. There are such features as biorhythms, biocycle counters and world time. Capabilities of the phonebook are standard. The phone doesnt have such functions as voice dial, voice memo and etc. But retail price of this handset is about 300 USD. In our opinion, the phones are overpriced. It seems to us that they should cost about 200 USD, not more.

Next phone in the line is VG207. It is equipped with internal STN-65K screen and supports 40-tones polyphony. It also allows to download own images. In response to design, it is a small copy of Samsung T500, but the price of it is about 450 USD. Take into account that it doesnt have a decorated external screen, so rich functions as T500; besides, brand is almost not known. A probable customers selections is obvious considering these differences and comparable price.

In the second quarter the company will launch 3 models: VG210, VG300, VG310. In response to functions VG210 is similar to VG207. But external screen of VG210 has 7 colors of backlighting (as models of 100 series). It also has other shape and available colors.

VG300 has much more differences. For example, it supports GPRS (class 10), EMS and MMS. A manufacturer adds a color external screen (256 colors) and graphical TFT 65K color internal display. There is an optional digital camera (VGA), which is available for this phone. I cant say, whether it is really necessary for the phone of this class. Besides, these phones and elder models support synchronization with PC, downloading of melodies and phone images. There is no information about the price yet, but it would be rather high.

VG310 has also many changes. It is equipped with a 65K TFT external display and 262 TFT display. It has an integrated digital camera, 64-tones polyphony and GPRS (class 12). These specifications sound very unreal. Prime costs of this phone are very high and there is no demand for the phones, which support GPRS (class 10 and higher). Probably, this phone remains only a paper handset or it will be a top and very expensive model.

Two more phones - VG300X, VG400 will be appeared in the 3Q. The differences of VG300X from VG300 are integrated camera, GPRS (class 12) and voice memo. Besides, it is a tri-band phone.

VG400 is based on solutions, which are used in VG310. It supports the third band and has improved GPRS. Besides, bluetooth function and 3D games support is added. These specifications look nice. The problem is that similar products of other manufacturers will be available on the market in September and price will be one of the determinant factors, which will influence customers preferences.

The outlook of the company for the future in Russia

HMM (Hyundai Image Quest) will promote VK Mobile in Russia. One year ago the same company tried to be an exclusive distributor of the other Korean manufacturer Maxon. Last year showed that the attempt was unsuccessful. First wholesale lots were large, but the phones were old-fashioned and, as a result, they remained in retail shops for a long time. Now the other company tries to promote the phones from Maxon, but it has small chances as well. By the way, its not a topic of this article.

It is planned to sell about 100 000 phones in 2003, 3 models (CG107/VG107/VG207) have been already certificated for using in Russian Federation. One can even find them on the shelves of the shops. In my opinion, thanks to high retail price, sales of these models will stop in the beginning of summer. The market will full of cheap models, which will have more advanced features, till that time. According to our estimations, real sales could be 35-40 000 per year in Russia, taking into account reducing of retail price.

Localization of the phones is quiet good, although there are some small shortcomings (for example, not correct abbreviations, not ideal users guide and so on).

HMM will promote the new brand mainly in Moscow and Saint Petersburg and spend main part of advertising budgets there (total budget is $1.3 mil.). Such advertising resources as TV, Kino, magazines and Internet will be used to improve advertising efficiency. The company plans to spend 80% of budget to increase VK brand awareness on the Russian market. Remembering Maxons experience, we doubt that the aims of HMM are real. Budget is not sufficient. We think that TV advertising is not reasonable, taking into account its price and small efficiency considering target group of VK mobile phones.

Replacement market is the most interesting in Moscow (25%), a share of replacement phones in Saint Petersburg is about 12%. In other regions of Russia it is very small, in the end of the year it would be about 4.5-5 %. So, VK phones will be mostly demanded in Moscow, where there are the most solvent customers. On the other hand, competition is also the highest. It wont be easy to compete with other manufacturers. We would like to notice once again that VK Mobile has a wrong price policy; the handset are too overpriced and we doubt that the strategy of the company would be successful.


Eldar Murtazin (eldar@mobile-review.com)
Translated by Maria Sennikova(maria@mobile-review.com)

Published — 27 March 2003

Have something to add?! Write us... eldar@mobile-review.com



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