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Tete-a-tete. Interview with Peter Zapf, president of Siemens ICM, mobile phones department

During CeBIT we met many interesting people. Usually, it is very difficult to find them during the year, as they are too busy. For example, we were lucky to talk with Peter Zapf, president of Siemens ICM, mobile phones department. He tried shortly to describe the main future trends of the company. By the way, its better if he tell everything himself.

Eldar Murtazin (E.M.) What do you think about European market? What will be the running course for mobile terminals this year and next year?
Peter Zapf (P.Z.) I think that we are really in overall transition phase in the mobile industry and I think that time is now over, when you can go with poor hardware oriented devices to the market and dream about to have success. So, we are in a way moving into this industry in two areas. One is a high-technical market with a lot of applications and services. Services will be aimed to entertainment, or how we call it infotainment. The other side or the second area where we see, of course, also in the future is the voice centric phone, mainly, for countries where we have a low penetration. But in Europe, where we have, of course, a lot of countries with more than 68-70% penetration we have to look for totally another direction. That is exactly what is going on the market in a moment. All these new devices have not only a capability to download ringing tones, now you have gaming, entertainment with music, you have high-end phones, mp3-player, video player and also office function. So, it is more and more open world with new applications, and these new applications will push some market and will enable the market going for really new opportunities. As we say, these new opportunities mean that there are no longer phones only to make calls, but phones which you will carry with you 24 hours 7 day per week. It is really your personal device and companion. Whatever you do in future you will look for your personal properties having on your phone and you will be flexible in future to make additional downloads of functions, you think which needed only for you. Need and this is exactly what we try to do business in the near future. We start with MMS, it is only the beginning, and it will go on the next year. I think that there are no needs to talk about kino applications; it is more huge range of varieties we will see in different fields of a daily life and people behavior.

E.M. What could you say about special devices for entertainment? Nokia introduced N-Gage, Sony Ericsson has entertainment products too. Is your company also going to show something of that kind?
P.Z. I think this is a very good question. So, what we did, we look for the different reaches in a world. As we know, the development of mobile communication is strongly different from one place to the other and you will see, of course, a lot of opportunities in different segments. In different countries you will see different devices, dedicated devices, not only those, which have universal devices, but all singing and fansing features around. So, we will also go for gaming platforms, may be in future we will go for platforms more focused to do movies or pictures. It means that youll have not only one device, which helps you to download everything what you need. We look for the different segments and well try to understand much better this development in future as well and go for these dedicated phones.

E.M. Siemens was the first company, which launched Limited Editions of phones. It was extremely popular, especially in Russia, now Siemens introduced Xelibri line. Does it mean that Limited Editions wont produced anymore?
P.Z. No, its not so. You told totally another story. We well go in future for Limited Editions without any questions and this is what we can do with all these phones in future as well. Xelibri is a totally another issue, we made Xelibri for fashion, for new life style segments. You wont find Xelibri in operators offices, but you can find it in shops of Saint Plaza, hand package and whatever. So, it has nothing to do with the other distributors.

E.M. And once again few words about segmentation. Few months ago Rudi Lamprecht in Moscow said that quantity of middle class phones would be decreased, but there would be more high-end phones and low-end handsets. How do you think, when it would be?
P.Z. Look, answer in future is to make it very very clear. The mass market is of course volume rise in a low end. Volume of high-end phones is also rising, because value of the product with a reasonable price and content is different from middle end. Of course, we will go down to a certain price level with volume again well go on. Though, it means, if we talk about low-end, that we should be careful; its not a single entry phone, it is a range. We have today C-phones and M-class, in the area where we create volume. But may be what we look a little bit more shrinking is may be the class of real business phones because it will be go upset with phones like these (Siemens SX1), its not really only a business phone. It is prepared for the mass market, because business people are not interested to make pictures, to hear music, not interested to have all these things.

Businessmen, of course, looks also for certain functions we have in, but not for everything, and these phones have really everything. It is a good example where it doesnt only go for business people. So, here we have a new way, where it moves volume rise up, volume rise more in a lower segmentation.

E.M. Siemens is very active on the American market. Has your company a strategic plan to invade this market?
P.Z. Look, this plan is not a new plan. You can believe me that this plan was prepared really 4 years ago and we made very clear segments what we do first. First, we focused to the home area of Europe with creating market share, additional market share and we came to number two positions. It is one step. Second step, we put up Asia overall with main focus to China. We did it. Third step was to prepare US with entering in last year and we did it only in GSM, because we focused our business. We do it with three main operators in GSM and we are now there, we have the entire product range what is needed for US and it runs. Of course, it starts with a low volume and well go on month-by-month, quarter-by-quarter. Then, of course steps were going for Latin America and this is as well a good example we achieved in a last 12 months in GSM. Our market share in Latin America is more than 50%. So, our story based on a clear strategy, its not new, it was prepared and we execute.

E.M. Well, what do you think about Russian market? Our readers and I assume that Siemens wont launch Xelibri in Russia, but it would be extremely popular. Is it possible to comment this situation?
P.Z. Lets go first to your first question. Russia really has a huge potential and I think we did it not so bad there, because we got excellent market share and people are now in a good development, people have money, not, of course, in every area of Russia, as Russia is a big country, but focused to the main cities. I think everything is possible and well increase our market share in an excellent way. So, we are very proud about us and we develop together with our people in Russia on this market very well.

Of course, we are looking, as well, for Xelibri, which has a great potential. What we do in a moment is we focus first to special show cases to find out whether it runs in China, in Hong Kong, in Singapore, or in Italy or in Germany. And then immediately, as you see, there will be pull effects on the market, otherwise, we do focus ourselves and it will not work there. This is as well a clear plan behind to make it in a step-by-step approach.

E.M. A big problem in Russia is a grey market.
P.Z. Its not only in Russia. It is a problem of all countries, where smuggling is more or less aloud and where certain elements try to get money.

E.M. Yes, but now there is a very strange situation, for example, with Siemens S55. We dont have official phones on the market now (the interview was conducted in the middle of March 2003) and it stimulates grey market. Why does it happen?
P.Z. I know it very well, but, look, that it is not that issue that Siemens can solve. You will find it in certain countries and Russia is one of these countries, where it is possible, China is another example. Siemens only can control it or help to control it that we dont create shortage and then may be to avoid this. But always in a run-up base of a new product a volume is limited because you cant jump from zero, whatever to million for a month and you cant create such quantity. I assume it will disappear very very soon again.

E.M. Back to the entertainment. Would it be a new gaming platform for such phones or it would be Java games or something like that? Would it be a standard solution or something specific?
P.Z. No, we are very committed to use Java and it doesnt make sense for us any longer to use proprietary interface or solution. This is exactly the success of the story in future and also for such devices that we are committed going for open platforms and in the proprietary solutions, of course, these are not Symbian, these are proprietary systems. Java is a key element, which helps us to open as well here a platform for the rest of the world. And I think this helps to enable overall applications variety in a market.

E.M. You said that you had one phones for Asia and others for Europe. Then, why was CL50 firstly introduced only for Asia and then it was launched in Europe too?
P.Z. Its very simple, because Asia is much more in front, what does it mean with design, with the small, attractive phones. So it changed in last year, Asia is more or less a sender of doing this and we were prepared to do this first here, see reaction and then the pull effect came more in Europe as well. So we changed the game. We only look for what is going on the market. And there is no need to start in Germany and then do the rest. We are international company, we look for international trends, we are looking for this to create overall business and this will happen in future, I think more and more times. For example, data services, which we set first in US, as we did it with SX56. And may be well bring it later or never. So, it depends on the different developments of the market.

E.M. What do you think what is more important for end user: design or features?
P.Z. You cant make it in black-and-white. Because I made it very clear that personalization is the most important issue. Personalization is design, personalization is features, and personalization is flexibility with your personal feature you look for. And every mind what I said is a 24 hours 7 days approach and then, it means you have to make a good mix out of positioning in the price level, positioning with your design and a functionality set. So, this is exactly I think the most important issue and I think nobody is willing to buy a phone, which looks ugly, because you are proud to carry this with you and hang it around your neck and then you will show it to the rest of the world, that you are leading at communication.

E.M. Thank you for such interesting interview. Bye.
P.Z. Thank you. Bye.

Eldar Murtazin (eldar@mobile-review.com)

Published — 14 April 2003

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



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