Handset-to-handset fight

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Handset-to-handset fight


Although a latecomer to the red-hot Chinese mobile phone market, South Korea's Samsung Electronics has edged out many rivals and has been the third-largest vendor since 2005.

But being on top is not always easy.

Trailing behind Finnish firm Nokia and United States-based Motorola, Samsung, which commands about 10 percent of the Chinese cellphone market, is facing fierce competition from a host of foreign and home-grown players.

Nokia and Motorola have reached out to China's second- and third-tier markets to boost turnover from their low-cost handsets and has widened their lead over Samsung on increased sales of cheap mobile phones, according to research house Gartner.

At the same time the South Korean phone maker being closely chased by Sony Ericsson for the No.3 position in China.

\"This year will be very crucial for us,\" says C.R. Jeon, senior manager of Samsung Electronics' Overseas Marketing Strategy Group, Mobile Communication Division.

Globally, Samsung aims to sell 133 million cellphones this year, up from last year's 118 million, Jeon says.

To reach that goal, Jeon says, it will partly depend on how well his firm performs in key emerging markets such as China and India.

But the executive declines to reveal how many handsets his company is planning to sell in China.

Samsung, which defines its core target consumers in China as fashion-conscious, affluent business people, will continue to put its strategic focus on premium handset lines, both globally and in China.

\"Our strategic focus on premium line-ups will be further enhanced this year by the introduction of our new Ultra Edition II and Ultra Special ranges,\" Choi Gee-sung, president of Samsung's Telecommunication Network Business, told an industry conference earlier this year.

The South Korean cellphone maker unveiled more than 10 new mobile phone models in February, including the Ultra Edition II, some of which will be released in China this year.

\"We will focus on the (the high-end) Ultra Edition series this year and also expand our product range in China,\" Jeon says.

Samsung, Jeon says, is planning to introduce more customized and dedicated cellphones in the domestic market.

\"We have to cater to diverse customer needs by introducing customized phones such as music-dedicated phones or messaging-dedicated phones that are very popular in China,\" the marketing chief says.

But more importantly, the South Korean cellphone maker, long known for its sleek designs and premium prices, \"will also introduce more low-priced (models)\", Jeon says.

\"We have noticed that the low-priced cellphone segment has been growing robustly in recent years in China,\" he notes.

In 2006, about 109 million cellphones excluding second-hand and smuggled handsets were sold in China, up 28 percent year-on-year from 2005, according to Norson Telecom Consulting, a Beijing-based market research house.

Handsets priced lower than 1,000 yuan accounted for a staggering 52 percent of the whole market in the fourth quarter of 2006, surging from 29 percent in the first quarter of 2005, the consultancy says.

Forty percent of Nokia's shipments in China were phones priced at less than 1,000 yuan, according to Hong Lei, a senior consultant at Beijing Pilot Marketing Management Consultant Co Ltd.

\"We hope the expanded product portfolio and the low-priced cellphones we are going to introduce will drive our business to help maintain our position as a top vendor in the country,\" Jeon says.

\"But the low-priced phone we are going to offer does not mean there is any compromise of our premium product quality,\" Jeon stresses.

\"We will maintain our image as a premium cellphone maker,\" the marketing chief says, admitting that it is a delicate balance to keep the premium image while offering low-priced handsets.

\"Our low-priced handsets will still feature quality and functionality, in line with our premium image,\" Jeon says.

Although Samsung's move to enter the low-priced cellphone segment seems belated, analysts say it may strike the right chord if it is well implemented.

\"If Samsung performs well in the lower-priced segment, while keeping its traditional advantages, it still has the chance to surpass Motorola to become the second-largest player, rather than falling behind Sony Ericsson as predicted by some analysts,\" Hong Lei from the Beijing Pilot Marketing Management Consultant Co writes in a memo.

\"But it is worthy of note that Samsung can not sacrifice its brand image as a premium product provider. While Nokia may get 40 percent of sales from low-end phones, its higher priced 6 and 7 Series bring bounty profits as well as defend brand awareness for its place as the No 1 in the market.\"