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Ultra Low Cost Handsets 2007-2012: Market Analysis and Forecasts of 2G & 3G Communications in Developing Markets

Product Type: Market Research Report
Published by: Visiongain
Published: August 2007
Product Code: R155-245
Description
Ultra Low Cost Handsets (ULCH) are critical for subscriber growth in emerging markets and for the growth of 3G services in both emerging and saturated markets. Since 2005, the ULCH strategy for emerging markets has generated huge attention of the key players in the wireless value chain and visiongain believes that many vendors are now evaluating market potential for affordable 3G handsets in saturated markets. An ULCH strategy can provide benefits including potential brand loyalty and sustained competitive advantage to handset vendors. Those vendors who will concentrate on customer requirements and focus on operational excellence as a key value driver will be able to ensure good profit margins in the ULCH segment. Operational excellence will ensure effective and efficient production processes and tight cost controls, thus providing sustainable profit margins. Are you prepared for the impact of ULCHs? How will they impact you and how can you benefit from them today?

Visiongain findings show that that chipset vendors like TI, Infineon and Qualcomm are reducing the prices of their chips to provide mass-market entry level devices. How will this impact on the industry as a whole? Will this mean a reduction in chip prices for all handsets or will clear divisions remain in the markets?

Although the current users of ULCH appears to be just around 0.8% of the total global mobile subscribers, we believe that ULCH will evolve further and will be adopted not only for business transactions in rural areas but would penetrate the masses in emerging markets. We believe that W-CDMA handsets will be widely accepted by subscribers both in the saturated and emerging markets.

Visiongain's research has established that the BOM for ULCHs in 2007 has dropped to $16, but with further R&D activity the BOM is set to fall. But what will it be by 2012? Plus with service revenues from the emerging markets low compared to the mature markets can operators make these developing markets profitable?

The emerging markets of India and China will account for what percentage of total global handset sales in 2012? This report tells you and it tells you in a clear and concise, easy-to-read format. Packed full of charts, graphs, tables and analysis, can you afford to ignore this report?

How will the market for ULCH be divided out by the manufacturers? What impact will cheaper Chinese and Indian manufacturers play in increasing sales? Currently Motorola and Nokia dominate the market, but how soon will this change? Visiongain's brand new report tells you.

This report answers key questions such as:
  • What impact will the ULCH have on your current handsets and costing structures?
  • What market share will ULCH expect and how will this impact on your market?
  • How can you customer segment the ULCH user? What do they expect and will it be delivered to them?
  • Analyse the current and future essential features of a ULCH and how to deliver them
  • How must operators, semiconductor manufacturers and handset manufacturers approach ULCH development?
  • Will intellectual property and royalty payments be maintained correctly for ULCHs?
  • Which countries will see greatest effect of ULCH and what will prices be?
  • What will sales be and at what prices in 2012?
In 2009 vendors will become truly competitive on pricing of W-CDMA ULCH - what will the vendor profit margins be and will economies of scale be large enough to warrant the fall in price? How many 3G ULCHs will be shipped in 2012?

To stay up-to-date and fully informed of the developments in the ultra low cost handset market, you must read this report today. With over 125 dedicated pages, this is the leading report available.

Please Note: Reports are sold based on the user licenses indicated. The Publisher delivers the report in Flash format via the publisher website, allowing viewing and printing capabilities only. Within one to two business days after placing the order, the Publisher will email the client with information on accessing their purchase. Prior to initiating fulfillment of an order, the client will be required to sign a document detailing the purchase terms for a publication from this publisher.

Table of Contents
Table Of Contents

E. Executive Summary

E1. ULCHs will Significantly Boost Mobile Handset Industry's Growth

E2. ULCH Strategy: A Key Requirement for the Emerging Market's Subscriber Growth

E3. ULCH Strategy will Increase Diffusion of Data Services in Saturated Markets

E4. Factors Influencing the Success of the ULCH Strategy

E5. ULCHs can Bring Benefits to all Players in the Wireless Value Chain

E6. Key Findings


1. Introduction

1.1 Defining "Ultra Low-cost Handsets" (ULCH)

1.2 Business Case for ULCHs

1.2.1 GSMA's ULCH Initiative

Table 1: List of Member Operators in EMH Programme (2005)

Table 2: List of countries with below average World Bank's GNI and less than 50% mobile service penetration

Table 3: Handset Specifications for EMH Programme

1.2.2 ULCH Strategy is Critical for Vendors' and Operators' Growth Strategy

1.2.2.1 Sustaining the Growth in Emerging Markets

1.2.3 Current Market Statistics on ULCHs

1.3 Aim of the Report

1.4 Report Structure

1.5 Report Scope

1.6 Methodology


2. Emerging Markets

2.1 Emerging Markets: Key Statistics

Chart 1: Population in Emerging Markets in Millions (March 2007)

Table 4: Population and Mobile Penetration Figures: for the Most Populated Countries in Emerging Markets (2006)

Chart 2: Mobile Penetration in Emerging Markets (March 2007)

2.1.1 Wireline Connectivity

2.1.2 Mobile Penetration in Rural Areas

2.1.2.1 Initiatives to Offer Connectivity in Rural Areas

2.1.2.1.1 Vendors

2.1.2.1.2 Operators

2.1.3 Subscriber Behaviour in Emerging Markets

2.1.4 Subscriber Growth in Emerging Markets

Chart 3: Subscriber Growth in Emerging and Mature Markets (2007-2012)

Chart 4: Subscriber Growth in Key Markets (2006)

2.1.5 Pricing plans pursued by Operators

2.1.6 Current Handset Availability

Chart 5: Motorola's Market Share in ULCH Segment in 2006

2.1.6.1 Handset Subsidies in Emerging Markets

2.1.7 Handset Distribution

2.1.8 ULCHs vs Low-cost Handsets

2.2 Description of the Major Markets for ULCHs

2.2.1 India

Chart 6: Subscriber Growth in India (2006)

Chart 7: Increasing Mobile Penetration in India (2001-2006)

Table 5: Key Indian Operators and Services Offered by them

2.2.1.1 Handset Availability

Chart 8: Increasing handsets Sales in India (2005-2012)

2.2.1.1.1 CDMA Vs GSM ULCHs

2.2.1.1.2 CDMA ULCH Market in India

2.2.1.2 Tariffs

2.2.1.3 Government Initiatives

2.2.1.4 Further Potentials in Indian Market

Chart 9: India's Subscriber Growth Forecast (2006-2012)

2.2.2 China

Chart 10: China's Mobile Subscriber Base (2006))

2.2.2.1 Handset Availability

2.2.2.1.1 Ultra Low Cost Handsets in China

Chart 11: China's Subscriber Growth (2007-2012)

2.2.2.1.2 TD-SCDMA Handsets

2.2.2.1.3 Chinese Government's Initiative

2.2.3 Africa

2.2.3.1 Key Statistics of African Market

2.2.3.2 Region Specific Factors

2.2.3.3 Government Policies

2.2.3.4 Mobile Banking Driving ULCH Demand in Africa

2.2.3.5 Handset Availability

Chart 12: Africa's Subscriber Distribution (2006)

Chart 13: Africa's Mobile Penetration (2006-2012)

Chart 14: Mobile Subscribers in African Subcontinent (2006-2012)


3. Key Players in the ULCH Value Chain

3.1 Handset Vendors

3.1.1 Nokia

Chart 15: Nokia Handsets Average Selling Prices (UDS) (Q1 2005-Q1 2007)

3.1.1.1 Nokia's ULCH Strategy

3.1.1.2 Nokia's ULCH Portfolio

Table 6: Nokia's ULCH Portfolio

3.1.2 Motorola

Table 7: Motorola's ULCH Portfolio

3.1.2.1 Motorola's Motofone wins the GSMA Award

3.1.2.2 Motorola's Strategy in ULCH Market

3.1.2.3 Motorola's Success or Failure in ULCH Market?

3.1.2.4 Motorola's CDMA ULCHs

3.1.3 LG

Table 8: Operators involved in W-CDMA ULCH Initiative

3.1.4 ZTE

3.1.5 Sony Ericsson

3.1.6 Samsung

3.1.7 Ningbo Bird

Table 9: S198 Technical Specifications

3.1.8 Other ODM's

Table 10: Handset Manufacturers and their Strategies in ULCH Market

3.2 Chip Manufacturers

Table 11: Chip Manufacturers and their Strategies in ULCH Market

3.2.1 Texas Instrument

3.2.1.1 TI's 2.5G Wireless Platform

3.2.1.2 TI's 3G Wireless Platform

3.2.2 NXP

3.2.3 Infineon

3.2.4 Philips

3.2.5 Silicon Laboratories

3.2.6 Qualcomm

3.2.6.1 Qualcomm explores Revenue Growth through Low Cost Handset

3.2.6.2 Qualcomm's Success

3.3 Operators

3.3.1 Vodafone

3.3.1.1 Vodafone's Strategy

3.3.1.2 Operator Branded Handset Strategy

3.3.2 China Unicom

3.4 Infrastructure Providers

3.4.1 Ericsson

3.4.2 Siemens Solution

3.4.3 Motorola's Solution

3.4.4 Other New Infrastructure Entrants

3.5 Other Players in the Value Chain

3.5.1 Spansion

3.5.2 LSI Logic


4. Vendor and Operator Issues and Strategies in ULCH Market

4.1 Issues and Strategies for Vendors

4.1.1 Is the Growth Sustainable in ULCH Segment?

4.1.2 How to Realise Economies of Scales?

4.1.2.1 Cost Leadership

4.1.2.2 Operational Excellence

4.1.3 Portfolio Strategies

4.1.3.1 Segmentation in emerging markets demands a cohesive ULCH/high-end handset approach

4.1.4 Brand Management

4.1.5 Dealing with Competition

4.1.6 Promotion

4.1.7 Partnerships and Alliances

4.1.8 Robust Product

4.1.9 Lower the BOM

4.1.10 Distribution

4.1.11 Coherent Marketing Strategy

4.2 Operator Strategies

4.2.1 Operator-Branded Handsets

4.2.2 Promote Service Uptake

4.2.3 Improving Coverage and Capacity of Networks

4.2.4 Segmenting and Targeting the Profitable Customer Segments

4.2.5 Flexibility and Adaptability

4.2.6 Choosing services that will benefit the low ARPU customers

4.2.7 Promotion

4.2.8 Pricing Strategies

4.2.9 Market Focus

4.2.10 Gaining Competitive Advantage through Effective and Efficient Operations

4.2.11 Other Essential Tactics

4.3 ULCH Market Dynamics

4.3.1 Threat from Substitutes

4.3.1.1 Second Hand/Refurbished Handsets

4.3.1.1.1 Re-Cellular

4.3.1.1.2 FoneAid

4.3.1.2 Reducing the Threat from Substitutes

4.3.1.3 The threat of low-cost Handsets

4.3.2 Threat from New Entrants

Table 12: New Entrants planning to enter ULCH Market

4.3.3 Threat from Competition

Chart 16: Falling Profit Margins in Handset Market (2007-2012)

4.3.4 Threat from Buyers (Network Operators)

4.3.5 Threat from Suppliers

4.4 Analysing the Ultra Low-cost Macro Environment

4.4.1 Political Factors

4.4.2 Economic Factors

4.4.3 Social Factors

4.4.4 Technological Factors

4.4.5 Environmental Factors


5. Major Developments in the ULCH Market

5.1 Success of the EMH programme

5.1.1 GSMA's W-CDMA Initiative

5.2 W-CDMA ULCH Market

Chart 17: W-CDMA ULCH Average Selling Prices

5.2.1 Will LG succeed in its W-CDMA ULCH Initiative?

5.2.2 Will Other Vendors target for W-CDMA ULCH Segment?

5.2.2.1 TechFaith

5.2.3 In which Markets will W-CDMA ULCHs be Most Successful?

5.2.4 Feasibility of Ultra Low cost W-CDMA Handsets

Chart 18: Global 3G Handset Shipments all Handset types (2006-2012)

Chart 19: W-CDMA ULCH Shipments (2007-2012)

5.2.5 W-CDMA Market

Chart 20: Global W-CDMA Subscribers (2006-2012)

Chart 21: Global 3G Revenues (2006-2012)

5.3 CDMA ULCH Initiative

Chart 22: 3G CDMA ULCH Average Selling Price (2007-2012)

5.3.1 Cal-Comp

5.4 Indian Government's Initiative


6. Statistics and Forecasts

6.1 Mobile Coverage Statistics

Chart 23: Wireless Network Availability Worldwide

Chart 24: Wireless Network Users Worldwide

Chart 25: Wireless Users Worldwide (2006-2012)

6.2 Vendor Market Share

Chart 26: Handset Vendor Market Shares in (Q1 2007)

Chart 27: Ultra Low-Cost Handset Vendor Market Share (2008)

Chart 28: Ultra Low-Cost Handset Vendor Market Share (2012)

6.3 Mobile Device Type Market Share

Chart 29: Mobile Device Type Shipment (2007-2012)

6.4 ULCH Market

Chart 30: Global ULCHs Shipments in Millions (2007-2012)

Chart 31: ULCH Shipment by Region (2012)

Chart 32: ULCH Shipments in India and China (2012)

6.5 Operator Revenues

Chart 33: Service Revenues from Selected Markets (2008)

Chart 34: Cellular Revenues CARG (2007-2012)

6.6 Handset Cost, Availability and Features

Chart 35: Falling ULCHs Costs (2005-2012)

6.6.1 Cost Analysis

6.7 Chip Manufacturers Market Share

Chart 36: Chip Manufacturers Market Share in ULCH (2012)

6.8 Bill of Materials

Table 13: Bill of Materials (BOM) for an Ultra Low-cost Handset

Chart 37: Bill of Materials for ULCH (2005- 2012)

6.9 Profit to Handset Vendors

Chart 38: Profit Margins in ULCH (2005-2012)


7. Conclusion

7.1 SWOT Analysis

Table 14: ULCH SWOT Analysis

7.2 Conditions for Success

Figure 1: Conditions for Success for ULCH Strategy

7.2.1 Barriers of Growth in Emerging Markets

7.2.2 Challenges in ULCH Market

7.2.3 Challenges for Handset Vendors

7.2.4 Challenges for Network Operators

Table 15: Criterion for Success in Emerging Markets

7.3 Conclusions
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