Asia rings up robust handset sales
Tuesday, June 26, 2001
REUTERS
Asia appears to have escaped the fall-off in mobile handset demand seen in Europe and the United States thanks to low cellular penetration rates and a huge appetite for new technology.
Telecom operators said that while regional handset demand may have eased in line with slowing Asian economies, overall sales remained relatively robust.
Laurens Bulters, director of operations at Indonesian cellular operator PT Telkomsel, said the company had seen "exponential" sales growth.
"We remain very optimistic about prospects in the Asia-Pacific [region] due to relatively low penetration rates in countries like Indonesia, Thailand, Malaysia and Philippines. Asia-Pacific remains separate from the US and Europe," he said.
The disparity was also due to the fact that infrastructure spending in developing markets like China was still in its infancy, said Ted Dean, managing director of BDA China, a Beijing-based telecommunications consulting firm.
"Operators like China Mobile and China Unicom are still increasing their capital expenditure on their networks and, as a result, there is still a lot of room for equipment vendors to sell on the handset side," Mr Dean said.
"China's business cycle in mobile communications is not in sync with the rest of the world. While the rest of the world has overspent on their networks, China has not hit that point yet."
Even Swedish telecommunications equipment maker Ericsson, grappling with losses from its mobile phone operations, struck a bullish note on wireless demand in the region.
"We expect Asia-Pacific to be the fastest-growing market in the coming years," chief executive Kurt Hellstrom said, adding that the region chalked up 250 million mobile subscribers last year - a number expected to hit 550 million by 2004.
Tech-savvy
In the more mature markets of Hong Kong and Singapore, tech-savvy users choosing to stay connected means there is a ready appetite for technology upgrades, which in turn drives handset demand.
"Mobile is a way of life in Hong Kong," said Charles Henshaw, chief executive of mobile operator Peoples Telephone. "We've seen tremendous [handset sales] growth in Hong Kong - nothing of the gloom and doom in Europe."
This demand may have eased of late, but that was largely because consumers were holding off on their purchases ahead of the release of the latest technology, Mr Henshaw said.
"There's nothing new in the market right now - people are waiting for GPRS and when that is released in the third or fourth quarter, [handset demand] will take off again," he added.
General packet radio services (GPRS), a 2.5-generation network, offers high-speed data transmission and is a stepping stone to faster and more sophisticated third-generation mobile technology.
Staying connected was also a "basic need" in Singapore, said Steven Chan, director of product development at the city state's second-largest mobile operator, MobileOne (Asia).
"We see continued growth in the mobile market in Singapore from, for example, parents giving their kids cell phones so they can keep in touch with them," he said.
New technologies involving machine-to-machine communication, such as using the short message service (SMS) to buy a drink from a vending machine, would also spur demand, Mr Chan added.
Role of value creation
As for Japan, struck by the double whammy of a moribund domestic economy and high cellular penetration rates of more than 60 per cent, strong handset sales were still a reality, said Japan's largest mobile phone operator, NTT DoCoMo.
"Penetration ratios and handset sales volumes are not necessarily 100 per cent related," Takeshi Natsuno, executive director of DoCoMo's Gateway Business Department, said.
"In Japan, penetration rates are already very high, but we still have a lot of demand for new phones because the technological improvements for handsets are growing very rapidly."
But technology will not be the buffer for every operator's bottomline, as creating value for the end user is more critical.
"You need to prove the real benefit of your services to end users. You must know what sort of marketing approach will work, and know how to set up relationships with content providers," Mr Natsuno said.
"All these are in a sense irrelevant to the technology, which is important as a factor, but is not everything. And as long as you can create real value to consumers, you don't have to worry about the economic situation." |
