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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: TobagoJack who wrote (59217)1/21/2005 6:09:52 AM
From: elmatador  Read Replies (1) of 74559
 
Mobile handset glut

T-Mobile, Deutsche Telekom's mobile arm, is not only axeing 2,200 jobs as part of a €1bn cost-cutting plan in its European operations: it is also reducing the range of handsets it offers from more than 50 to 30-40. It is unlikely to be the last operator to streamline handsets, which will intensify competitive pressures on manufacturers such as Nokia, Siemens, Samsung and Motorola.

For T-Mobile the move is sensible. Subscriber growth remains rapid in the US, but most Europeans already have a mobile phone and service providers must squeeze more revenues from existing clients. T-Mobile wants to give itself leeway to meet tariff competition. Trimming the number of phones and cutting the handset subsidies it offers to customers accounts for €500m a year of the cost cuts.

Other operators might follow. Analysts say there is a glut of mobile phones that look similar and have many of the same features, such as colour screens and cameras. Rationalising product ranges will reduce confusion among customers.

Larger volumes of single models will also enable operators to demand bigger discounts, adding to pressure they are already exerting on handset makers for software customisation and handset branding. The saving grace for manufacturers is that if operators narrow their ranges, they may be able to reduce the number of models they make.

news.ft.com
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