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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: John Biddle who wrote (29063)	11/18/2002 9:33:02 PM
From: John Biddle	Read Replies (1) \| Respond to of 197703

Asia's 3G edge in mobile-phone market By CHRISTOPHER BROWN-HUMES, ROBERT BUDDEN, ANDREW GOWERS FINANCIAL TIMES straitstimes.asia1.com.sg THE United States leads the world in software development. Japan dominates in consumer electronics. Europe's claim to fame has been its leadership in mobile telephony. But as third-generation timetables in Europe continue to slip and as Asian mobile-phone manufacturers look to expand overseas, is Europe's dominance of the market beginning to fade? Korea and Japan have by far the highest penetration of colour phones in the world. Data usage is also higher in these countries than anywhere else as consumers embrace wireless Net access and the latest features such as video messaging. Europe, by contrast, is just starting to introduce picture messaging. In Korea, 50 per cent of users have colour-screen phones and this number is rising. About 40 per cent of Korean mobile-phone users use their sets for data services, a level several times higher than that of anywhere in western Europe. Japan has similarly strong interest in data; these services account for more than 20 per cent of revenues at Vodafone's Japanese arm, almost double the level seen in Europe. This is significant as it has given Asian manufacturers such as Sharp, NEC and Panasonic, the dominant mobile-phone suppliers in these markets, a clear technological advantage. 'The Asians are the kings on this,' says Mr Richard Windsor, analyst at Nomura. 'The Asian handset manufacturers have a clear technological advantage in terms of better battery life and better colour screens which will prove crucial with the roll-out of 3G services.' Mr Jorma Ollila, chairman and chief executive of Nokia, concedes that Asian and American rivals have gained ground. 'I think the others have caught up, but that's natural,' he says. 'They've invested so heavily.' The risk for the Europeans is that Asian manufacturers will take an early lead in the production of the latest sets. Symbolically, Vodafone, traditionally a major buyer of equipment from the likes of Nokia, Motorola and previously Ericsson, has chosen two Asian manufacturers alongside Nokia to provide sets for the launch of Vodafone Live!, its new flagship data-services offering. A key reason for this change of fortune is the technology that most of Asia has chosen for 3G services. While Europe has gone for wideband CDMA, a natural successor to its 2G GSM technology, much of Asia has chosen the rival CDMA2000 platform. 'The Asians have used a proprietary standard,' says Mr Windsor. 'Everyone in Asia is using chips from one company so there are no inter-operability problems and it is fully compatible with 2G.' By contrast, phone operators in Europe doing trials on their rival 3G technology are still experiencing technical hitches including 'dropped calls' when users move between 2G and 3G network-coverage areas. Thus, Europe is not expected to see widespread commercial launches of 3G services until well into next year. For Nokia, these delays mean it will be several months before it starts shipping 3G sets in meaningful numbers. It has only a tiny share of CDMA2000 set sales and does not manufacture a 'clam-shell' phone. The delays will also take their toll on European operators trying to raise revenues from services such as faster wireless Internet access. In Korea, operators are already starting to reap the rewards of 3G with higher customer spending on the latest data services. Users with colour-screen 3G phones spend around US$7.50 (S$13.27) a month on data services, over seven times more than the amount spent by other users. NTT DoCoMo, the Japanese mobile operator, has also begun to challenge the Europeans with the roll-out of its successful i-mode data offering across Europe. It is still early days, but i-mode has yet to make a significant impact in Europe. Indeed some believe European operators will quickly catch up again on services. Says analyst Christian Maher of Investec Securities: 'The leap from voice to picture messaging in Europe took a while, but the leap to video messaging may take less time because you now have a major European operator (Vodafone) with controlled operations in Japan.' Mr Charles Dunstone, chief executive of the Carphone Warehouse, Europe's largest mobile-phone retailer, believes Nokia is well-placed to take advantage of a predicted upsurge in demand for higher-end models. 'If you look at Nokia they are bouncing back,' he says. 'What we are seeing now is that they've got a range like no one else.' With a 50 per cent market share in Europe, Nokia also has the advantage in that consumers have got used to its sets. Mr Ollila appears relaxed about a potential onslaught from rivals. 'We still have the cumulative know-how here that is ahead of the rest of the pack,' he says. And if the Asian manufacturers attempt to compete on price, Nokia has another trick up its sleeve. With the highest mobile-phone margins in the business, Nokia could afford to cut its set prices aggressively and still turn in a respectable profit.