Contract manufacturers will put added pressure on handset makers

Visiongain: The increasing demand of operators to customise and brand their own handsets will benefit contract manufacturers in the mobile handset industry. The handset manufacturing outsourcing market is considerable in size and growing. Visiongain estimates that outsourced handsets will account for 36% of total shipments in 2006, a figure that will rise to 47% of all mobile devices by 2009. Flextronics, the leading contract manufacturer, produced 47 million handsets in 2005, putting it close behind the world’s fourth largest handset maker, LG, which made 53 million phones that year, and ahead of Sony Ericsson.

The recent announcement by Vodafone of a five-year deal with Huawei for the supply of own-brand 3G phones in 21 countries reinforces the trend of operators looking beyond the Tier 1 manufacturers. OEMs such as Nokia are reluctant to dilute their own branding on handsets, and will need to become more flexible in working with operators to become competitive in the customisation market.

Own-brand handsets are one way for operators to increase data usage, and the trend towards greater customisation will have an impact upon the manufacturing side of the industry. OEMs need to re-assess their relationships with operators and become more accommodating in terms of cross branding and customisation. Only by doing so can they compete with the ODMs and EMS providers who are willing to work closely to meet all the operators’ needs.

The study also found that the burgeoning low-cost handset market is a major opportunity for ODMs and EMS providers. Ultra low-cost and low cost handsets can be made more cheaply by contract manufacturing, leading more OEMs to outsource the production of such handsets as emerging market growth continues.

We are also seeing moves towards increasing handset production in India as a result of more favourable government initiatives. Once the dark horse of handset manufacturing, India will experience a dramatic increase in the number of handsets shipped from the region, concludes Walkden. Outsourcing in the Mobile Handset Industry, Publ 20060324

xLower Laptop Prices Fail to Entice Laggards

ParkAss.: Notebook computer market has still not shifted toward later adopters. Laptops have yet to attract the late-adopting market segments in the U.S. Only 2% of the 10.5 million households planning on buying a notebook are technology latecomers.

These technology laggards as households that have an Internet connection but seldom engage in online activities, show little to no interest in purchasing a laptop, despite falling prices. By comparison, a majority of the households planning on buying a laptop computer in the next 12 months already own one, with early-adopter households accounting for 29% of these households.

The laptop market is a mile wide and an inch deep, . New notebook computers can be found for less than $500, but it’s not the latecomers who are taking advantage of falling prices. The early adopters are getting a laptop to complement their existing desktop or laptop computer.

Multimedia Trends: Segmenting the U.S. Consumer Population i

Publ 20060324