For years, the formula for success in the mobile-phone business was simple: Make products that are progressively cheaper and smaller with longer battery lives. But with the increasing segmentation of mobile-phone products into multiple tiers, wireless service providers are making much more sophisticated demands on mobile-phone makers. OEMs and their designers must now look beyond the simple goals of cheaper, smaller, and lower power.
Mobile-phone products have become more diverse as the market's focus has shifted from adding subscribers to luring upgrade buyers. The growth in the number of new subscribers is slowing. In contrast, recent upgrade sales have been robust due to strong demand for new phones with features like color displays and integrated digital still cameras.
The market's shift to upgrade sales and the popularity of new phones are prompting wireless communications service providers to add functions to their products. The proliferation of these various features is spurring a segmentation of mobile-phone products. OEMs are now managing portfolios of products partitioned by ranges of features and price points.
Phone categories range from simple voice communicators to models with advanced PDA functions and/or enhanced gaming capabilities. With today's time-to-market pressures, many OEMs are delivering multiple versions of handset models to achieve the sequential goals of first meeting product-specific targets, next reducing power consumption, and finally, cutting cost.
Nowadays, service providers want OEMs to manage phone pricing so it's at the lowest level across their entire product portfolio. They also want phones in a variety of innovative form factors designed for varying needs and applications. Furthermore, they want phones with power consumption optimized for the specific applications they're performing. The mobile-phone market is changing. So too must the role of mobile-phone OEMs.
Dale Ford is a vice president of iSuppli Corp. and the lead analyst for Wireless Systems Application Markets and Application Specific Devices. He can be reached at [email protected]