Accenture predicts a "significant shakeout" in the mobile handset industry over the next three years.
Mark Joseph, senior manager of the Accenture Communication and High Technology operating group, says its global survey on the future of mobile handsets indicates the industry will, in the next three years, see a successful business model emerge: with global leaders, low-cost competitors and niche vendors.
He says realignment will occur amid wide industry restructuring and a significant shakeout as growth rates slow, price pressures increase and competition emerges from unexpected places.
Joseph says SA will see a blend of mature market characteristics combined with elements of a developing market, which will allow for high growth, an influx of lower cost handsets and a keen awareness of brand and status.
"The mobile handsets industry is huge and is still growing, with close to two million devices sold per day. The global market for devices alone is now worth more than US$100 billion; with trends in handsets bringing massive implications for other players in the mobile ecosystem," he says.
Each of the three emerging business models - global leaders, low-cost competitors and niche vendors - will bring its own strengths and weaknesses. Global leaders will be able to take advantage of their scale and scope to compete globally on both price and differentiation.
Their size will allow them to defend their position against low-cost competitors, while their global reach and brand awareness will allow them to offer premium devices. With the increasing commoditisation of mobile handsets, low-cost competitors will enter the market with a 'me-too` strategy, keeping costs low by using network operators for distribution in mature markets and competing only locally in growth markets.
Premium/niche vendors will circumvent price competition by offering devices that are highly differentiated on design and brand.
Accenture`s expectation for 2005-2008 is for modest growth in high single digits along with a slight decrease in concentration, as competitive new players − especially from Asia-Pacific − come in. "These characteristics will drive the industry into an overall scenario we call 'Paradise Lost`. Crucially, the mobile handset industry`s 'Gold Rush` is over," says Joseph.
Looking beyond the next two or three years, Accenture anticipates a 'War of Attrition` scenario as growth slows down and concentration increases once again. This will drive a shakeout and wide-scale industry restructuring.
Share
