Mobile telecommunication
Mobile Telecommunication
The mobile telecommunications market is booming. Mobile phones are now seen as necessities rather than luxuries and market penetration (the percentage of the population owning mobile phones) is very high and growing. A recent report put market penetration in the western EU as a whole at 90 per cent in 2004 and predicted that this will rise to 100 per cent by 2007. In some European countries (including the UK) penetration is in excess of 100 per cent as individuals have more than one mobile phone.
This high level of market penetration in the developed world does not mean that the market is saturated as the advent of 3G technology has opened up the market and will lead to people trading up to more expensive phones. In addition there is an explosion of demand in the developing world.
Current competition
It is necessary to look at two aspects of the market as they are inextricably linked together – the market for mobile handsets and the market for network operators. In both cases the market is oligopolistic, as Tables 13.13 and 13.14 show.
The market leader for handsets is Nokia. However, its position is under threat –its market share in the UK in 2002 was 52 per cent. Nokia’s main problem was the failure to recognise and meet the increased demand for camera flip-phones. It responded to this criticism by launching a new range of seven handsets in April 2005. The percentages shares of the other manufacturers remained fairly constant between 2002 and 2004, although LG is a new entrant and the ‘others’ group increased its market share from 10 per cent to 18 per cent.
The market for mobile phone handsets in the UK
Manufacturer % share of the UK market, 2004
Nokia 36
Siemens 10
Sony Ericsson 10
Samsung 10
Motorola 09
LG 07
Others 18
Source: Mintel, 2004
Table 13.13
The market for network operators in the UK
Network % share of the UK market, 2004
The mobile telecommunications market is booming. Mobile phones are now seen as necessities rather than luxuries and market penetration (the percentage of the population owning mobile phones) is very high and growing. A recent report put market penetration in the western EU as a whole at 90 per cent in 2004 and predicted that this will rise to 100 per cent by 2007. In some European countries (including the UK) penetration is in excess of 100 per cent as individuals have more than one mobile phone.
This high level of market penetration in the developed world does not mean that the market is saturated as the advent of 3G technology has opened up the market and will lead to people trading up to more expensive phones. In addition there is an explosion of demand in the developing world.
Current competition
It is necessary to look at two aspects of the market as they are inextricably linked together – the market for mobile handsets and the market for network operators. In both cases the market is oligopolistic, as Tables 13.13 and 13.14 show.
The market leader for handsets is Nokia. However, its position is under threat –its market share in the UK in 2002 was 52 per cent. Nokia’s main problem was the failure to recognise and meet the increased demand for camera flip-phones. It responded to this criticism by launching a new range of seven handsets in April 2005. The percentages shares of the other manufacturers remained fairly constant between 2002 and 2004, although LG is a new entrant and the ‘others’ group increased its market share from 10 per cent to 18 per cent.
The market for mobile phone handsets in the UK
Manufacturer % share of the UK market, 2004
Nokia 36
Siemens 10
Sony Ericsson 10
Samsung 10
Motorola 09
LG 07
Others 18
Source: Mintel, 2004
Table 13.13
The market for network operators in the UK
Network % share of the UK market, 2004