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Motorola says cheaper handsets are coming
February 21, 2003
Motorola has warned it is braced for another drop in handset prices,
heavy competition in China and a slow take-off for 3G handsets.
The group is struggling to regain ground and push up profit margins
in the fiercely competitive mobile handset market.
"In general, we're talking about another $4 to $5 (2.50 pounds
to 3.10 pounds) of price erosion on average," Tom Lynch, chief of
Motorola's handset division and the world's second largest behind
Finland's Nokia, told the press.
Average selling prices are closely watched because they directly
impact profitability in the handset market.
Motorola's average selling prices, which are estimated by analysts
to have declined by some $4 last year to $155, are under pressure
as more low-end handsets are sold in emerging markets and components,
such as chips, become cheaper.
"You'll see a new level of low-end phones," he said, referring
to a trend to cater for mobile phone users in developing countries
with lower disposable incomes.
Like its rivals, Motorola has felt the pressure of new and aggressive
rivals in Asia, particularly in China, the largest mobile phone
market with over 160 million subscribers.
Lynch said he was confident Motorola could hold on to its number
one position there, but acknowledged that local manufacturers, which
have grabbed a percentage point market share every month over the
last year, would continue to grow.
"Over time the share of traditional suppliers will erode. It has
started already. And we understand that we have to become nimbler,"
he said.
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3G Motorola A920
