Friday, September 30, 2005

ARCchart: Handset Differentiation is in the Pink

ARCchart looks at the recent trend by handset manufacturers to differentiate their designs and target specific markets, such as women between the ages of 25 to 35. As noted, the color pink seems to be the flavor of the month with screens doubling as mirrors.

ARCchart believes there is an "increasing need for handset vendors to move away from competing on technical superiority" since in the "past three years, the average handset margins of the top six vendors have fallen from around 16% to just 10%." ARCchart predicts the "days of double-digit [handset] growth are over, and vendors will struggle to maintain their levels of profitability if margins continue to deteriorate."

Aesthetics and design is becoming increasingly important and "plays a significant role in triggering an emotional response from consumers in mature mobile markets. The handset has become the most ubiquitous item of personal consumer electronics ever produced; it travels everywhere with its owner. As a result, the mobile phone can act as a canvas for an outward and visible statement of the owner’s tastes and values. This moves simple aesthetics into the realm of fashion and style."

ARCchart notes the industry is becoming aware of this and cites various examples. It concludes that

While we might write-off the painting pink strategy as simply the first fumbling steps by handset vendors as they become more sophisticated in their use of style to segment their market and elicit an emotional bond with consumers, an important question remains: Can these handset companies ever reposition their brands away from technology and into a context of fashion and style?