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Quest for a Mobile Phone that's Truly Usable

Mobile phone service providers will make approximately $10.7 billion worldwide through the sales of private branded handsets in 2007, almost 23 percent more than the $8.7 billion earned in 2006.

A number of factors including handset delivery delays, greater customization needs, increasing demand for low-cost handsets, and the growing importance of emerging markets are prompting operators to choose private branded handsets.

According to ABI Research industry analyst Shailendra Pandey, "In the past, private branded handsets have mostly been high-end feature phones and smartphones supplied to operators by the likes of HTC, Sharp, and Quanta."

"Now, however, the growing demand for low-cost and ultra-low-cost handsets means that operators also have opportunities to provide private branded handsets in this segment. They can partner with selected local manufacturers who will be able to address the low-cost market by avoiding import costs and benefiting from the skill sets and cheap labor of indigenous work forces."

Therefore, in addition to having handsets from leading vendors such as Nokia and Motorola in their portfolios, operators are looking for opportunities to forge partnerships with these local manufacturers, who are also more willing to accept operator customization and branding needs.

One example is Vodafone's well known agreement with Huawei to supply 3G handsets for its operations in 20 global markets, and the more recently announced partnership with ZTE for 2G handsets.

In the next five years, over 80 percent of new mobile phone subscribers will be from the emerging markets of Asia, Africa, and Latin America. Asia is now the most important region for demand, supply, and competition in the handset industry, and Asian suppliers have significant cost advantages over suppliers from other regions.

ABI Research expects the market for operator private branded handsets to grow to over 127 million handset shipments by 2011. I believe handsets that are easier to use, and apply personalized VAS features, are still the greatest untapped market opportunity that a prescient carrier could use to distance themselves from their competitors.

Imagine a mobile phone that doesn't puzzle mainstream users. Where simplicity, by design, is the primary value driver of the service offering. Put your brand on that offering, and now you have the makings of a real winner. Suppliers have stripped the costs out of phone designs; now they just need to extract the complexity.

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