As the barriers to entry to the GSM market diminish dramatically, established companies such as Nokia, Ericsson and Siemens are bound to loose market share. Equipped with as little as a brand name or low-cost distribution channel, the newcomers can gain market share by means of mobile phones they have developed themselves or phones they have paid other companies to design, develop, test and manufacture.

Layered organisations

A few years ago, major telephone operators (the market incumbents) started to divide their organisations into wholesale and retail divisions. They were forced to do so by both legislative requirements and the market conditions opened up by free competition. This pattern is now being followed by mobile phone producers and chip manufacturers, which have responded to market demands – particularly in China – and have commodities their technologies. In order to sell more chips, companies such as Motorola and Ericsson are selling the same GSM/GPRS

platforms used in their own branded products to external customers.

The electronics industry will succeed

In addition, developing mobile GSM/GPRS phones is no longer the sole domain of a selected few suppliers. The technology has almost reached the stage of being a mere commodity. The well-documented, open standard for GSM/GPRS technology means that the market has become flooded with numerous launches of new mobile phones. Many of the newcomers are based in Asia and – as has been the case in the past when Asian manufacturers enter a new market – such companies end up taking over the market because their technology is less expensive. It is already a well-known fact that 80% of WLAN products on the world market come from Taiwan.

The fact that new manufactures will enter the market and that there is a market potential is

backed up by recent surveys from In- Stat/MDR. "Nokia and Ericsson currently dominate the

handset market. However, our research shows that business users don't care as much about name brand as they do about features. With a focus on providing handsets with the features that users want, companies like RTX Telecom have the potential to shake up the handset market in the next few years, distributing market share among many more players than exist today." Says Rebecca Diercks from In-Stat/MDR.

Chinese companies will win

With more than five million new mobile subscribers a month, China is currently the most attractive mobile phone market in the world. Nokia, Ericsson and other brands arevery popular in China simply because their products are easily identifiable as coming from the West and they provide a certain amount of status in China. However, Chinese consumers are very price-conscious and are therefore aware that domestically developed mobile phones from Haier, TCL and other local manufacturers are not only of a high quality, but are also less expensive. This means, of course, that such manufacturers will gain a significant share of the market. In addition, the Chinese authorities are endeavouring to protect Chinese companies from inroads by foreign companies. One example of this form of protectionism is the expected selection of the TD-SCDMA 3G standard for the Chinese market – a standard that is not dominated by Nokia, Motorola and Ericsson.

Design companies will prosper

In order to sell more chips, semiconductor manufacturers such as Motorola will sign contracts with partners that can develop finished products for Motorola customers. RTX Telecom is one of the preferred Motorola partners. RTX Telecom is currently developing GSM/GPRS products based on the Motorola i250 GSM/GPRS platform both for newcomers and for existing companies that wish to enter the mobile market rapidly, safely and easily. Joergen Elbaek, CEO of RTX Telecom, says, "As we have already developed many mobile products, we can reuse our know-how from one project to the next. This means we can often be very competitive on price, and can develop a finished mobile phone within six months – which is faster than anyone else. We can also offer our customers a "one-stop shopping" service by roviding mechanical designs, product development, testing and manufacturing software."

GSM/GPRS phones as off-the-shelf products for brand owners

There is a trend towards more and more suppliers designing, developing and manufacturing GSM/GPRS mobile phones and selling them as OEM products. This makes it very attractive for manufacturers of global electronic brands or other brand owners to expand their product lines as lowrisk, low-investment ventures. The GSM/GPRS market is becoming more and more competitive, where the big get smaller and the small get bigger.

Newcomers such as Disney, Armani or Deutsche Telekom can easily enter the mobile phone

market within a period of six months by outsourcing the design, development and production to partners. This phone was designed by vertical pre-production management GmbH of Austria and developed by RTX Telecom.