Siemens foresees growing handset market

The company expects the global mobile phone market to grow 10 percent this year and pledges to bring picture messaging to all its handsets.

HANNOVER, Germany--Siemens said on Wednesday it expected the global mobile phone market to grow 10 percent this year and said it continued to gain market share as it pledged to bring picture messaging to all its handsets.

"We expect global handset sales to grow by 10 percent this year. Our market share continues to grow above market to currently 10 percent," Rudi Lamprecht, the head of the mobile communications unit of Siemens AG, told journalists.

Some 520 million mobile phones were sold in 2003, according to market research group Gartner Dataquest. Gartner predicts sales of 580 million units in 2004. Siemens's forecast, almost in line with Gartner's, is more aggressive than its rivals.

The world's No. 4 handset maker said at the CeBit electronics trade fair here that all its new phones would be able to do picture messaging, the successor of text messaging.

"The move from SMS (text messaging) to MMS (picture messaging) will take place this year. But we need new phones for the lower segments of the market. There should be at least 20 to 30 percent penetration of picture messaging handsets before that market takes off," Lamprecht told Reuters in an interview.

Budget picture messaging
To that end, the company introduced a new C65 camera phone for the budget end of the market, bringing picture messaging, which was previously found in expensive handsets, to cost-conscious consumers. Budget handsets sell for less than 150 euros ($183), before operator subsidies, which will lower the retail price further.

Siemens also introduced cordless home phones with cameras that could send snapshots to a television set.

"In the long run there is no difference between what consumers want outdoor and indoor," Lamprecht said, explaining why Siemens was building digital cameras into home phones.

Siemens, which plans to launch over 30 new mobile phone models this year, showed two more new phones, one sturdy model that would retail for around 200 euros ($244) and which Lamprecht threw around the room to show its resilience.

Get Up to Speed on...
Get the latest headlines and
company-specific news in our
expanded GUTS section.

He also showed an expensive model for business users, a segment in which Siemens is underperforming.

Siemens increased its market share last year by some two percentage points, mainly by pushing cheap phones into emerging markets such as Russia, India and China.

The aggressive pricing, which has led to wafer thin profit margins, is a bet on loyal consumers buying a more expensive Siemens phone in two years, Lamprecht said.

In the home phone market, Siemens embraced another new technology that allows consumers to make cheap calls over the Internet, by working with start-up company Skype, of Luxembourg, which has signed up over eight million users around the world for its free Internet telephony service.

Siemens introduced a computer add-on that allows consumers to do Internet applications such as instant messaging, chat, buddy lists, Internet radio and e-mails on a cordless home phone.

Story Copyright  © 2004 Reuters Limited.  All rights reserved.

Featured Video