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The New Age of Handset Customisation: 2006 - 2011
New players, business models and market trends that are changing the economics and dynamics of delivering uniquely customised handsets

Executive Summary

Preface

Report organisation, companies reviewed and interviewed

Organisation of the Report

Companies and Products Reviewed

Methodology and Interviews

CHAPTER A. The Quiet Revolution

A flashback into the history of handset customisation and a flash forward into the proliferation of uniquely customised handsets

A.1 | 1990-2000: The Handset as the Network Endpoint

A.2 | 2001–2005: The Handset as a Medium for Branding and Service Access

A.3 | 2006-2011: Uniquely customised handsets

CHAPTER B. The Market Today

The status of manufacturer, mobile operator and brand activities and the market for uniquely customised handsets

B.1 | The Status of Handset Customisation Today

B.2 | Uniquely Customised Handsets

What is handset customisation?

Uniquely Customised Handsets

B.3 | Uniquely Customised Handsets: Global Update

CHAPTER C. Manufacturers: Disruptive Times In The Age of Customer Segmentation

Manufacturer strategies and case studies in handset customisation from skinning to total redesign

C.1 | Striving for Customer Segmentation

The struggle for profit margins

Charting segments and market niches

C.2 | Diversity in Manufacturer Positioning

OEMs, ODMs, ODEs, EMSs, CDMs and OBEs

Continued growth in outsourced handset production

C.3 | OEMs: Innovative but organisationally handicapped

OEM handset innovation, fashion and style

Superficial handset customisation

Independent subsidiaries: Vertu and Xelibri

Uniquely customised handsets: Samsung and Casio

Organisationally handicapped

Disconnected handset sub-teams

The limitations of economies of scale

C.4 | ODMs: Facilitating customised devices

HTC, a prime example of a handset customiser

C.5 | ODEs: Changing the Economics of Customisation

FG Wireless

Positioning and revenue model

Development process

Strategy

Cellon

Positioning and business model

Services and technology

C.6 | Case studies of uniquely customised handsets

Xelibri: lessons learned

A bold experiment in fashion handsets

The year in the life of the Xelibri range

What Xelibri did right

Where did Siemens go wrong?

The Siemens ESCADA project

A repeated success in handset co-branding

How the ESCADA project benefited from the Xelibri experience

Bang & Olufsen

Bang & Olufsen, a $600M Brand

From concept to design

The Handset

Market Reaction and Strategy

The ELLE GlamPhone by Alcatel

A brand, a matchmaker and a manufacturer

 From design to distribution

Inside and Outside the GlamPhone

Market Reaction and Strategy

i-kids: a customised kids handset

Vertu by Nokia

Vertu’s brand DNA: obsessive craftsmanship

The Signature and Ascent Handsets

Exclusive materials and precision engineering

Commodity hardware and lightly customised UI

Concierge service

Market reaction

Goldvish

Competition in the horizon

VIPN Black Diamond

C.7 | Manufacturer handset customisation: 2006-2011

CHAPTER D. Operators & MVNOs: Time for Handset Innovation

The ageing state of operator handset customisation and case studies of the novel MVNO approach to market segmentation through handset innovation

D.1 | The Ageing State of Operator Handset Customisation

Handset Customisation Today

Raison d'être

Handset branding

Network service interoperability

Usability and service promotion

Industrial design and aesthetics

The Benefits to Operators

A Minefield of Challenges

One Brand To Rule Them All?

Development cost on the rise

Longer development and lead times

Organisational constraints

Technology fragmentation

Partner competition

Operators must innovate

D.2 | MVNOs: Reinventing the Handset

Handsets at the core of the MVNO proposition

Firefly Mobile: Designed for Tweens

Go-to-Market Strategy

Market reaction and company strategy

Disney Mobile

Disney’s surprisingly limited handset customisation

The Dmobo Disney-branded handsets

Helio

Korean handsets, with a touch of customisation

Amp’d Mobile

The handsets

Mobile ESPN

Handset design: A low risk strategy and exacting product definition

The handset at the forefront of the ESPN experience

Market reaction

Strategy: more devices by end of 2006

UIEvolution

The UIEngine application environment

Voce MVNO

Exclusive leather-moulded handsets

Jitterbug MVNO

MVNOs: towards uniquely customised handsets

MVNEs: Handset Customisation as service

D.3 | Operator strategies in handset customisation

Exclusive partnerships

The 5-year Huawei agreement

Co-branded handsets

Vodafone Ferrari

T-Mobile, Robbie Williams and Sony Ericsson

Middleware investments

Vodafone to facilitate a more aggressive move

Behind Vodafone’s S60 announcement

The Vodafone-DoCoMo Linux-based reference platform

From DoCoMo to Vodafone Simply and Orange Experience

DoCoMo and KDDI: Leading the way

Inside the Vodafone Simply Proposition

Mid 2007: the Orange Experience handsets

Operator-led Handset Innovation

T-Mobile’s vision: Multi-modal access

D.4 | Operator-led handset customisation: 2006-2011

MVNOs

MNOs

Own-brand handsets

Co-branded handsets

Wholesale

CHAPTER E. Consumer Brands: The New Force in Mobile Handsets

The routes to market, incentives and challenges for brands entering the handset customisation market.

E.1 | Brands and Mobile

What’s in a brand?

Brands in the mobile industry

Lack of brand differentiation

Lack of manufacturer brand differentiation

Obscure operator brand deliverables

Is brand building only about time and money?

The absence of consumer brands: an unbalanced equation

E.2 | Consumer Brands and Mobile Content

Branded content everywhere

Brands using On-Device Portals

The future of branded content looks bright

E.3 | Branded Handsets: The New Frontier

Branded handsets as a line extension

Consumer electronics as a brand extension

The unique proposition of branded handsets

The incentives for brands

New revenue sources

Attractive margins

The Barriers to Market Entry

Limited know-how

Manufacturer flexibility

Operator inertia

Channel pricing, capabilities and retail experience

Lack of technology kudos

E.4 | Beyond 2006: The Future of Branded Handsets

Which brands are best suited to brand handsets ?

The Route To Market

1. The MVNO route

2. The Customised Design Manufacturer (CDM) route

3. The Value-Adding Distributors (VAD) route

Technology as a catalyst

CHAPTER F. The Silk Road of Customised Handsets

The arduous path of handset commercialisation, from brand licensing and industrial design to distribution and the retail experience

F.1 | The Path to Handset Commercialisation:  From Design to Distribution

Cost and time-to-market

Brand licensing

Market research

Industrial design

Hardware design

Handset assembly and manufacturing

Software integration

Last mile handset customisation

Service integration

Testing and quality assurance

Distribution, warehousing and logistics

Retailing

Customer support, reverse logistics, waranty and repairs

F.2 | Routes To Market for Uniquely Customised Handsets

1. The Customised Design Manufacturer (CDM) route

2. The Value-Adding Distributors (VAD) route

Technology as a catalyst to handset commercialisation

Reference designs

Operating systems

Application environments

User interface frameworks

On-device portals

F.3 | Industrial Design: First Step of the Experience

The business dynamics of industrial design

Limited differentiation and margin pressures

Towards closer integration of industrial design with manufacturing.

No Picnic

Frog design

Lawton & Yeo

The benefits of independent industrial design firms

The Industrial Design process

Idem

Services

Positioning and customers

Strategy

Ocean Observations

Overview

Services

Positioning and customers

Strategy

Case Study: Nordisk Mobiltelefon

Background

The design of the Nordisk brand

Understanding the Scandinavian rural professionals segment

Development of the rugged line of handsets

Next phase: targeting the consumer segment

Development of The Networker Line

Summary

F.4 | Customised Design Manufacturers

CDM: an OEM without fixed costs

The beginnings and principles of the CDM model

From modelabs to TCL Alcatel

CDM challenges

Modelabs

A unique and market leading position

The Elite (modelling agency) and Airness (sport equipment) branded handsets

Strategy: 10 uniquely designed handsets a year

Tedemis

Licensing and on-device portal services

A branded services provider strategy

Emblaze Mobile

A handset customisation house for operators

A three-stage strategy from an ODM to a CDM model

A service-centric strategy targeted to operators

F.5 | Value-Added Distributors

Challenges for value added distributors

Emporia Telecom

EmporiaLife: A handset for the 50+ age group

Dangaard Telecom

Brightpoint

Brightpoint’s Business Model

F.6 | Handset Commercialisation: 2006-2011

CHAPTER G. A Guide to Technologies for Handset Customisation

The technology vendor ecosystem, from user interface and plastics customisation to operating systems and reference designs

G.1 | The Handset Technology Stack

Technology as a catalyst to handset customisation

The software stack

On-device portals

User interface frameworks

Application environments

Operating systems

Reference designs

Casing

G.2 | On-Device Portals

ODP, the evolution of WAP

A Crowded Vendor Landscape

Nokia Content Discoverer

Market forecast to 2009

G.3 | UI Customisation Platforms

Who needs UI customisation?

Vendors and Technologies

Vendor landscape

Technology and tools

Criteria for UI vendor selection

TAT

Background and overview

Positioning and unique selling points

Products

Customers and deployments

Technology

Strategy

Digital Airways

Background and overview

Positioning and unique selling points

Products

Customers and deployments

Technology

Strategy

e-SIM

Background and overview

Positioning and unique selling points

Products

Customers and deployments

Technology

Strategy

MSX

Background and overview

Positioning and unique selling points

Products

Customers

Technology

Strategy

High-end Handset UI Platforms

Nokia S60

Trolltech Qtopia

G.4 | Application Environments

Beyond Java and browsers

Java, a point solution

Application environments: the new operating system

Decomposing the browser as an application environment

The war of application environments?

Adobe Flash Lite

Openwave MIDAS

Obigo

SKY MobileMedia

SKY-MAP middleware platform

Customers and partnerships

Open Plug

Product proposition, customers and partners

G.5 | Operating Systems

Symbian

Microsoft

SavaJe

Linux: quickly gaining market share, but challenges remain

Challenges for Linux vendors today

Purple Labs

G.6 | Hardware Reference Designs

Reference design form factor: crucial to handset customisation

G.7 | Casing: new materials for mass customisation

Handset customisation beyond plastics

Inclosia

Overview

Positioning and revenue model

Products

Customers

SkinIt

History

Product and positioning

G.8 | Handset Customisation Technology: 2006-2011

CHAPTER H. 2006-2011: Market Forecasts and Trends

The growth of uniquely customised handsets and the trends that will shape the handset customisation market

H.1 | Global Market Forecast 2006-2011

Forecast Model

Market Forecast 2006-20011

H.2 | Market Trends in Handset Customisation

Brand-led handset customisation

Uniquely customised handsets at the core of the MNO strategy

Own-brand handsets

Co-branded handsets

Wholesale

The Rise of Customised Design Manufacturers

Verticalisation in handset services and technology

Verticalisation in the service business

Verticalisation in the technology business

Handset System Integrators

Mass customisation: micro-segmentation

Open OSes are out; customisable software stacks are in

CHAPTER I. Recommendations For Industry Players

Strategic insights for mobile operators, manufacturers and consumer brands charting their course in handset customisation and segmentation

Recommendations for mobile network operators

Own-brand handsets

Co-branded handsets

Wholesale

Recommendations for handset manufacturers

Recommendations for consumer brands