Global Insight Perspective | |
Significance | The KU250 3G handset from South Korean vendor LG Electronic (LGE) is now available for sale and has been endorsed by the world's 12 leading mobile operators. |
Implications | The commercial availability of the low-cost 3G handset marks a new stage in the evolution of the mobile market for 3G services. |
Outlook | The initiative will make 3G services accessible to a much wider user base across the globe. It opens up the emerging markets to the 3G technology, where mobile multimedia services will now have a chance of becoming a mass-market phenomenon. The move will also enable mobile operators participating in the programme to migrate new market segments from 2G to 3G networks. |
The world's number-five mobile handset vendor, LG Electronic (LGE), has commercially launched its KU-250 model, which was selected by the GSM Association (GSMA) in February 2006 as the winning handset for its "3G for All" programme. As part of the GSMA's initiative, the KU-250 handset was selected by 12 leading operators, including Cingular Wireless, Globe Telecom, Hutchison 3G, Orange, KTF, MTN, Smart, Telecom Italia Mobile, Telefónica, Telenor, T-Mobile and Vodafone. The KU-250 will go on sale in Europe (Germany, Spain, Poland, Hungary, Sweden, Portugal and Italy), Asia (Hong Kong, Taiwan, India, Indonesia, Australia, Thailand, Philippines, Singapore and Malaysia), the Middle East (United Arab Emirates, Saudi Arabia and Turkey) and Africa (South Africa) later in June. It will enable operators to offer an array of mobile multimedia services—such as video calls, music downloads and high-speed internet access—to new market segments.
The feature-rich KU-250 bar-type handset was selected from 19 handsets submitted by eight vendors from the 12 participating mobile companies, using eight criteria: functionality, usability, logistics, market acceptance, target price, service and support, strategic commitment and form factor. The KU-250 is 15 mm thick, with a 1.3 megapixel camera and 10 Mb of user memory, enabling the phone to store and play video and music files, while its multi-tasking capability enables customers to use the phone without turning off the music. The chipset for this handset is supplied by Qualcomm, the promoter of rival CDMA technology. The price has not been revealed, but the GSMA stated earlier in 2006 that the KU-250 model would be priced at a 30% discount, wholesale, to the 3G handsets available today. Industry sources expect that the new model will retail at around US$100.
Outlook and Implications
Price Point: The price of 3G handsets has been the major hurdle for the moderate uptake of 3G services in Europe and worldwide. The 3G handsets still remain relatively limited and at a premium price point, particularly in the pre-paid segment, which accounts for more than 60% of the global mobile subscriber base. The availability of the KU-250 widens the range of price points of 3G handsets, enabling mobile operators to tap into new market segments. The release of the KU-250 will also have a rippling effect across the industry, driving down the wholesale prices for the low-end 3G handsets, which will be offset by shifting more volumes. LGE will benefit from first-mover advantage in the low-end 3G market segment, with other vendors expected to follow suit. The company also expects to supply over 10 million 3G handsets to the 12 mobile operators participating in the programme in 2007 and it anticipates shipping 18 million 3G terminals worldwide in total this year, up from the 4.1 million 3G units LGE shipped in 2007.
Economy of Scale: Global Insight expects that the entry-level KU-250 will become the catalyst for the mass-market availability of affordable 3G terminals, which will accelerate the growth of the 3G subscriber base. In addition to the 12 mobile groups participating in the GSMA's “3G for All” initiative, the KU-250 model will also be available to any 3G operator, which will drive further purchase orders for the South Korean vendor. The entry-level 3G handset will also facilitate handset replacements, which is the high-growth area for the European mobile operators. In Europe, the W-CDMA technology has already acquired a greater marker share of net additions against GSM in 2006. According to the UMTS Forum, by the beginning of 2007, subscriptions to 3G networks had exceeded 100 million worldwide, with more than 45 million 3G users in Europe, outstripping the 30 million 3G customers in Japan. Within Europe, Italy commands the largest 3G user base of 17 million, almost a fifth of the world's W-CDMA customer base. The “3G for All” campaign is the second programme designed by the GSMA to create economies of scale for handset makers and their component suppliers. The GSMA’s Emerging Market Handset programme stimulated the development of a range of ultra-low-cost mobile phones aimed at first-time buyers in developing countries. The GSMA represents nearly 700 mobile operators from 215 countries, with its members serving more than two billion customers, or 82% of the world's mobile user base.