Convergence is now:

Accenture Mobile Handset Study

Management Summary
Convergence is now:
Accenture Mobile Handset Study

It is a huge market—and still growing. By the time you finish reading

this sentence, more than a 100 mobile phones will have been sold
worldwide. At a rate of close to 2 million devices sold per day, 2004
marked another record year for the mobile handset industry. About
650 million devices were shipped to customers globally in a market
worth over US$100 billion—for devices alone.

Innovation has been driving the
industry. Today’s devices are much
more than simply mobile handsets. They
offer a variety of features, ranging from
PDA to gaming functions to digital
photography—and that is only the
beginning. Wireless is going broadband
and setting the scene for video-tele-
phony and more, based on 3G, Wi-Fi,
WiMax, and VoIP. Unrelated industries
have become competitors overnight, as
camera-equipped mobile phones begin
to compete with traditional cameras on
their home turf. Each of these advances
—and others like them—is reshaping an
industry that increasingly resembles the
general consumer electronics market
mechanism. Competition will intensify;
price pressure will increase.
The mobile handset ecosystem
The mobile handset industry is part of a
complex mobile handset ecosystem. The
traditional vendors of mobile devices
are positioned between their suppliers
and original developer manufacturers
(ODMs) on one side, and mobile
network operators (MNOPs) on the
other. Within the area of sales and
distribution channels, the mobile
handset vendor behaves more like a
wholesaler than a retailer, because the
consumer is generally owned by the
wireless carrier. Exceptions exist, but
primarily in developing growth markets
like India.
The mobile handset industry has seen
enormous growth over the last decade
and has benefited from further robust
growth in 2003 and 2004. Six big
manufacturers – Nokia, Motorola,
Samsung, Siemens, Sony Ericsson, and
LG Electronics—today control about
three-quarters of the global mobile
handset market, although market share
distribution has evolved substantially in
the past decade.
Global vendor market share
development
The market continues to grow, but it is
doing so with reduced momentum.
High growth is now mainly coming
from developing countries and regions
like China, India, Russia, and Latin
America, and will remain primarily in
the mid to low-end market segment in
the shortterm.
Of the several trends that are currently
influencing the mobile handset eco-
system, including the mobile handset
industry, convergence is by far the most
important.
• As devices are equipped with more
and more features, industries—once
separate—find themselves competing
against each other. For instance, the
mobile handset is poised to substitute
the entire low to mid-range of digital
cameras.

1
The mobile handset ecosystem
New entrants
(e.g. Canon,
Nintendo, Apple)
Source
Accenture analysis
• The growing worldwide use of the 3G
standard is a major step toward
converged networks.
• The emergence of wireless local area
networks (WLAN, including WiFi based
on IEEE 802.11 standards and WiMax
based on IEEE 802.16 standards)
within the unlicensed spectrum and
the development of Voice over
Internet Protocol (VoIP) nurture the
convergence of wireless and wireline.
Cable companies entering the
communications market complement
this trend.
• Although no dominant operating
system has emerged so far, the fight
for the number one position is well
under way. A clear mid-term winner
for the growing smartphone market is
likely. One well-known competitor,
Microsoft, may be able to transfer its
dominance from the PC sector into
the area of mobile devices.
2
Supplier/ODM
(e.g. Qualcomm)
MVNOP*
(e.g. Easymobile,
Comviq, Debitel)
Mobile
handset MNOP**
manufacturer (e.g. Vodafone,
(e.g. Nokia, Orange)
Motorola,
Samsung,
Retailer/other
Siemens, Sony
(e.g. Tesco, Aldi)
Ericsson, LG
Electronics)
Wireline device
manufacturer
(e.g. Avaya, Cisco)
With former boundaries to other markets
blurring, the mobile handset industry is
being reshaped—driven by a broad
convergence trend that is fueled by many
factors. Once the new industry settles, it
will look very much like the consumer
electronics industry with increasing price
pressure, intense competition, slower
growth, and significant differences in
growth rates as well as profit margins
between regional and segment markets.
In the most likely global industry
scenario for the next two to three years,
the combination of growth and conver-
gence should result in a rather stable
level of horizontal industry concentra-
tion. As in any other industry, the mobile
handset industry will tend toward
consolidation as it matures over time.
While tremendous growth in the last
decade hampered industry consolidation,
convergence is preventing it today.
Increased cost pressure, however, will
continue to favor cooperation below the
Customer
Consumer
Business
= Focus of Study
* Mobile virtual network operator
** Mobile network operator
Mergers & Acquisition level (e.g., the
cooperation for 3G Research & Develop-
ment between Sharp and Sony Ericsson).
This scenario has several important
strategic implications for mobile handset
manufacturers, and three business
models are expected to emerge during
the next couple of years. To compete
successfully, mobile handset vendors will
need to differentiate themselves clearly
if they want to avoid becoming a
progressively more commoditized
consumer electronics business.
Global leader
Only truly global vendors will be able to
compete on both price and differentia-
tion, based on their advantages of scale
and scope. Their size will allow them to
defend their position against low-cost
competitors; their global reach and
brand awareness will allow them to offer
premium devices. Most of the industry’s
Research & Development effort will be
covered by these players.
Global mobile terminals market share 1994 to 2004
Global market share
40%
35%
30%
25%
20%
15%
10%
5%
0%
94 95 96 97
Nokia Motorola Samsung
Source
For 94 - Q1 04 data:
Gartner Dataquest, Market Share: Mobile Terminals, Histor-
ical Figures 1994-2004, by Wood, Ben; January 2005
For Q2 04 data:
Gartner Dataquest Alert, Market Share: Mobile Terminals,
Cost competitor
As mobile handsets increasingly
become commodities, low-cost
competitors with a me-too strategy are
entering the market. Size will be an
advantage for them but not a require-
ment. In mature markets, network
operators will likely provide the neces-
sary distribution channels because they
are looking for white label phones. In
growth markets, low-cost competitors
will probably compete only locally
because they will not have the neces-
sary market access and global reach.
Their success will be threatened, but
mostly by new players offering even
cheaper devices.
Followers
From a global perspective, other players
should be in a position to pursue a cost
leadership strategy, to differentiate
themselselves or to address a market
niche. For instance, some players will
attempt to circumvent price competi-
98 99 00 01 02
Sony Ericsson (formerly Ericsson)
Worldwide, Q2 04, by Wood, Ben/ Milanesi, Carolina/ Liang,
Ann/ De la Vergne, Hugues J./ Mitsuyama, Nahoko/Desai,
Kobita/ Nguyen, Tuong Huy/ Song, Sauk-Hun; August 2004
For Q3 04 data:
Gartner Dataquest Alert, Market Share: Mobile Terminals,
tion by offering highly differentiated
devices. Design and brand will be key
differentiators, while Research & Devel-
opment will play a secondary role
because of cost. These vendors will be
limited in their growth opportunities
because a substantial part of overall
growth will stem from emerging markets,
such as China and India, over the next
couple of years—the kind of growth that
is very much limited to the low-end
segment. Even in mature markets, the
mid to high-end segment will not
account for the largest share of the
market.
These business models should prevail for
the next couple of years.
Regional markets—each with very
different stages of development,
subscriber penetration, and customer
needs—add new layers of complexity to
the already intricate web of relationships
among industry players. Competing
03 Q1 04 Q2 04 Q3 04 Q4 04
Siemens LG Electronics
Worldwide, Q3 04, by Wood, Ben/ Milanesi, Carolina/ Liang,
Ann/ De la Vergne, Hugues J./ Mitsuyama, Nahoko/Desai,
Kobita/ Nguyen, Tuong Huy/ Song, Sauk-Hun; November 2004
For Q4 04 data:
In-Stat Press release February 14, 2005
simultaneously in Europe and in China at
the same time, for example, requires very
different strategies and mobile handset
portfolios. The major competitors have
responded to this challenge by posi-
tioning themselves differently in
different markets. One key finding of the
competitive positioning is that
economies of scale and scope still give
the big three—Nokia, Motorola, and
Samsung—a clear economic advantage.
As the three largest players, they control
almost 60 percent of the global market.
Over the past few years, the big three
accounted for almost all of the industry’s
profits, supported by a statistically
significant relationship between absolute
operating profits, average selling price
(ASP), and units sold.
The three leading vendors by volume—
Nokia, Motorola, and Samsung—have
achieved strong operating margins in
2004. The big three will continue to have
advantages of scale and scope going
3
Scenario model Consolidated market with a
few large companies

Scenario 4:
Wars of attrition
• Little growth or stagnation of
demand result in concentration
and consolidation
• Success factors are primarily
financial strength for M&A
deals and size to benefit from
economies of scale and scope
Scenario 1:
Gilded cage
• Strong concentration and
growth in a regulated industry
environment or during a short-
term transition phase
• Success depends on industry
regulations or – during a transi-
tion phase – on the success
factors of scenario 4

Slow to stagnant Strong growth of

global demand
Scenario 3:
Paradise lost
• Slow growth of demand paired
with convergence
• Success factors differ between
mature and growth markets; for
the former, customer insight and
brand value allow for differenti-
ation; for the latter, understand-
ing of local demand and market
access allow for growth
global demand
Scenario 2:
Gold rush
• Hyper-growth and strong decline
of industry concentration
• Primary success factors are
market access, flexibility, and
speed to secure market share
early on in a growth environ-
ment

Source Fragmented market with

Accenture analysis many small companies

forward, but convergence now poses a
strategic challenge to vendors of all
sizes. Motorola and Samsung are unlikely
to catch up with Nokia. Other players
will likely need to further differentiate
themselves as Sony Ericsson is
attempting to do. LG Electronics seems
to be trying to follow in Samsung’s foot-
steps and Siemens is expected to
announce its future positioning soon.
Eventually, the enormous changes in the
area of handset manufacturers will have
implications for other players within the
mobile handset ecosystem. For example,
as mobile handsets become substitutes
for digital cameras, pure play digital
camera manufacturers may start to lose
market share.
The emerging market scenario
It is exactly this kind of dynamic
convergence that makes the mobile
handset industry so innovative—and so
volatile. As traditional industry borders
give way to new, unexpected possibili-
ties and combinations, the industry
stands to be radically redefined. In the
short-term—i.e., for the next three to
four years—a Paradise Lost scenario is
likely to emerge. This scenario will be
characterized by the continued conver-
gence of devices and by slower, steady
global growth of probably less than 10
percent in unit sales and somewhat less
in revenue. In developed markets like
Western Europe, product design, user
interface, and pricing capabilities
together with short time-to-market, a
strong brand value, and the ability to
respond flexibly to network operators’
requirements will be key success
factors. In growth markets like China
and India, understanding local demand,
the ability to adopt a me-too approach
to imitate innovations and to deliver
large volumes, flexibly combined with
strong market access and cooperation
with intermediaries will be key success
factors. The above figure compares this
scenario that we consider to be the
most likely one for the next three to
four years with other possible scenarios.
The implications of this short-term
scenario for both the mobile handset
manufacturers and the other partici-
pants of the mobile handset ecosystem
are extremely challenging. The changing
industry dynamics and competitive
mechanisms call for a broad strategic
review of each competitor’s market
approach. With different business
models and success factors, the strategic
direction will need to be realigned with
the emerging scenario. A consumer elec-
tronics-like market will for instance
require particularly astute customer
insight capabilities to ensure adequate
understanding of market demand. In
mature markets, design and user inter-
face will be key buying criteria for
consumers. Internal structures and

4
European converged mobile devices shipments development
Shipments (in million)
45
40
35
30
25
20
15
10
5 10%
0 0%
2003 2004 2005
Source
Ovum Connections, July 2004, by Mendez-Villamil, Marta Munoz
processes will have to be adjusted to
reflect the direction chosen, e.g. to
support a model based on price competi-
tion or a high-end positioning. For
instance, state-of-the art supply chain
capabilities and production processes—
with IT being a key enabler—will be
required to achieve a competitive
advantage based on costs. Other partici-
pants of the mobile handset ecosystem
will need to adjust their positioning, too.
For instance, network operators should
review their mobile handset portfolio
strategy in the light of the emerging
scenario.
By 2008, device shipments are expected
to reach almost 1 billion units world-
wide, targeting a global market of more
than 2 billion users. Within this time
frame, the current emerging markets
should begin to mature, with corre-
sponding lower growth rates of handset
shipments and lower net subscriber addi-
tions. Although global growth rates are
Growth (%), Share of total
mobile device shipments (%)
80%
70%
60%
50%
40%
30%
20%
2006 2007 2008
expected to slow, the overall market will
be enormous and therefore remain
attractive, if highly competitive. In this
mid-term scenario, a brisk war of attri-
tion may be the likely outcome, in which
slow industry growth and consumer
demand lead to concentration and—ulti-
mately—consolidation.
At the horizon of 2010, the arrival of 4G
technology could be the start signal for
yet another realignment of the market as
this new technology may impact market
dynamics. The mobile handset market is
today, and will remain tomorrow, a
constantly changing market.
Details on the idea and the
approach—overview of the full
study by chapter
The observation of disruptive changes
in the mobile handset industry marks
the outset of the study. The full discus-
Number of smartphones shipped in
Western Europe
Annual growth
Smartphones as percentage of total
mobile shipments
sion of the global handset market and
its major competitors is grouped into
seven sections:
Disruptive changes in the
handset industry
Powerful forces for change are
buffeting the mobile handset industry
from all sides. The drivers—innovation,
market size, convergence, and industry
mechanics—will leave little margin for
error among the industry's current
players, and will continue to open the
doors to future entrants in a global
market worth more than US$100 billion.
Far from operating in a vacuum, mobile
handset manufacturers are at the
center of a vast industry ecosystem
that includes suppliers, original device
manufacturers (ODMs), network opera-
tors (MNOPs and MVNOPs), retailers,
manufacturers, new entrants,
5
Global mobile connections
Global mobile users (in million)
2,500
2,000
1,500
1,000
500
0 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source
1995–2001 data:
Telecom Handel 2004: Telecom Handel (http://www.tele-
comhandel.de/sixcms/list.php?page=telecomhandel_markt
zahlen)
customers (consumer and enterprise)
and wireline device manufacturers,
each of whom have a direct or indirect
impact on a manufacturer's profits.
The relative importance of ecosystem
members changes with the vicissitudes
of convergence: As new technologies
and related industries emerge, the
importance of various players increases
accordingly—and with them, the
competitive mechanisms.
Convergence is now:
technological revolution
Convergence is the single most impor-
tant trend to reshape the mobile
handset industry. It is technology-
driven and is taking place in four main
areas: devices; operating systems;
wireless network standards; and wire-
less, wireline, Internet, and cable
networks.
6
Year-to-year growth (%)
70%
60%
50%
40%
30%
20%
10%
2003 data:
Accenture estimate
Once separate markets, personal
digital assistants (PDAs) and mobile
phones are no longer distinct devices.
Both markets have appropriated the
other market's functions and features
to such an extent that the two
industry segments have blurred. As an
increasing number of handsets incor-
porate digital cameras as a standard
feature, for example, such handsets
are increasingly replacing cameras
altogether.
Today's advanced generation of
smartphones offer more than simply
telephony. Like personal computers,
they are equipped with sophisticated
operating system hardware. Software
developers are currently in a fight-to-
the-finish struggle to become the
dominant operating system on the
handsets of the world's 1.4 billion
subscribers. Symbian, the operating
system owned by a consortium led by
Nokia, is pitted against familiar rival
Global mobile users
Average growth in percent
2003-2008 data:
Ovum 2004a: Ovum Connections, July 2004, by Mendez-
Villamil, Marta Munoz
Microsoft, who hopes to extend its
dominance from the PC world.
Like software standards, wireless
network standards are also
converging. 3G, the broadband air
interface poised to replace 2G and
2.5G networks, will harmonize
different network standards and
increase overall quality of service. In
spite of early rollout difficulties and
slow adoption among 2.5G users, 3G
devices are expected to achieve a
shipment share of around 40 percent
by 2008. It will also go far in paving
the way for 4G, which is likely to be
the first truly converged network.
While network convergence may be
proceeding cautiously, wireless, wire-
line, Internet, and cable technologies
are coming together at lightning
speed. Particularly WiFi and WiMax,
together with Voice over Internet
Protocol (VoIP), are driving the
convergence of the fixed line and the
 European mobile connections
European mobile users (in million)
800
700
600
500
400
300
200
100
0 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source
1995–2001 data:
Telecom Handel 2004: Telecom Handel (http://www.tele-
comhandel.de/sixcms/list.php?page=telecomhandel_markt
zahlen)
wireless worlds. Cable operators have
also entered the competition and they
have started to leverage their net-
works to offer broadband fixed line
communications.
Global mobile handset market:
facts and figures
The global market is currently domi-
nated by the big six mobile handset
manufacturers: Nokia, Motorola, and
Samsung, who account for roughly 60
percent market share, followed by
Siemens, Sony Ericsson, and LG Elec-
tronics, who account for about
another 20 percent market share. With
convergence reshaping the industry
and its competitive mechanisms,
however, new players are entering the
market.
The big six have very different back-
grounds: Nokia is strongly communi-
Year-to-year growth (%)
80%
70%
60%
50%
40%
30%
20%
10%
2003 data:
Accenture estimate
cations-focused; Motorola and
Siemens have electronics backgrounds;
Samsung and LG have emerged from a
consumer electronics history; and
Sony Ericsson is the result of a joint
venture between Sony and Ericsson.
The regional strength of the major
players differs significantly, both in
terms of regional market share and in
terms of regional growth. A multitude
of suppliers surround today’s OEMs,
especially because of the disintegra-
tion of the mobile handset value
chain.
Worldwide growth of the mobile
handset market has been extraordinary
over the past decade.
But today, growth in more mature
markets is slowing down and primarily
replacement-driven, while emerging
markets show impressive growth
through first-time subscribers, espe-
cially in the low-end segment.
European mobile users
Average growth in percent
2003-2008 data:
Ovum 2004a: Ovum Connections, July 2004,
by Mendez-Villamil, Marta Munoz
In mature markets, sales of new phones
are very much driven by attractive
device design and user interface
configuration rather than advanced
software and operating systems. An
increasing number of features is now
appearing on even the most standard
entry-level phones and mid-range
handsets.
Despite impressive growth rates of
smartphones of up to 70 percent in the
third quarter of 2004, the traditional
mobile handset still dominates the
market with about 95 percent of all
mobile devices. However, smartphones
are expected to account for around 10
percent of global and around 25
percent of Western European shipments
in 2008.
7
Value contribution of different handset components
Applications
Industrial design
100%
consumer
Electronics and
value mechanics
1990s
*Note: Operating systems, micro-browsers, firewall, others
Source
Accenture analysis
Transformation toward
consumer electronics market
mechanisms
The market for mobile handsets will
increasingly resemble the consumer
electronics market. As convergence
continues to blur traditional industry
borders, new competitors will enter the
market, increasing price competition
and price pressure.
Already, the average selling price (ASP)
for most mobile handsets has steadily
fallen over the past couple of years.
Consistent with the diminishing
marginal utility of innovations, new
features like camera phones and color
displays have not been able to stem
this downward trend, particularly
among price-sensitive consumers.
Growth will level off and differ sig-
nificantly between global regions.
Different market segments will also
8
Third-party
Applications applications
Basic
Industrial design applications*
Industrial design
Electronics and
mechanics
Electronics and
mechanics
1998-2000 2002-2004
emerge—with different success factors
for competition. For the mass market
segment, brand differentiation will be
important as handsets become
increasingly commoditized. In non-
voice segments like mobile gaming,
technical integration and partnership
management will be the key to
success. And in the high-end segment,
both brand and excellent Research &
Development skills will be paramount.
To add to the already complex matrix,
different strategies will be necessary
to address different market segments
within different regions. Given the
vast differences between mature
markets and developing ones, a mass
market strategy for the German
market, for example, will be quite
different than one for India.
Software will begin to account for a
growing share of a mobile handset's
value proposition. Although differen-
tiation was hardware-driven in the
past, it will be more software-driven
in the future, allowing for increased
device intelligence and utility.
Paradise lost: The short-term
future of the mobile handset
industry
All industries tend toward convergence
and consolidation over time, and the
mobile handset industry is no excep-
tion. It has shown similar trends in the
past, and a slowdown in growth has
generally resulted in a higher industry
concentration.
Over the next couple of years, compa-
rably limited growth could result in a
stronger industry concentration, but
convergence will offset this trend or may
even reverse it. In the short- to mid-
term, the industry will most likely follow
a paradise lost scenario, in which
Overview of most relevant success factors
Mature markets
• Product design, user
interface, pricing
• Time-to-market
Strategic • Flexibility to respond to
Factors Mobile network operator
requirements
• Brand value
• Size (number of handset shipments globally) to achieve supply chain scale
• Average selling price
Economic
Factors • Production efficiency (Direct costs: total system costs, costs of goods sold)
• Overhead (Research & Development and selling, general, and administra-
tive expenses)
Source
Accenture
existing players will find their market
share—and their profits—threatened by
new entrants.
Cooperation among industry players is
likely. Indeed, alliances to save costs and
to pool parts of the value chain are
already occurring, for example, between
Sharp and Sony Ericsson for 3G Research
& Development activities. Heavy
Mergers & Acquisition activity, however,
is unlikely until 2008, when market
growth is expected to further slow down
and weak demand is to spur concentra-
tion and to drive mergers.
The launch of 4G around 2010 leaves
the industry with an open question. The
next generation of mobile technology
may redefine, yet again, the industry's
competitive mechanisms.
Growth markets
• Product design, user
interface, pricing
• Ability to adapt a me-too
approach/imitate
• Ability to flexibly deliver
large volumes
• Access and cooperation
with intermediaries
Competitive positioning:
who's winning?
The factors for success in the mobile
handset industry will begin to look
remarkably similar to those for the
consumer electronics business. They
will fall into two categories: strategic
versus economic success factors, with
different characteristics for mature and
growth markets.
In the strategic sphere, understanding
demand and consumer insight will be
very important. Product design, user
interface and pricing will continue to
be the most important purchasing
criteria for consumers.
As more competitors enter the fray and
as consumer demand changes rapidly,
the time it takes for a handset manu-
facturer to bring a new product to
market will be critical. Production
processes will have to be more flexible
than ever before to ensure that the
right product gets into consumers'
hands at the right time. Customization
requirements of network operators will
also challenge manufacturers to rapidly
turn around new products.
In mature markets, in particular, brand
value will play a decisive role in a
market that is increasingly commodi-
tized. Existing players will have to rein-
force their value proposition to
consumers with strong brands. In
growth markets, where the return on
Research & Development investments is
too small, the ability to efficiently
execute a me-too strategy, to deliver
large volumes and to cooperate with
intermediaries will play a decisive role.
For both developed and emerging
markets, a strong sales and cost posi-
tion is vital. A manufacturer's size will
give it a strong advantage in achieving
optimal supply chain scale, optimal
9
Competitor positioning
Strong Niche Players
Strategic Position
Followers
Weak
Source
Accenture
average selling price, production effi-
ciency and overhead, including a reduc-
tion in total system costs, cost of goods
sold, Research & Development expenses,
and selling, general, and administrative
expenses.
Looking ahead: smart moves
to survive
In a paradise lost scenario, three
successful business models are likely to
emerge: global leaders, cost leaders, and
followers.
Nokia, Samsung, and Motorola are each
in a position to retain their leading
positions because they combine a
worldwide presence with scale
economies and strong brands. They will
compete head-to-head with cost
leaders—smaller players who compete
on an extremely low-profile cost struc-
ture. Sony Ericsson may emerge as a
10
Global Leaders
Cost Leaders
Strong
Economic Position
premium vendor—a manufacturer who providers of enterprise communication
uses its brand strength and under- solutions. For instance, mobile network
standing of demand to carve out a valu- operators are likely to revise their
able niche, particularly in mature handset portfolio strategy to the new
markets. LG's attempt to join the ranks market mechanisms and the positioning
of the global leaders by copying of the various handset manufacturers.
Samsung’s approach seems rather ambi-
tious. Siemens is expected to announce
its future positioning soon.
The other players (followers) usually
either pursue a cost leadership strategy
to achieve a strong economic position,
try to differentiate themselves or try to
address a market niche. An example for
differentiation in a niche is HTC
(Taiwan) and for a cost leadership
strategy is BPL Telecom (India).
Convergence, and the corresponding
changes for the vendors of mobile
devices, should have the biggest impact
on the other participants of the mobile
handset industry. This includes suppliers,
network carriers, new entrants and
Accenture capabilities for the mobile handset ecosystem

Mobile handset ecosystem

Supplier Manufacturer Network- Customer

Operator
Strategy

Customer Relationship Management

Supply Chain Management

Offerings Finance & Performance Management

Human Resources

Technology Services

Outsourcing Services

Solutions Accenture Communications Solutions

Source
Accenture

Methodology
For the purposes of this study, a mobile
handset is defined as any portable
device that is equipped with a SIM
card. Examples for mobile handsets
following this definition are mobile
phones, data cards used for laptops, or
SIM-equipped wireless PDAs.
This study is based on extensive
secondary research and input from
leading industry experts on general
trends and developments. Accenture
Research Team conducted 15 in-depth
interviews with industry experts and
representatives from major mobile
handset manufacturers as well as
mobile network operators and suppliers.
This material was supplemented by
discussions with 25 Accenture area
experts with years of industry-specific
experience.
Based on this data, Accenture devel-
oped likely scenarios for the next
several years, including the further
development and analysis of the
paradise lost scenario, which was
augmented by the mature/emerging
market segmentation and the competi-
tive positioning of the big six manufac-
turers.
Accenture as a partner for the
mobile handset ecosystem
Whatever scenario ultimately plays out
in the mobile handset industry, it is
clear that the participants in this
ecosystem are and will continue to be
confronted with the need to continu-
ously adapt their business models and
many of their processes to a rapidly
changing competitive and technolog-
ical environment. Accenture has deep
industry expertise in Telecommunica-
tion, High-Tech, and Media & Enter-
tainment combined with an extensive
range of offerings to help participants
in the ecosystem anticipate and adapt
successfully to these challenges to
become high performance businesses.
As shown by the chart, these offerings
can be grouped in six major functional
areas and target all the participants in
the ecosystem, whether suppliers,
manufacturers, or network operators.
Below we have indicated selected
offerings that are particularly relevant.
Strategy
Accenture’s development tools for
corporate strategy are relevant to all
the participants in the handset
ecosystem. The first step is to ensure a
clear understanding of what a true
strategy actually involves. It is already
apparent, for instance, that VoIP is
substituting with classic telephony.
What are the implications of this

11
process for the mobile handset industry
and what strategies can be developed
to capitalize on it? Faced with such
issues, Accenture’s approach to Busi-
ness Visioning, Growth Strategy, and
Portfolio Management provides a path
for understanding strategy as a process
by which one moves from a vision to a
strategic plan and its implementation.
As another example, the tools available
in the area of SITE—Strategic IT Evalua-
tion—are critical for the transformation
and optimization of a company’s busi-
ness processes through the use of IT.
Customer Relationship
Management
Within the context of Customer Rela-
tionship Management, Accenture
provides offerings designed to enhance
performance more specifically in the
areas of sales, support, and marketing.
Partner Relationship Management is a
disciplined approach to improving sales
by structuring the relationship with key
partners as effectively as possible—a
key consideration for the mobile
handset industry in light of the multiple
partnership relationships characterizing
the ecosystem. In the support area, the
Unified Desktop Solution provides a
framework for centralizing all available
customer contact information. In the
area of marketing, Accenture Marketing
Sciences is a tool—of particular interest
to handset manufacturers—that makes
it possible to measure the return on
investment from a company’s
marketing instruments. In a parallel
step, the analysis of a company’s Brand
and Marketing Effectiveness helps to
identify the drivers that can enhance
that effectiveness. And Customer
Analytics provides the detailed under-
standing of the customer that makes it
possible to take effective decisions in
many domains of the fast-moving
mobile handset business.
12
Supply Chain Management
Accenture’s offerings in the field of
supply chain management are exten-
sive, covering all aspects of Supply
Chain Management from procurement
through service and warranty manage-
ment. Examples that are relevant to the
mobile handset industry—especially the
manufacturers and network operators—
include Supply Chain Performance
Assessment and Supply Chain Planning.
As handsets become more complicated,
it is increasingly important to support
repairs and to minimize defects. This in
turn requires effective testing proce-
dures as part of the supply chain.
Accenture’s Supply Chain Performance
Assessment and Supply Chain Planning
are tools to ensure that the supply
chain is designed from the outset to
minimize subsequent costs, for instance
by incorporating adequate test and
quality control procedures.
Finance & Performance
Management
A key challenge for financial manage-
ment is to develop the control and
reporting systems that can enhance
financial performance while ensuring
the transparency necessary for good
corporate governance and effective
management control. Accenture offers
best practice tools and support to this
end. Corporate Reporting Excellence,
for instance, is an approach to revisit-
ing a company’s reporting procedures
and standards to ensure the implemen-
tation of best practices. Accenture also
can provide complete Financial and
Accounting Outsourcing solutions in
cases where the outsourcing of a
specific business process is the best
avenue to cost efficiencies and
strategic advantage.
Human Resources
Releasing the full potential of the
human resources available to an enter-
prise frequently requires a transforma-
tion process that focuses both on
structures and mentalities. Sales Trans-
formation, as the name implies, focuses
on optimizing the performance of the
entire sales organization through an
integrated approach designed to
leverage the existing resources and
culture while incorporating best practice
from Accenture’s broad experience with
state-of-the-art technology and tools.
Another Accenture offering, Learning
Transformation, helps clients to effec-
tively and efficiently offer learning
opportunities to its workforce to keep up
with the dynamics of the fast-moving
mobile handset industry. Another impor-
tant area is customer education when
introducing innovations.
Technology
Mobile handsets are technological
products, but the chances of success of
the participants in the handset
ecosystem depend on their own ability
to use technology to achieve their busi-
ness goals. With respect to a company’s
technical architecture, Accenture’s
approach to designing the Enterprise
Architecture makes it possible for
participants in the handset ecosystem
to adapt their IT landscape to support
necessary changes in key business
processes. With respect to the technical
infrastructure, the Network Assessment
and the Enterprise Network Transfor-
mation offerings are further examples
of Accenture’s ability to specifically
support the network operators in evalu-
ating and adapting their critical busi-
ness processes to optimize the chances
of success in this dynamic market.
Contacts:
Asia Pacific,
Jenny Dong,
jenny.dong@accenture.com

Europe,
Markus Karras,
markus.karras@accenture.com

North America,
Melissa Reid,
melissa.reid@accenture.com

Authors
Dr. Nikolaus Mohr
Dr. Karsten Kammer
 About Accenture
Accenture is a global management consulting, technology
services, and outsourcing company. Committed to delivering
innovation, Accenture collaborates with its clients to help them
become high-performance businesses and governments. With
deep industry and business process expertise, broad global
resources and a proven track record, Accenture can mobilize the
right people, skills, and technologies to help clients improve their
performance. With more than 110,000 people in 48 countries,
the company generated net revenues of US$13.67 billion for
the fiscal year ended Aug. 31, 2004. Its home page is
www.accenture.com.

Copyright © 2005 Accenture

All rights reserved.

Accenture, its logo, and

High Performance Delivered
are trademarks of Accenture.