- To extend first-quarter momentum, mobile phone vendors aggressively enhanced product specifications while continuing to launch low-price strategies in the second quarter of 2004. By depressing prices of color display handsets, major vendors looked to inspire replacement demand, thus creating a market climate where price took precedence over specifications. As a result, Taiwanese mobile phone market sales defied seasonality to reach approximately 1.5 million units in the second quarter of 2004.
This performance represented a 6% slide sequentially yet a 10% increase compared to the second quarter of 2003, when SARS (Severe Acute Respiratory Syndromes) dealt a blow to the market. As mobile phone makers drove down prices of high-end and mid-range handsets priced between NT$7,000 (US$205; US$1=NT$34.1) and NT$15,000 (US$439.4), overall sales grossed approximately NT$9.7 billion (US$284.1 million), shrinking 8% sequentially.
In the second quarter of 2004, boosted by aggressive promotions by brand-name vendors, operators, and channel players, color display handsets captured 80% shipment share, growing two-fold year on year and 15% sequentially. Embedded camera phone shipment share neared 40%, posting a seven-fold increase year on year and a 10% rise sequentially.
Amid a barrage of offerings in the Taiwanese market, Korean brand-name players saw market share nearly double. Samsung increased value-line and mid-range offerings to grab a larger share, while Gplus and Innostream rolled out high-end and mid-range phones with superior price-performance ratios. Other second- and third-tier Korean players such as VK and GEO also threw variables to the market by soliciting celebrity endorsements and intensive marketing activities.
Impacted by Motorola's aggressive rollouts and Samsung's entry into the mid-range and value-line segments, Taiwanese branded makers saw market share drop 2% sequentially to stand at 25%. Market share of US and European players slid to 40%. Siemens and Alcatel suffered product line gaps due to delayed rollouts. Furthermore, Nokia began to launch clamshells in a strategy swerve, yet failed to pump up its market share.
In the third quarter of 2004, the strong retail season and low-price offerings by branded makers in the mid-range and value-line segments are expected to heat up the Taiwanese market. However, specifications among high-end and mid-range models remain fairly homogenous and multi-media services launched by operators have not met wide acceptance. Growth momentum is thus expected to be limited. Taiwanese mobile phone market size is anticipated to reach approximately 1.7 million units in the third quarter of 2004 and 3.3 million units for the second half of 2004, demonstrating slowed year-on-year growth.