The aggressive promotion of 3G services by mobile phone carriers was expected to stimulate the growth of the Taiwanese mobile phone market in the third quarter of 2005. However, according to the Market Intelligence Center (MIC), a Taipei-based industry research house, sales of 3G handsets failed to live up to original expectations, as consumers were anticipating a drop in prices. However, thanks to the peak season effect, the overall sales volume still reached approximately 1.7 million units in the third quarter, similar to the same period in 2004.

Due to the rollout of new mid-range and high-end multimedia models by manufacturers and channel players, sales value hit around NT$11.6 billion, up 2% year-on-year, with ASP (Average Selling Price) reaching NT$6,642 (approximately US$200), also up 2% year-on-year. "In view of its performance over the past three quarters, the Taiwanese mobile phone market can expect sluggish growth in the near future if it is not pushed forward by innovative new functions and applications," said Marty Kung, Senior Industry Analyst with MIC.

Mobile phone vendors have been aggressively developing the mid-range and high-end segments, and therefore models priced over NT$10,000 accounted for about 25% of total sales, up nine percentage points year-on-year, while sales volume of such models soared 57% year-on-year. Looking at product specs, mobile phone makers have been pushing 0.3MP and 1MP camera phones in the two aforementioned market segments, thereby raising the share of mobile phones with built-in camera modules to almost 60%, for a year-on-year increase of 12 percentage points.

European and U.S. mobile phone vendors Motorola, Nokia, and Sony Ericsson had a combined market share of around 60% in the third quarter, up 4 percentage points sequentially and 11 percentage points year-on-year. Facing low-price strategies from Motorola and Nokia and the strengthening of mid-range and high-end lineups by Sony Ericsson and Samsung, local Taiwanese brands only had a market share of around 20%, down three percentage points sequentially and four percentage points year-on-year.

With the exception of Samsung, Korean brands also suffered from the strong competition presented by first tier vendors. Overall, Korean brands commanded 13% of the market, similar to the second quarter but down six percentage points year-on-year. The combined market share of Japanese brands only reached approximately 10%, similar to the previous quarter and the same period last year. "Generally speaking, first tier brands have squeezed the market room for second tier vendors through their brand superiority, product strategies, and large marketing resources, and concentration in the Taiwanese mobile phone market is expected to increase even more in the future," added Kung.

Looking ahead to the fourth quarter of 2005, MIC expects that market demand will be stimulated with new services and multimedia offerings, especially the fast-growing MP3 player-equipped handsets. Mobile phone vendors will roll out models with MP3 functions in order to stimulate replacement demand, and give a push to 3G services. It is expected that due to the rollout of new models and promotion of older models, sales of the Taiwanese mobile phone market will reach about 1.7 million units in the fourth quarter of 2005, up 3% year-on-year. However, due to price reductions, overall sales value will reach NT$10.9 billion. For the full year 2005, total sales of the Taiwanese mobile phone market will grow 2% annually to approximately 6.7 million units and sales value will amount to about NT$43.8 billion.

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About MIC

Market Intelligence Center, based in Taipei, Taiwan, was founded in 1987. MIC is Taiwan's premier IT industry research and consulting firm providing intelligence, in-depth analysis, and strategic consulting services on global IT product and technology trends, focusing on markets and industries in Asia-Pacific. MIC is part of the Institute for Information Industry. https://mic.iii.org.tw/english