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The New Age of Handset Customisation: 2006 - 2011

  • ID: 344736
  • Report
  • August 2006
  • 200 Pages
  • ARCchart
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New players, business models and market trends that are changing the economics and dynamics of delivering uniquely customised handsets

Handset customisation is a standard practice across the mobile industry. Mobile network operators (MNOs) enforce a range of modifications to manufacturer handsets to improve service interoperability and discovery. However, customisation is now working its way into the physical form factor of the device, as well as the graphical user interface. MNOs like Vodafone have launched completely customised phones to better address the needs of specific customer segments, and new-age MVNOs, such as AMP'd, ESPN and Voce, are deploying customised handsets to appeal to niche market segments. Handset manufacturers are evolving their product portfolio towards differentiated devices that appeal to niche audiences. Finally, consumer and lifestyle brands, such as ELLE and ESCADA, are diversifying into mobile handsets in search of brand extension opportunities and greater profits.

This 200-page report examines the industry evolving around uniquely customised handsets (UCHs) - phones which have both distinguished industrial design and a customised user interface - to target niche consumer segments. This will meet an increased demand for variety and personalisation in phone colours, styles and form factors, as handset cosmetics becomes a key purchase criterion for consumers.

UCHs presently account for less than 0.5% of handsets shipped worldwide. However, ARCchart forecasts that this number will grow over the coming years to reach 234 million handset shipped in 2011, or 19% of the global market.

This report provides an extensive analysis of the industry emerging around uniquely customised handsets. Topics of coverage include:

- The current state of handset customisation and overview of UCHs released worldwide
- OEM strategies, including case studies for Xelibri, Siemens ESCADA, Bang & Olufsen, ELLE, i-kids and Vertu
- The 12 steps to handset commercialisation: from brand licensing and design, to distribution and the retail experience
- UCHs as a key differentiator for MVNOs
- Operator UCHs: including Vodafone Simply, Orange Experience and Nordisk Mobiltelefon
- The role of handset distributors and the emergence of Value-Added Distributors (VADs)
- The emergence of Customised Design Manufacturers (CDMs)
- Insight into how operator and manufacturer customisation strategies will evolve in the coming years
- Leveraging the handset software stack
- Next-generation plastics and casing techniques
- Recommendation for optimising UCH market strategy
- Top seven trends emerging between 2006-11
- Market forecast: Growth of uniquely customised handsets to 2011 and the changing roles of OEMs, ODMs and CDMs

Answers and opinions are provided with respect to the following essential questions:

- What constitutes a uniquely customised handset?
- Which companies are currently leading the production of UCHs?
- What are the factors driving consumer purchase behaviour towards more targeted devices?
- What benefits do UCHs deliver to OEMs, MNOs, MVNOs and the consumer?
- What is the market opportunity for consumer and lifestyle brands?
- What are the key industrial design steps which must be considered?
- What is a Customised Design Manufacturer (CDM) and who are the companies leading this field?
- What available technologies can provide highly customisable UIs?
- What solutions can provide innovative customisation of handset plastics and casings?
- What is the role of handset operating systems and application environments?

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| Organisation of the report
| Companies and products reviewed
| Methodology and interviews

CHAPTER A The Quiet Revolution
A1 | 1990-2000: The handset as the network endpoint
A2 | 2001–2005: The Handset as a medium for branding and service access
A3 | 2006-2011: Uniquely customised handsets

CHAPTER B The Market Today
B1 | The status of handset customisation today
B2 | Uniquely customised handsets
| What is handset customisation?
| Uniquely customised handsets
B3 | Uniquely customised handsets: global update

CHAPTER C Manufacturers: Disruptive Times in The Age of Customer Segmentation
C1 | Striving for customer segmentation
| The struggle for profit margins
| Charting segments and market niches
The New Age of Handset Customisation: 2006-2011
C2 | Diversity in manufacturer positioning
OEMs, ODMs, ODEs, EMSs, CDMs and OBEs
Continued growth in outsourced handset production
C3 | 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
C4 | ODMs: Facilitating customised devices
| HTC, a prime example of a handset customiser
C5 | ODEs: Changing the economics of customisation
| FG Wireless
Positioning and revenue model
Development process
| Cellon
Positioning and business model
Services and technology
C6 | 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
The New Age of Handset Customisation: 2006-2011
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
C7 | Manufacturer handset customisation: 2006-2011

CHAPTER D Operators & MVNOs: Time for Handset Innovation
D1 | 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
D2 | 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 New Age of Handset Customisation: 2006-2011
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
D3 | 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
D4 | Operator-led handset customisation: 2006-2011
| MNOs
Own-brand handsets
Co-branded handsets

CHAPTER E Consumer Brands: The New Force in Mobile Handsets
E1 | 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
The New Age of Handset Customisation: 2006-2011
E2 | Consumer brands and mobile content
Branded content everywhere
Brands using On-Device Portals
The future of branded content looks bright
E3 | 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
E4 | 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
F1 | 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 customisatio
| Service integration
| Testing and quality assurance
| Distribution, warehousing and logistics
| Retailing
| Customer support, reverse logistics, warranty and repairs
F2 | Routes to market for uniquely customised handsets
The New Age of Handset Customisation: 2006-2011
| 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
F3 | 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
Positioning and customers
| Ocean Observations
Positioning and customers
| Case Study: Nordisk Mobiltelefon
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
F4 | 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
The New Age of Handset Customisation: 2006-2011
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
F5 | 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
F6 | Handset commercialisation: 2006-2011

CHAPTER G A Guide to Technologies for Handset Customisation
G1 | 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 131
G2 | On-Device Portals
| ODP, the evolution of WAP
| A crowded vendor landscape
Nokia Content Discoverer
Market forecast to 2009
G3 | UI Customisation Platforms
| Who needs UI customisation?
| Vendors and Technologies
Vendor landscape
Technology and tools
Criteria for UI vendor selection
Background and overview
Positioning and unique selling points
Customers and deployments
| Digital Airways
Background and overview
Positioning and unique selling points
Customers and deployments
| e-SIM
Background and overview
Positioning and unique selling points
Customers and deployments
Background and overview
Positioning and unique selling points
| High-end Handset UI Platforms
Nokia S60
Trolltech Qtopia
G4 | 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
G5 | Operating Systems
| Symbian
| Microsoft
| SavaJe
| Linux: quickly gaining market share, but challenges remain
Challenges for Linux vendors today
| Purple Labs
G6 | Hardware reference designs
Reference design form factor: crucial to handset customisation
G7 | Casing: new materials for mass customisation
Handset customisation beyond plastics
| Inclosia
Positioning and revenue model
| SkinIt
Product and positioning
G8 | Handset customisation technology: 2006-2011

CHAPTER H 2006-2011: Market Forecasts and Trends
H1 | Global market forecast 2006-2011
| Forecast model
| Market forecast 2006-20011
H2 | 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
| 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
| Recommendations for mobile network operators
Own-brand handsets
Co-branded handsets
| Recommendations for handset manufacturers
| Recommendations for consumer brands

The New Age of Handset Customisation: 2006-2011

List of Figures
Figure 1 – Detailed list of uniquely customised handsets and handset series profiled in this report
Figure 2 - Motorola’s market segmentation chart identifying main consumer clusters
Figure 3 - BenQ Siemens market segmentation chart circa 2004
Figure 4 - Roles of manufacturers, by category
Figure 5 - Global handset production breakdown: in-house vs outsourced
Figure 6 - The Red Motorola SLVR and Dolce & Gabbana RAZR v3i as examples of superficially
customised handsets
Figure 7 - The Sagem my700X Roland Garros designed for fans of the French Open tournament
Figure 8 - Illustration of the LG SD410 handset whose design resembles a sports car
Figure 9 - The Nokia Versace 7270, with Swarovski crystal lanyard
Figure 10 - The 3250 WESC Limited Edition handset
Figure 11 - The Casio G-Zone splash-proof phone
Figure 12 - The grey colours and conventional form factors typically found in mass-market handsets
Figure 13 - The Nokia 5500, the first device to offer ‘mode shifting’
Figure 14 - A music phone design by FG Wireless
Figure 15 - The Philips 968 Linux-based high-end handset designed by Cellon
Figure 16 - Xelibri models 1 through 8
Figure 17 - The Siemens ESCADA range
Figure 18 - The Bang & Olufsen Serene handset
Figure 19 - The ELLE Glamphone No 1 phone (top) and No 2 phone (bottom)
Figure 20 - The i-kids uniquely customised handset targeting the tweens segment
Figure 21 - Selected handsets from Vertu’s Signature range (left) and Ascent range (right)
Figure 22 - The Goldvish diamond-encrusted handset
Figure 23 - The VIPN Black Diamond designed by Jaren Goh
Figure 24 - Vodafone’s handset menu icons
Figure 25 - Orange Downloads service
Figure 26 - Vodafone Live Cast screenshots
Figure 27 - T-Mobile’s market segmentation charting segments by life stage
Figure 28 - The Firefly uniquely customised handset for 8-12 year old children
Figure 29 - LG and Pantech handsets customised for Disney Mobile
Figure 30 - Disney-branded fixed, cordless and mobile handsets, manufactured through brand licensing
Figure 31 - Limited edition of Dmobo M900 with numbered certificate and rag cleaner
Figure 32 - The Hero and Kickflip handsets launched by MVNO Helio
Figure 33 - The Amp’d Jet, Hollywood and Angel handsets
Figure 34 - The Sanyo MVP and the Samsung ACE customised Mobile ESPN handsets
Figure 35 - Leather-embossed Motorola RAZR v3 handsets available exclusively to Voce customers
Figure 36 - The A120 phone models designed and built by Samsung, based on Jitterbug’s conceptual
Figure 37 - The Vodafone Ferrari Sharp 902 handset
Figure 38 - The Sony Ericsson W300 Robbie Williams handset, exclusive to T-Mobile
Figure 39 - Vodafone investment in handset user interface, core applications and middleware
Figure 40 - KDDI Designer handsets
Figure 41 - The DoCoMo Music Porter X army-style handset from Mitsubishi
Figure 42 Dedicated single-task buttons as part of the Simply user interface (VS1 handset model)
Figure 43 - Handset retail margins of selected Tier-1 manufacturer handsets
Figure 44 - The 12 stages in the lifecycle of handset commercialisation
Figure 45 - The stages in the lifecycle of handset commercialisation and industry roles alongside the
Figure 46 - Example of the stages of the handset industrial design process
Figure 47 - A dissection of the industrial design of the NMT handset, showing the complex arrangement of
Figure 48 - The Nordisk MobilTelefon logo
Figure 49 - The industrial design for the rugged handset developed by Ocean Observations
Figure 50 - Screenshots of the user interface designed for the NMT handsets
Figure 51 – modelabs’ customisable handset features for project delivery within six months
Figure 52 - The Elite Model Look EML1 handset powered by modelabs
Figure 53 - The EmporiaLife handset designed for the 50+ age group
Figure 54 - Simplified handset technology stack showing core software platforms that enable handset
Figure 55 - Positioning of on-device portals within the handset technology stack
Figure 56 - Examples of immersive data service experiences delivered by commercial on-device portal
Figure 57 - Positioning of UI customisation platforms within the handset technology stack
Figure 58 - Examples of customisable user interfaces delivered by TAT’s product
Figure 59 - Example of a customisable user interface delivered by Digital Airways’ product
Figure 60 - Examples of customisable user interfaces delivered by e-SIM’s product
Figure 61 - Examples of customisable user interfaces delivered by MSX’s product
Figure 62 - Positioning of application environments within the handset technology stack
Figure 63 - Positioning of operating systems within the handset technology stack
Figure 64 - Positioning of hardware reference designs within the handset technology stack
Figure 65 - Evolution of reference design hardware and integration of functionality into fewer chips
Figure 66 - The Dmobo M900 and the Philips Xenium 9@9 handset featuring leather-moulded housing by
Figure 67 - Branded vinyl skins produced by SkinIt, themed around a licensed Star Wars character
Figure 68 - Unit sales of uniquely customised handsets by manufacturer type: 2006-2011
Figure 69 - UCH sales as a percentage of global handset sales: 2006-2011
Figure 70 - UCH sales as a percentage of global handset sales: 2006-2011
Figure 71 - The handset industry shift from vertical to horizontal forms, modelled on Charles Fine’s Double
Note: Product cover images may vary from those shown
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Organisation of the Report

This research report is structured around nine chapters:

Chapter A: The Quiet Revolution
A flashback into the history of handset customisation and a fast forward into the proliferation of uniquely customised handsets

Chapter B: The Market Today
The status of manufacturer, mobile operator and brand activities and the market for uniquely customised handsets

Chapter C: Manufacturers: Disruptive Times In the Age Of Micro-Segmentation
Manufacturer strategies and case studies in handset customisation from skinning to total redesign

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

Chapter E: Consumer Brands: The New Force In Mobile Handsets
Routes to market, incentives and challenges for brands entering the handset customisation market.

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

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

Chapter H: 2006-2011: Market Forecasts And Trends
The growth of uniquely customised handsets and the trends that will shape the handset customisation market

Chapter I: Recommendations for Industry Players
Strategic insights for mobile operators, manufacturers and brands charting their course in handset customisation and segmentation
Note: Product cover images may vary from those shown
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Companies and Products Reviewed:

Over 45 companies and products related to device customisation are reviewed in this report, as listed below. The depth of each review varies according to the relevance of the company or product to device customisation, ranging from a brief overview of the company positioning, to extensive 3-page reviews of company background, positioning, products, customers, technology and strategy.

- Adobe Flash Lite
- Amp’d Mobile
- Bang & Olufsen Serene
- Brightpoint
- Cellon
- Dangaard Telecom
- Digital Airways
- Disney Mobile
- Dmobo M900
- ELLE Glamphone
- Emblaze Mobile
- Emporia Telecom
- e-SIM
- FG Wireless
- Goldvish
- Firefly
- Frog design
- Helio
- Idem
- Inclosia
- i-kids
- Microsoft
- Mobile ESPN
- modelabs
- Nokia Content Discoverer
- Nokia S60
- Nordisk Mobiltelefon
- Obigo
- Ocean Observations
- Openwave MIDAS
- Open Plug
- Purple Labs
- SavaJe
- SkinIt
- SKY Mobile Media
- Symbian
- Trolltech Qtopia
- UI Evolution
- Vertu
- Xelibri
- Voce
- Vodafone Ferrari
- Vodafone Simply
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown