Subject: [NEXTEL-1] Trend: Samsung knocking at Motorola's door

From: Marcel <[email-masked]>
Date: Tue, 11 Feb 2003 15:34:09 -0500

Trend: Samsung knocking at Motorola's door

Handset maker Samsung has been the wunderkind of the mobile phone businesses,
expanding its role of the global handset market from the No. 6 phone maker in 2000 to
the No. 3 handset maker in 2002. Analysts expect Samsung to grow its share of the
global mobile phone market from 10.6 percent at the end of 2002 to 15 percent by the
end of 2004. If the company continues this rate of growth, it would overtake Motorola as
the No. 2 handset maker in the world and be poised to challenge Nokia for the lead.
Samsung was a small-time player in the wireless market until 1997 when it started making
CDMA phones for the South Korean market. The company has capitalized on its CDMA
technology to make strides in the South Korean and North American markets. If the
company expects to overtake Motorola, though, it will need to boost its GSM offerings
and make more inroads in Europe.

Motorola sleepless with Samsung

Author:

CHICAGO: If executives at the world's second-largest mobile phone maker, Motorola Inc,
are having trouble sleeping, it could be because they are getting a wake-up call from
Samsung Electronics Co Ltd.

The South Korean cellphone maker is known for the aggressive ways in which it gains and
keeps contracts.

Samsung last year flew 400 engineers halfway around the world from South Korea to
Kansas, the United States, where they worked round-the-clock with colleagues back home
to produce a new phone for US wireless telephone operator Sprint PCS Group.

That kind of determination has helped Samsung double its market share in two years,
overtaking both Germany's Siemens AG and Sony Ericsson.

The Korean handset maker vaulted into the world's No 3 position in 2002, from No 6 in
2000, and is now knocking on the doors of market leaders Nokia and Motorola.

Wireless industry analysts expect Samsung to boost its global share to 15 per cent by 2004

from 10.6 per cent at the end of last year's third quarter.

At that rate, it could overtake Motorola, which, according to Gartner Dataquest, had 14.4
per cent market share at the end of the same period.

"It's got to be very unsettling because Motorola does not want history to repeat itself,"
said
independent telecommunications analyst Jeff Kagan, referring to Motorola's loss of the No
1
spot to Nokia about four years ago.

Considered an irrelevant player in the 1980s, Samsung jump-started its mobile phone unit
in
1997 when South Korea adopted code division multiple access (CDMA) technology.

The company rapidly gained share in its home market and in the United States, helped
largely by a combination of innovative designs, cutting-edge technologies and aggressive
marketing.

Among its successes, Samsung was first to launch phones with voice-activated dialing,
offer
Web browsing capabilities and incorporate global positioning system technology to allow
emergency workers to pinpoint a caller's location.

Analysts recently gave Motorola's first batch of 2003 phones a lukewarm reception,
criticizing the company's tardiness in introducing such features as colour screens and
integrated cameras.

"Motorola responds to what they see others doing; Samsung is proactive," noted Jane
Zweig, chief executive of Washington-based wireless consulting firm Shosteck Group.

Aggressive Samsung

And Samsung is only getting more aggressive.

Peter Skarzynski, senior vice-president of wireless terminals for Samsung, said the
company
last year rolled out a new phone every three weeks in the United States.

It plans to launch phones more frequently in 2003.

Daewoo Securities analyst Chung Chang-won predicts Samsung's overall handset shipments
this year will increase 36 per cent.

In addition to its biggest markets in South Korea and the United States, Samsung is now
targetting Europe, which uses cellphones based on a different technology standard than
CDMA.

To contend with such a threat, analysts said they would like to see Motorola stop playing
catch-up and introduce new designs and technology more consistently - and quickly.

"It's no longer a world of just the incumbents," Zweig said, adding South Korea's LG
Electronics Ltd, Japan's Sanyo Electric Co Ltd and Chinese manufacturers also are
breathing down Motorola's neck.

"Motorola ... still makes decent products, but they're not the only ones that do," she
said.

'We're not paralyzed'

To be sure, Motorola has already started making some of the changes it needs to stay
ahead of its competition.

"With no disrespect to Samsung or anybody else, we're not paralyzed," Motorola President
Mike Zafirovski said recently at a company event in Shanghai.

"Our strategies are offensive in nature as opposed to defensive."

Under Zafirovski, who previously led the mobile phone unit, the company that invented the
cellphone has been tightening relationships with customers in the last few years after its

perceived arrogance cost it the top spot in the global market.

It hired executives from design and marketing powerhouses Apple Computer Inc and Nike
Inc, and has made splashes with sleek, tiny phones, sporting eye-catching designs like
rotating covers.

"I do not know that they can claim the cutting edge, but they can certainly say they're a
much better phone company," said Deutsche Bank analyst Brian Modoff.

But even he has a "sell" rating on Motorola, citing the stock's expensive price, continued
use
of one-time charges and the need to improve its business further.

Agencies via Xinhua

http://www1.chinadaily.com.cn/bw/2003-01-28/104206.html

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