Philips looks to China for mobile phone revolution

By Graeme Hunt

Friday 15th March 2002

Text too small?

BOB PILLAY: Market rules

ALAN SPARKS: Confident

TOP PHONE: The Fisio 820

Not so long ago mainland China barely counted in the consumer electronics market. Its focus was machinery parts, textiles and other symbols of the old economy. Mobile phones barely rated a mention.

Now China is the world's largest mobile phone market, outstripping the inventor of conspicuous consumer capitalism, the US. It is, quite simply, the make- or break-point of mobile phones.

The world's largest mobile phone maker, Nokia, knows this, having suffered the perils of Asia with a sharply reduced September-quarter profit on the back of poor performance in China.

There is no suggestion Nokia will pull out of China but its problems serve as a warning to mobile phone makers worldwide that critical mass does not necessarily generate profits.

Philips, the Holland-based consumer electronics multinational, was unaware of Nokia's bad news when it launched an advanced range of mobile phones and digital cordless phones in Singapore last week. Even if it had known of Nokia's difficulties, Philips is unlikely to have changed course.

Among the 50-plus journalists at the launch were nine from mainland China. The rest came from Singapore, Taiwan, the Philippines, Malaysia and Indonesia. The Europeans were in a minority of one (me).

What this signifies is the tilt of consumer purchasing power toward China and the maturity of hitherto reliable markets like Australia and New Zealand.

Indeed the research on the relative attraction of mobile phones is extremely China focused.

Philips Consumer Communications Asia-Pacific marketing director Rob Goudswaard said research in mainland China confirmed the importance of product appearance in influencing buying decisions.

Looks came first followed by small size, battery life and ease of use. In Taiwan, ease of use came first, followed by looks, battery life and small size.

Philips' top-of-the-range mobile, the Fisio 820, certainly has the looks. Weighing just 85gm, the phone has a large face, colour screen and downloadable screensaver - what Philips' PR people describe as a "hot conversation piece among today's discerning handphone consumers."

Highlights for the techies include the fastest GPRS (general packet radio services) class in the market, full-colour LCD display, Bluetooth connectivity and the ability to receive and store colour pictures.

This is not quite Japanese third-generation mobility but close to it - something Philips Asia-Pacific senior vice-president Alan Sparks admitted.

"We are looking at the possibilities of [Japanese] I-mode - but just looking at it," he said.

The Fisio 820 was the most advanced of four phones launched in Singapore but the company also brought to the market a range of digital-enhanced cordless (Dect) phones, offering users interference-free conversations and a wider range.

Philips, highly respected in consumer electronics, is not a big player in mobile phones but takes the view that a growing slice of Asia-Pacific, especially China, is preferable to a weakening market in Europe.

For New Zealand, a backer of Philips products for 75 years, a launch in Singapore means new products in Auckland.

Philips Consumer Communications South/Southeast Asia, Taiwan and Pacific general manager Bob Pillay said the new phone range represented more than trying to capture a share of a new market.

It amounted to a re-engineering of the company to meet consumer needs.

"You should develop products based on market information," he said.

"In New Zealand, Philips is a market leader in consumer electronics. We have extremely high market share but we have to ask ourselves how to use that to lift the market share for mobile phones."

Graeme Hunt attended the Singapore launch as a guest of Philips

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