Future Success in Global Handset Market Dependent on Survival of the Fittest.

Business Editors/High-Tech Writers

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--May 16, 2001

Corporate-level stability, effective management, and the ability to quickly adapt to changing market conditions are the key factors that determine survival vs. failure for manufacturers in the competitive global wireless handset business, according to Cahners In-Stat Group (http://www.instat.com).

The high-tech market research firm has determined that in this competitive market only two strategies have proven to work: a marketing focus and development of unique business models that drive effective content-provider partnerships.

"Market leader Nokia illustrates effective implementation of a market-focus, mass production approach. The company heavily markets modestly priced handset units that suit existing consumer needs.

"Their handset business unit is accountable for 72 percent of the company's net sales and is growing faster than their other primary business unit, Networks," said Brenda Sky, industry analyst with In-Stat's Wireless Handset Group.

However, In-Stat finds that number two and three players, Motorola and Ericsson, have short-run profitability issues in the divisions that produce handsets. Despite having grabbed significant shares of the growing U.S. market, both companies are losing ground to market leader Nokia.

Sky continued, "Not only does a company need to prove financial stability and be effectively managed to survive as a manufacturer in this industry; the business unit or segment responsible for wireless handsets needs to deploy a powerful and effective strategy to establish profitability.

"With lean and mean organizations positioned for attack on new and existing wireless handset markets, the fight for market share in 2001 will truly be survival of the fittest."

In-Stat has also found that:

-- Philips unsuccessfully deployed a similar strategy to Nokia. The company
aspired to rise to a top three position from their existing 4 percent of market
share. However, they failed to build brand recognition and quit the handset
business last month.

-- Motorola, most visible for harsh lay-offs in recent months, still spends
nearly 12 percent on R&D and plans to capitalize on the mobile-Internet in
the United States.

-- Matsushita has blended innovation and a unique business model to bring
well-received new concepts and products to domestic Japanese consumers.

The report, "Survival of the Fittest in Global Wireless Handset Manufacturing," (No. WH0101MS) provides a detailed analysis and comparison of the global top 10 wireless handset manufacturers. It outlines each company's strengths and weaknesses and gives market share statistics.

The report also describes and evaluates the size and significance of each manufacturer's wireless handset business relative to their other business units. Finally, it offers measurement criteria for determining which of these companies will continue to be market leaders as the new economy unfolds.

To order this report or for more information, please visit http://www.instat.com/catalog/cat-wh.htm#wh0101ms or contact Matthew Woods at 617/630-2139; [e-mail]. The report price is $2,995.

Cahners In-Stat Group (http://www.instat.com/) covers the full spectrum of digital communications research from vendor to end-user, providing the analysis and perspective that allows technology vendors and service providers worldwide to make more informed business decisions.

In-Stat is a unit of Cahners Business Information (www.cahners.com), a leading provider of critical information and marketing solutions to business professionals and a member of the Reed Elsevier plc group.