Convergence is now: Accenture Mobile Handset Study

Management Summary

Convergence is now: Accenture Mobile Handset Study

It is a huge marketand still growing. By the time you finish reading this sentence, more than a 100 mobile phones will have been sold worldwide. At a rate of close to 2 million devices sold per day, 2004 marked another record year for the mobile handset industry. About 650 million devices were shipped to customers globally in a market worth over US$100 billionfor devices alone.

Innovation has been driving the industry. Todays devices are much more than simply mobile handsets. They offer a variety of features, ranging from PDA to gaming functions to digital photographyand that is only the beginning. Wireless is going broadband and setting the scene for video-telephony and more, based on 3G, Wi-Fi, WiMax, and VoIP. Unrelated industries have become competitors overnight, as camera-equipped mobile phones begin to compete with traditional cameras on their home turf. Each of these advances and others like themis reshaping an industry that increasingly resembles the general consumer electronics market mechanism. Competition will intensify; price pressure will increase.

traditional vendors of mobile devices are positioned between their suppliers and original developer manufacturers (ODMs) on one side, and mobile network operators (MNOPs) on the other. Within the area of sales and distribution channels, the mobile handset vendor behaves more like a wholesaler than a retailer, because the consumer is generally owned by the wireless carrier. Exceptions exist, but primarily in developing growth markets like India. The mobile handset industry has seen enormous growth over the last decade and has benefited from further robust growth in 2003 and 2004. Six big manufacturers Nokia, Motorola, Samsung, Siemens, Sony Ericsson, and LG Electronicstoday control about three-quarters of the global mobile handset market, although market share distribution has evolved substantially in the past decade.

Global vendor market share development

The market continues to grow, but it is doing so with reduced momentum. High growth is now mainly coming from developing countries and regions like China, India, Russia, and Latin America, and will remain primarily in the mid to low-end market segment in the shortterm. Of the several trends that are currently influencing the mobile handset ecosystem, including the mobile handset industry, convergence is by far the most important. As devices are equipped with more and more features, industriesonce separatefind themselves competing against each other. For instance, the mobile handset is poised to substitute the entire low to mid-range of digital cameras.
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The mobile handset ecosystem

The mobile handset industry is part of a complex mobile handset ecosystem. The

The mobile handset ecosystem

Supplier/ODM (e.g. Qualcomm)

MVNOP* (e.g. Easymobile, Comviq, Debitel) Mobile handset manufacturer (e.g. Nokia, Motorola, Samsung, Siemens, Sony Ericsson, LG Electronics) MNOP** (e.g. Vodafone, Orange) Retailer/other (e.g. Tesco, Aldi)

Customer

Consumer

New entrants (e.g. Canon, Nintendo, Apple)

Business

Wireline device manufacturer (e.g. Avaya, Cisco)

Source Accenture analysis

= Focus of Study * Mobile virtual network operator ** Mobile network operator

The growing worldwide use of the 3G standard is a major step toward converged networks. The emergence of wireless local area networks (WLAN, including WiFi based on IEEE 802.11 standards and WiMax based on IEEE 802.16 standards) within the unlicensed spectrum and the development of Voice over Internet Protocol (VoIP) nurture the convergence of wireless and wireline. Cable companies entering the communications market complement this trend. Although no dominant operating system has emerged so far, the fight for the number one position is well under way. A clear mid-term winner for the growing smartphone market is likely. One well-known competitor, Microsoft, may be able to transfer its dominance from the PC sector into the area of mobile devices.
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With former boundaries to other markets blurring, the mobile handset industry is being reshapeddriven by a broad convergence trend that is fueled by many factors. Once the new industry settles, it will look very much like the consumer electronics industry with increasing price pressure, intense competition, slower growth, and significant differences in growth rates as well as profit margins between regional and segment markets. In the most likely global industry scenario for the next two to three years, the combination of growth and convergence should result in a rather stable level of horizontal industry concentration. As in any other industry, the mobile handset industry will tend toward consolidation as it matures over time. While tremendous growth in the last decade hampered industry consolidation, convergence is preventing it today. Increased cost pressure, however, will continue to favor cooperation below the

Mergers & Acquisition level (e.g., the cooperation for 3G Research & Development between Sharp and Sony Ericsson). This scenario has several important strategic implications for mobile handset manufacturers, and three business models are expected to emerge during the next couple of years. To compete successfully, mobile handset vendors will need to differentiate themselves clearly if they want to avoid becoming a progressively more commoditized consumer electronics business. Global leader Only truly global vendors will be able to compete on both price and differentiation, based on their advantages of scale and scope. Their size will allow them to defend their position against low-cost competitors; their global reach and brand awareness will allow them to offer premium devices. Most of the industrys Research & Development effort will be covered by these players.

Global mobile terminals market share 1994 to 2004

Global market share 40% 35% 30% 25% 20% 15% 10% 5% 0% 94 95 96 97 98 99 00 01 02 03 Q1 04 Q2 04 Q3 04 Q4 04

Nokia

Motorola

Samsung

Sony Ericsson (formerly Ericsson)

Siemens

LG Electronics

Source For 94 - Q1 04 data: Gartner Dataquest, Market Share: Mobile Terminals, Historical Figures 1994-2004, by Wood, Ben; January 2005 For Q2 04 data: Gartner Dataquest Alert, Market Share: Mobile Terminals,

Worldwide, Q2 04, by Wood, Ben/ Milanesi, Carolina/ Liang, Ann/ De la Vergne, Hugues J./ Mitsuyama, Nahoko/Desai, Kobita/ Nguyen, Tuong Huy/ Song, Sauk-Hun; August 2004 For Q3 04 data: Gartner Dataquest Alert, Market Share: Mobile Terminals,

Worldwide, Q3 04, by Wood, Ben/ Milanesi, Carolina/ Liang, Ann/ De la Vergne, Hugues J./ Mitsuyama, Nahoko/Desai, Kobita/ Nguyen, Tuong Huy/ Song, Sauk-Hun; November 2004 For Q4 04 data: In-Stat Press release February 14, 2005

Cost competitor As mobile handsets increasingly become commodities, low-cost competitors with a me-too strategy are entering the market. Size will be an advantage for them but not a requirement. In mature markets, network operators will likely provide the necessary distribution channels because they are looking for white label phones. In growth markets, low-cost competitors will probably compete only locally because they will not have the necessary market access and global reach. Their success will be threatened, but mostly by new players offering even cheaper devices. Followers From a global perspective, other players should be in a position to pursue a cost leadership strategy, to differentiate themselselves or to address a market niche. For instance, some players will attempt to circumvent price competi-

tion by offering highly differentiated devices. Design and brand will be key differentiators, while Research & Development will play a secondary role because of cost. These vendors will be limited in their growth opportunities because a substantial part of overall growth will stem from emerging markets, such as China and India, over the next couple of yearsthe kind of growth that is very much limited to the low-end segment. Even in mature markets, the mid to high-end segment will not account for the largest share of the market. These business models should prevail for the next couple of years. Regional marketseach with very different stages of development, subscriber penetration, and customer needsadd new layers of complexity to the already intricate web of relationships among industry players. Competing

simultaneously in Europe and in China at the same time, for example, requires very different strategies and mobile handset portfolios. The major competitors have responded to this challenge by positioning themselves differently in different markets. One key finding of the competitive positioning is that economies of scale and scope still give the big threeNokia, Motorola, and Samsunga clear economic advantage. As the three largest players, they control almost 60 percent of the global market. Over the past few years, the big three accounted for almost all of the industrys profits, supported by a statistically significant relationship between absolute operating profits, average selling price (ASP), and units sold. The three leading vendors by volume Nokia, Motorola, and Samsunghave achieved strong operating margins in 2004. The big three will continue to have advantages of scale and scope going
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Scenario model

Consolidated market with a few large companies

Scenario 4: Wars of attrition Little growth or stagnation of demand result in concentration and consolidation Success factors are primarily financial strength for M&A deals and size to benefit from economies of scale and scope

Scenario 1: Gilded cage Strong concentration and growth in a regulated industry environment or during a shortterm transition phase Success depends on industry regulations or during a transition phase on the success factors of scenario 4
Strong growth of global demand

Slow to stagnant global demand

Scenario 3: Paradise lost Slow growth of demand paired with convergence Success factors differ between mature and growth markets; for the former, customer insight and brand value allow for differentiation; for the latter, understanding of local demand and market access allow for growth

Scenario 2: Gold rush Hyper-growth and strong decline of industry concentration Primary success factors are market access, flexibility, and speed to secure market share early on in a growth environment

Source Accenture analysis

Fragmented market with many small companies

forward, but convergence now poses a strategic challenge to vendors of all sizes. Motorola and Samsung are unlikely to catch up with Nokia. Other players will likely need to further differentiate themselves as Sony Ericsson is attempting to do. LG Electronics seems to be trying to follow in Samsungs footsteps and Siemens is expected to announce its future positioning soon. Eventually, the enormous changes in the area of handset manufacturers will have implications for other players within the mobile handset ecosystem. For example, as mobile handsets become substitutes for digital cameras, pure play digital camera manufacturers may start to lose market share.

The emerging market scenario

It is exactly this kind of dynamic convergence that makes the mobile
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handset industry so innovativeand so volatile. As traditional industry borders give way to new, unexpected possibilities and combinations, the industry stands to be radically redefined. In the short-termi.e., for the next three to four yearsa Paradise Lost scenario is likely to emerge. This scenario will be characterized by the continued convergence of devices and by slower, steady global growth of probably less than 10 percent in unit sales and somewhat less in revenue. In developed markets like Western Europe, product design, user interface, and pricing capabilities together with short time-to-market, a strong brand value, and the ability to respond flexibly to network operators requirements will be key success factors. In growth markets like China and India, understanding local demand, the ability to adopt a me-too approach to imitate innovations and to deliver large volumes, flexibly combined with strong market access and cooperation

with intermediaries will be key success factors. The above figure compares this scenario that we consider to be the most likely one for the next three to four years with other possible scenarios. The implications of this short-term scenario for both the mobile handset manufacturers and the other participants of the mobile handset ecosystem are extremely challenging. The changing industry dynamics and competitive mechanisms call for a broad strategic review of each competitors market approach. With different business models and success factors, the strategic direction will need to be realigned with the emerging scenario. A consumer electronics-like market will for instance require particularly astute customer insight capabilities to ensure adequate understanding of market demand. In mature markets, design and user interface will be key buying criteria for consumers. Internal structures and

European converged mobile devices shipments development

Shipments (in million) 45 40 35 60% 30 50% 25 40% 20 30% 15 10 5 0 2003 2004 2005 2006 2007 2008 20% Number of smartphones shipped in Western Europe Annual growth 10% 0% Smartphones as percentage of total mobile shipments Growth (%), Share of total mobile device shipments (%) 80%

70%

Source Ovum Connections, July 2004, by Mendez-Villamil, Marta Munoz

processes will have to be adjusted to reflect the direction chosen, e.g. to support a model based on price competition or a high-end positioning. For instance, state-of-the art supply chain capabilities and production processes with IT being a key enablerwill be required to achieve a competitive advantage based on costs. Other participants of the mobile handset ecosystem will need to adjust their positioning, too. For instance, network operators should review their mobile handset portfolio strategy in the light of the emerging scenario. By 2008, device shipments are expected to reach almost 1 billion units worldwide, targeting a global market of more than 2 billion users. Within this time frame, the current emerging markets should begin to mature, with corresponding lower growth rates of handset shipments and lower net subscriber additions. Although global growth rates are

expected to slow, the overall market will be enormous and therefore remain attractive, if highly competitive. In this mid-term scenario, a brisk war of attrition may be the likely outcome, in which slow industry growth and consumer demand lead to concentration andultimatelyconsolidation. At the horizon of 2010, the arrival of 4G technology could be the start signal for yet another realignment of the market as this new technology may impact market dynamics. The mobile handset market is today, and will remain tomorrow, a constantly changing market.

sion of the global handset market and its major competitors is grouped into seven sections:

Disruptive changes in the handset industry

Powerful forces for change are buffeting the mobile handset industry from all sides. The driversinnovation, market size, convergence, and industry mechanicswill leave little margin for error among the industry's current players, and will continue to open the doors to future entrants in a global market worth more than US$100 billion. Far from operating in a vacuum, mobile handset manufacturers are at the center of a vast industry ecosystem that includes suppliers, original device manufacturers (ODMs), network operators (MNOPs and MVNOPs), retailers, manufacturers, new entrants,
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Details on the idea and the approachoverview of the full study by chapter
The observation of disruptive changes in the mobile handset industry marks the outset of the study. The full discus-

Global mobile connections

Global mobile users (in million) Year-to-year growth (%)

2,500

70% 60%

2,000 50% 1,500

40% 30% 20%

1,000

500

10% 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source 19952001 data: Telecom Handel 2004: Telecom Handel (http://www.telecomhandel.de/sixcms/list.php?page=telecomhandel_markt zahlen)

Global mobile users

Average growth in percent

2003 data: Accenture estimate

2003-2008 data: Ovum 2004a: Ovum Connections, July 2004, by MendezVillamil, Marta Munoz

customers (consumer and enterprise) and wireline device manufacturers, each of whom have a direct or indirect impact on a manufacturer's profits. The relative importance of ecosystem members changes with the vicissitudes of convergence: As new technologies and related industries emerge, the importance of various players increases accordinglyand with them, the competitive mechanisms.

Once separate markets, personal digital assistants (PDAs) and mobile phones are no longer distinct devices. Both markets have appropriated the other market's functions and features to such an extent that the two industry segments have blurred. As an increasing number of handsets incorporate digital cameras as a standard feature, for example, such handsets are increasingly replacing cameras altogether. Today's advanced generation of smartphones offer more than simply telephony. Like personal computers, they are equipped with sophisticated operating system hardware. Software developers are currently in a fight-tothe-finish struggle to become the dominant operating system on the handsets of the world's 1.4 billion subscribers. Symbian, the operating system owned by a consortium led by Nokia, is pitted against familiar rival

Convergence is now: technological revolution

Convergence is the single most important trend to reshape the mobile handset industry. It is technologydriven and is taking place in four main areas: devices; operating systems; wireless network standards; and wireless, wireline, Internet, and cable networks.
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Microsoft, who hopes to extend its dominance from the PC world. Like software standards, wireless network standards are also converging. 3G, the broadband air interface poised to replace 2G and 2.5G networks, will harmonize different network standards and increase overall quality of service. In spite of early rollout difficulties and slow adoption among 2.5G users, 3G devices are expected to achieve a shipment share of around 40 percent by 2008. It will also go far in paving the way for 4G, which is likely to be the first truly converged network. While network convergence may be proceeding cautiously, wireless, wireline, Internet, and cable technologies are coming together at lightning speed. Particularly WiFi and WiMax, together with Voice over Internet Protocol (VoIP), are driving the convergence of the fixed line and the

European mobile connections

European mobile users (in million) 800 700 600 500 400 300 200 100 0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source 19952001 data: Telecom Handel 2004: Telecom Handel (http://www.telecomhandel.de/sixcms/list.php?page=telecomhandel_markt zahlen)

Year-to-year growth (%) 80% 70% 60% 50% 40% 30% 20% European mobile users 10% 0 Average growth in percent

2003 data: Accenture estimate

2003-2008 data: Ovum 2004a: Ovum Connections, July 2004, by Mendez-Villamil, Marta Munoz

wireless worlds. Cable operators have also entered the competition and they have started to leverage their networks to offer broadband fixed line communications.

Global mobile handset market: facts and figures

The global market is currently dominated by the big six mobile handset manufacturers: Nokia, Motorola, and Samsung, who account for roughly 60 percent market share, followed by Siemens, Sony Ericsson, and LG Electronics, who account for about another 20 percent market share. With convergence reshaping the industry and its competitive mechanisms, however, new players are entering the market. The big six have very different backgrounds: Nokia is strongly communi-

cations-focused; Motorola and Siemens have electronics backgrounds; Samsung and LG have emerged from a consumer electronics history; and Sony Ericsson is the result of a joint venture between Sony and Ericsson. The regional strength of the major players differs significantly, both in terms of regional market share and in terms of regional growth. A multitude of suppliers surround todays OEMs, especially because of the disintegration of the mobile handset value chain. Worldwide growth of the mobile handset market has been extraordinary over the past decade. But today, growth in more mature markets is slowing down and primarily replacement-driven, while emerging markets show impressive growth through first-time subscribers, especially in the low-end segment.

In mature markets, sales of new phones are very much driven by attractive device design and user interface configuration rather than advanced software and operating systems. An increasing number of features is now appearing on even the most standard entry-level phones and mid-range handsets. Despite impressive growth rates of smartphones of up to 70 percent in the third quarter of 2004, the traditional mobile handset still dominates the market with about 95 percent of all mobile devices. However, smartphones are expected to account for around 10 percent of global and around 25 percent of Western European shipments in 2008.

Value contribution of different handset components

Applications Industrial design

Applications

Third-party applications Basic applications*

100% consumer value

Industrial design Electronics and mechanics Electronics and mechanics

Industrial design Electronics and mechanics

1990s

1998-2000

2002-2004

*Note: Operating systems, micro-browsers, firewall, others

Source Accenture analysis

Transformation toward consumer electronics market mechanisms

The market for mobile handsets will increasingly resemble the consumer electronics market. As convergence continues to blur traditional industry borders, new competitors will enter the market, increasing price competition and price pressure. Already, the average selling price (ASP) for most mobile handsets has steadily fallen over the past couple of years. Consistent with the diminishing marginal utility of innovations, new features like camera phones and color displays have not been able to stem this downward trend, particularly among price-sensitive consumers. Growth will level off and differ significantly between global regions. Different market segments will also
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emergewith different success factors for competition. For the mass market segment, brand differentiation will be important as handsets become increasingly commoditized. In nonvoice segments like mobile gaming, technical integration and partnership management will be the key to success. And in the high-end segment, both brand and excellent Research & Development skills will be paramount. To add to the already complex matrix, different strategies will be necessary to address different market segments within different regions. Given the vast differences between mature markets and developing ones, a mass market strategy for the German market, for example, will be quite different than one for India. Software will begin to account for a growing share of a mobile handset's value proposition. Although differen-

tiation was hardware-driven in the past, it will be more software-driven in the future, allowing for increased device intelligence and utility.

Paradise lost: The short-term future of the mobile handset industry

All industries tend toward convergence and consolidation over time, and the mobile handset industry is no exception. It has shown similar trends in the past, and a slowdown in growth has generally resulted in a higher industry concentration. Over the next couple of years, comparably limited growth could result in a stronger industry concentration, but convergence will offset this trend or may even reverse it. In the short- to midterm, the industry will most likely follow a paradise lost scenario, in which

Overview of most relevant success factors

Mature markets Product design, user interface, pricing Time-to-market Flexibility to respond to Mobile network operator requirements Brand value

Growth markets Product design, user interface, pricing Ability to adapt a me-too approach/imitate Ability to flexibly deliver large volumes Access and cooperation with intermediaries

Strategic Factors

Economic Factors

Size (number of handset shipments globally) to achieve supply chain scale Average selling price Production efficiency (Direct costs: total system costs, costs of goods sold) Overhead (Research & Development and selling, general, and administrative expenses)

Source Accenture

existing players will find their market shareand their profitsthreatened by new entrants. Cooperation among industry players is likely. Indeed, alliances to save costs and to pool parts of the value chain are already occurring, for example, between Sharp and Sony Ericsson for 3G Research & Development activities. Heavy Mergers & Acquisition activity, however, is unlikely until 2008, when market growth is expected to further slow down and weak demand is to spur concentration and to drive mergers. The launch of 4G around 2010 leaves the industry with an open question. The next generation of mobile technology may redefine, yet again, the industry's competitive mechanisms.

Competitive positioning: who's winning?

The factors for success in the mobile handset industry will begin to look remarkably similar to those for the consumer electronics business. They will fall into two categories: strategic versus economic success factors, with different characteristics for mature and growth markets. In the strategic sphere, understanding demand and consumer insight will be very important. Product design, user interface and pricing will continue to be the most important purchasing criteria for consumers. As more competitors enter the fray and as consumer demand changes rapidly, the time it takes for a handset manufacturer to bring a new product to market will be critical. Production processes will have to be more flexible

than ever before to ensure that the right product gets into consumers' hands at the right time. Customization requirements of network operators will also challenge manufacturers to rapidly turn around new products. In mature markets, in particular, brand value will play a decisive role in a market that is increasingly commoditized. Existing players will have to reinforce their value proposition to consumers with strong brands. In growth markets, where the return on Research & Development investments is too small, the ability to efficiently execute a me-too strategy, to deliver large volumes and to cooperate with intermediaries will play a decisive role. For both developed and emerging markets, a strong sales and cost position is vital. A manufacturer's size will give it a strong advantage in achieving optimal supply chain scale, optimal
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Competitor positioning

Strong

Niche Players

Global Leaders

Strategic Position

Followers

Cost Leaders

Weak

Strong

Economic Position
Source Accenture

average selling price, production efficiency and overhead, including a reduction in total system costs, cost of goods sold, Research & Development expenses, and selling, general, and administrative expenses.

Looking ahead: smart moves to survive

In a paradise lost scenario, three successful business models are likely to emerge: global leaders, cost leaders, and followers. Nokia, Samsung, and Motorola are each in a position to retain their leading positions because they combine a worldwide presence with scale economies and strong brands. They will compete head-to-head with cost leaderssmaller players who compete on an extremely low-profile cost structure. Sony Ericsson may emerge as a
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premium vendora manufacturer who uses its brand strength and understanding of demand to carve out a valuable niche, particularly in mature markets. LG's attempt to join the ranks of the global leaders by copying Samsungs approach seems rather ambitious. Siemens is expected to announce its future positioning soon. The other players (followers) usually either pursue a cost leadership strategy to achieve a strong economic position, try to differentiate themselves or try to address a market niche. An example for differentiation in a niche is HTC (Taiwan) and for a cost leadership strategy is BPL Telecom (India). Convergence, and the corresponding changes for the vendors of mobile devices, should have the biggest impact on the other participants of the mobile handset industry. This includes suppliers, network carriers, new entrants and

providers of enterprise communication solutions. For instance, mobile network operators are likely to revise their handset portfolio strategy to the new market mechanisms and the positioning of the various handset manufacturers.

Accenture capabilities for the mobile handset ecosystem

Mobile handset ecosystem

Supplier Strategy

Manufacturer

NetworkOperator

Customer

Customer Relationship Management Supply Chain Management Offerings Finance & Performance Management Human Resources Technology Services Outsourcing Services Solutions Accenture Communications Solutions

Source Accenture

Methodology
For the purposes of this study, a mobile handset is defined as any portable device that is equipped with a SIM card. Examples for mobile handsets following this definition are mobile phones, data cards used for laptops, or SIM-equipped wireless PDAs. This study is based on extensive secondary research and input from leading industry experts on general trends and developments. Accenture Research Team conducted 15 in-depth interviews with industry experts and representatives from major mobile handset manufacturers as well as mobile network operators and suppliers. This material was supplemented by discussions with 25 Accenture area experts with years of industry-specific experience.

Based on this data, Accenture developed likely scenarios for the next several years, including the further development and analysis of the paradise lost scenario, which was augmented by the mature/emerging market segmentation and the competitive positioning of the big six manufacturers.

Accenture as a partner for the mobile handset ecosystem

Whatever scenario ultimately plays out in the mobile handset industry, it is clear that the participants in this ecosystem are and will continue to be confronted with the need to continuously adapt their business models and many of their processes to a rapidly changing competitive and technological environment. Accenture has deep industry expertise in Telecommunication, High-Tech, and Media & Enter-

tainment combined with an extensive range of offerings to help participants in the ecosystem anticipate and adapt successfully to these challenges to become high performance businesses. As shown by the chart, these offerings can be grouped in six major functional areas and target all the participants in the ecosystem, whether suppliers, manufacturers, or network operators. Below we have indicated selected offerings that are particularly relevant.

Strategy
Accentures development tools for corporate strategy are relevant to all the participants in the handset ecosystem. The first step is to ensure a clear understanding of what a true strategy actually involves. It is already apparent, for instance, that VoIP is substituting with classic telephony. What are the implications of this
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process for the mobile handset industry and what strategies can be developed to capitalize on it? Faced with such issues, Accentures approach to Business Visioning, Growth Strategy, and Portfolio Management provides a path for understanding strategy as a process by which one moves from a vision to a strategic plan and its implementation. As another example, the tools available in the area of SITEStrategic IT Evaluationare critical for the transformation and optimization of a companys business processes through the use of IT.

Supply Chain Management

Accentures offerings in the field of supply chain management are extensive, covering all aspects of Supply Chain Management from procurement through service and warranty management. Examples that are relevant to the mobile handset industryespecially the manufacturers and network operators include Supply Chain Performance Assessment and Supply Chain Planning. As handsets become more complicated, it is increasingly important to support repairs and to minimize defects. This in turn requires effective testing procedures as part of the supply chain. Accentures Supply Chain Performance Assessment and Supply Chain Planning are tools to ensure that the supply chain is designed from the outset to minimize subsequent costs, for instance by incorporating adequate test and quality control procedures.

Human Resources
Releasing the full potential of the human resources available to an enterprise frequently requires a transformation process that focuses both on structures and mentalities. Sales Transformation, as the name implies, focuses on optimizing the performance of the entire sales organization through an integrated approach designed to leverage the existing resources and culture while incorporating best practice from Accentures broad experience with state-of-the-art technology and tools. Another Accenture offering, Learning Transformation, helps clients to effectively and efficiently offer learning opportunities to its workforce to keep up with the dynamics of the fast-moving mobile handset industry. Another important area is customer education when introducing innovations.

Customer Relationship Management

Within the context of Customer Relationship Management, Accenture provides offerings designed to enhance performance more specifically in the areas of sales, support, and marketing. Partner Relationship Management is a disciplined approach to improving sales by structuring the relationship with key partners as effectively as possiblea key consideration for the mobile handset industry in light of the multiple partnership relationships characterizing the ecosystem. In the support area, the Unified Desktop Solution provides a framework for centralizing all available customer contact information. In the area of marketing, Accenture Marketing Sciences is a toolof particular interest to handset manufacturersthat makes it possible to measure the return on investment from a companys marketing instruments. In a parallel step, the analysis of a companys Brand and Marketing Effectiveness helps to identify the drivers that can enhance that effectiveness. And Customer Analytics provides the detailed understanding of the customer that makes it possible to take effective decisions in many domains of the fast-moving mobile handset business.

Technology Finance & Performance Management

A key challenge for financial management is to develop the control and reporting systems that can enhance financial performance while ensuring the transparency necessary for good corporate governance and effective management control. Accenture offers best practice tools and support to this end. Corporate Reporting Excellence, for instance, is an approach to revisiting a companys reporting procedures and standards to ensure the implementation of best practices. Accenture also can provide complete Financial and Accounting Outsourcing solutions in cases where the outsourcing of a specific business process is the best avenue to cost efficiencies and strategic advantage. Mobile handsets are technological products, but the chances of success of the participants in the handset ecosystem depend on their own ability to use technology to achieve their business goals. With respect to a companys technical architecture, Accentures approach to designing the Enterprise Architecture makes it possible for participants in the handset ecosystem to adapt their IT landscape to support necessary changes in key business processes. With respect to the technical infrastructure, the Network Assessment and the Enterprise Network Transformation offerings are further examples of Accentures ability to specifically support the network operators in evaluating and adapting their critical business processes to optimize the chances of success in this dynamic market.

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Contacts: Asia Pacific, Jenny Dong, jenny.dong@accenture.com Europe, Markus Karras, markus.karras@accenture.com North America, Melissa Reid, melissa.reid@accenture.com Authors Dr. Nikolaus Mohr Dr. Karsten Kammer

About Accenture Accenture is a global management consulting, technology services, and outsourcing company. Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance. With more than 110,000 people in 48 countries, the company generated net revenues of US$13.67 billion for the fiscal year ended Aug. 31, 2004. Its home page is www.accenture.com.

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