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STUDIES DISSECT EUROPEAN WIRELESS MARKET

The Western European cellular service market will grow from $31 billion in 1997 at an annual growth rate of 7.6 percent to become a $52 billion industry by 2002, according to a new forecast from International Data Corp.

“The cellular market in Europe is maturing rapidly,” said Guila Rancati, a research analyst in European Wireless and Mobile Communications research for IDC. “Despite variations in the rate of progress between different countries, we expect to see that the number of cellular subscribers in Western Europe will exceed 133 million by the year 2002,” stated Rancati.

Falling prices and greater competition between operators fostered by liberalization in the marketplace are the main factors that will sustain the growth rate, Rancati explained.

Strategy Analytics also completed research in Europe, which examined cellular handset brand awareness. The study found that 58 percent of existing cellular consumers could name Nokia Corp. as a mobile phone manufacturer, followed by L.M. Ericsson with 54-percent awareness, and finally 44 percent were aware that Motorola Inc. made mobile phones. Among emerging players, Siemens AG and Philips Electronics NV achieved the highest brand awareness with 34 percent and 29 percent respectively.

Although the penetration rate varies from country to country, the European cellular market has developed into a truly mass market reaching the consumer segment, said IDC. At the end of 1997, 43 percent of subscribers were consumers vs. businesses, and IDC forecasts it will increase to 63 percent in the region as a whole by 2002.

“As the European cellular industry moves toward mass-market status, the value of brand identity will become more and more important for mobile phone manufacturers,” said Declan Lonergan, director of Strategy Analytics’ Mobile Communications Service for Europe.

“As cellular penetration rates increase across the region, replacement handset sales will begin to dominate shipment growth. We can then expect individual purchase decisions to be more heavily influenced by brand issues and less by traditional form factor and performance differentiators,” Lonergan added.

One-quarter of cellular users replaced their phones during the past year, Strategy Analytics’ brand-awareness study found. The United Kingdom had the most replacement sales, with 38 percent of users making a replacement purchase in the last 12 months; Sweden ranked second with 37 percent. The 18-percent replacement rate in Germany and especially France’s 6-percent replacement rate were significantly lower than the overall average, Strategy Analytics noted.

Among cellular non-users, Ericsson edged out Nokia for top position with a 38-percent brand awareness, compared with Nokia’s 35 percent. Motorola trailed with a score of 26 percent among the non-users. Siemens (21 percent) and Philips (16 percent) again were the best challenging players.

“It’s interesting to note that, at present, our vendor brand awareness rank order closely mirrors actual market share in Europe,” Lonergan said, “but going forward, there is a real opportunity for the emerging players, like Siemens and Philips to leverage their strong brand identity in related market sectors to increase their presence in Europe’s fiercely competitive [Global System for Mobile communications] marketplace.”

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