The changing face of the mobile handset business

The squeeze is on as the mobile handset business matures, growth slows and the pace of consolidation picks up.
One sign of the increasing pressures, even at the world’s largest handset vendors, is the shuffle of executives leading the charge.
While the departure of Ron Garriques, former head of Motorola Inc.’s handset division, made waves in the industry and the general financial press, other changes have gone unheralded.
The latest shuffle in the executive suite is the appointment of Geesung Choi to lead Samsung Electronics Co. Ltd.’s telecom division, with responsibility for reinvigorating its languishing handset business. In 2006, Samsung’s global market share fell nearly 1 percent from the prior year to less than 12 percent of the world’s annual total. While Samsung easily retained its position as the No. 3 global vendor, its momentum has stagnated and revenue and profit growth has been unremarkable.
Meanwhile, between 2005 and 2006, Nokia Corp. grew its market share 2.3 percent, Motorola Inc. grew 3.4 percent and Sony Ericsson Mobile Communications grew its market share by more than 1 percent. LG Electronics Co. Ltd. lost a half-percent in market share in the same period, according to Gartner Inc.
In December, LG replaced the CEO of its parent corporation as well as another 30 executives in its telecom business, including the handset division.
Unlike other multinational companies that trumpet the signal they send when they literally change the face of their business-moves that are typically part of an effort to draw attention to their purportedly renewed approach-Samsung’s executive changeup occurred relatively quietly. Choi appeared at the International Consumer Electronics Show in Las Vegas in early January as the champion of the company’s momentum in the television business-Choi headed Samsung’s digital media unit from 2003 to 2007-and then, at the 3GSM World Congress in February, he was quoted in press releases as the leader of the telecom unit.
Virtually nothing has been said of Choi’s predecessor, K.T. Lee, who headed Samsung’s telecoms unit until January.
Choi, according to a press release from Samsung, will oversee all handset design work as well as take responsibility for the company’s telecommunication system division.
“Samsung’s market share has stagnated for two years,” said Ben Wood, director of clients at Collins Consulting Services. “Choi is the guy who took Samsung beyond Sony in the TV space. He’s going to use all his consumer electronics experience to get like Nokia: a lean, mean, phone-making machine. He’ll move manufacturing from Korea to China, Latin America and India.”