Pantech&Curitel, a South Korean manufacturing company comprising the mobile-phone operations of Curitel Communications Inc. and Pantech Group, announced ambitious plans to sell 10 million Pantech-branded mobile phones in the United States in 2005. However, industry watchers believe the company faces a major uphill climb to reach its stated goal of garnering 15 percent of the U.S. CDMA handset market.
“Without a substantial marketing presence, I think that 15-percent target is unrealistic,” said Chris Ambrosio, director of the wireless devices strategies service at research and consulting firm Strategy Analytics.
Pantech&Curitel said it scored a $1.6 billion deal with Audiovox Communications Corp. (now owned by UTStarcom Inc.) to sell 10 million CDMA phones in the United States in 2005 through the likes of Verizon Wireless and Sprint. The phones will carry the Pantech logo. Pantech&Curitel have been selling phones through Audiovox for the past few years, although the phones have carried the Audiovox brand.
As part of its efforts for 2005, Pantech&Curitel said it plans to upgrade its North American headquarters in Los Angeles as well as establish six new branch offices throughout the country. The company said it will hire more than 100 new employees in the United States to deal with product planning and research and development. The company promised it would offer a variety of Pantech-branded CDMA handsets in 2005, from low-end, bar-style phones to high-end camera phones featuring resolutions of up to 1.3 megapixels.
“These will certainly be a strategic product portfolio to satisfy potential consumers in North America,” the company said in a statement.
Pantech&Curitel-the No. 3 handset vendor in South Korea behind LG Electronics Co. Ltd. and Samsung Electronics Co. Ltd.-is difficult to define due to its extensive and varied businesses. The Curitel side of the company traces its origins to 1983, when it was established as a communications division of Hyundai Electronics Co. The business released its first CDMA mobile phone around 1995-which the company said was the world’s first CDMA handset-and has since built 1xRTT, 1x EV-DO, CDMA 450 MHz, wireless local loop and GSM/GPRS handsets. In 2001, the company became Hyundai Curitel Co., which was 100-percent owned by semiconductor company Hynix. Later that year, the company teamed with Pantech Co.
Pantech was established in 1991 as a pager manufacturer. In 1998, Pantech became an original equipment manufacturer for Motorola Inc., and in 2001 it became a Motorola original design manufacturer. In early 2002, the Pantech/Curitel handset company changed its name to Curitel Co. and then later that year changed its name again to Pantech&Curitel Co. Curitel and Pantech are generally referred to as “sister companies.” Pantech&Curitel said its goal is to become the world’s No. 5 handset manufacturer by 2007.
Pantech&Curitel sells phones under a variety of brands, including its own, in South Korea, China, Russia and elsewhere. It initially began selling phones in the United States in 1998 through PrimeCo Personal Communications L.P., which later became one of the carriers cobbled together to create Verizon Wireless. In 2002, Pantech&Curitel signed a distribution deal with Audiovox to sell handsets in the United States. Audiovox does not build any of its phones; it instead works as a conduit between carriers and manufacturers. This often-but not always-means that the phones sell under Audiovox’s brand. Audiovox also sells phones built by the likes of Toshiba and others.
Earlier this year, Curitel entered a bid to buy Audiovox Communications Corp., the handset business of consumer electronics company Audiovox Corp. The move would have solidified its position in the U.S. market. However, Curitel lost to wireless technology vendor UTStarcom, which finalized its Audiovox acquisition just a few months ago.
The Pantech brand will face fierce competition in the U.S. market during 2005. The brand is totally unknown in the United States and will have to compete against the likes of CDMA vendors Kyocera Wireless Corp., LG and Samsung. Indeed, LG recently launched a $300 million branding campaign in the United States, and Kyocera also launched a new branding effort.
Pantech&Curitel’s outlook becomes even murkier in 2006. Ambrosio said UTStarcom will likely begin selling its own CDMA handsets through Audiovox starting in 2006 and may not want to compete against Pantech&Curitel. If UTStarcom decided to end Pantech&Curitel’s relationship with Audiovox, it would create a serious issue for the South Korean vendor. Pantech&Curitel would have to establish its own relationships with Verizon Wireless and Sprint PCS by 2006 to stay in the U.S. market-and carriers are generally picky when it comes to new handset partners. Indeed, companies including BenQ Corp., NEC Corp., Panasonic, InnoStream and others have recently attempted to score U.S. carrier contracts and have failed.
Thus, Pantech&Curitel will have to make the most of 2005 or risk missing out on the critical U.S. mobile-phone market.
