The Growing Market For Downmarket Customized Phones

With the consolidation of the handset market the mantra is “the biggest survive”, but there’s still space for small companies to fill a niche with customized or differentiated handsets. That used to be the province of hyper-expensive diamond-studded phones, but now that brands are getting in on the act (such as Prada) that’s moving down to mid-range phones. ModeLabs, which designs handsets for brands such as Elite and MTV, expects the market for cobranded phones will increase to 19 percent of the global handset market by 2011, from less than 0.5 percent today, reports the International Herald Tribune. ModeLabs says that it can make a profit from selling as little as 10,000 handsets per line, which covers design, creation and production.
Mark Burk, a strategy analyst at Informa Telecoms & Media, agrees that there will be a market for co-branded phones, but said that there would be fierce competition from the big manufacturers as they seek to grow or maintain their marketshare. I guess the big manufacturers lose the advantage of economies of scale if the branding partner only wants a small number of phones, but many of them have content services they can offer, perhaps on a white label basis, which may give them an edge.

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