Hyundai’s decision to break into the UK handset market comes as the global mobile phone market is predicted to shrink 9% this year. So a move into the market, particularly by a company best known for manufacturing cars, is considered at best “brave” by industry analysts.
Despite, or perhaps because of, the dwindling global automotive market, Hyundai insists its move into mobile makes sense. According to Hyundai Mobile Europe chief executive Norbert Winkler, Hyundai’s main asset is its strong brand, which it believes can stretch to another market dominated by the likes of Nokia, Motorola and, increasingly, Apple.
“Hyundai is one of the five biggest car manufacturers and is ranked 72nd in the world’s most valuable brands [according to FutureBrand], which is bound to provide a positive image transfer to Hyundai mobiles,” says Winkler.
Yet in the UK, Hyundai has just a 1.32% market share, according to December 2008 figures from the Society of Motor Manufacturers and Traders. Last year, the company sold 28,036 new cars, a fall of 5.8% on 2007.
In any case, analysts doubt that Hyundai will be able to stretch the brand. Strategy Analytics director Neil Mawston says: “Awareness of Hyundai as a car brand is low, so for it to hope that that will be its unique selling point in the mobile handset market is optimistic.”
The Hyundai Corporation, an exporting and importing business in Korea, owns Hyundai Mobile. Although it is best known for its car marque it also builds machinery and consumer electronics. Its mobile phones are already available in Hong Kong, Germany, Hungary and Slovenia, and the company wants to have a UK share of between 3% and 5% by 2014. It will release ten to 15 handsets in the first half of this year.
Toughest of times
Mawston says: “This is not an easy time to enter the market. We expect the first half of 2009 to be very weak, as the industry is hit by a double whammy of slowing post-Christmas shipments and subdued demand. For Hyundai to think it can release 15 handsets in that time is very ambitious. Its chances of making 5% by 2014 are even more ambitious.”
In its latest quarterly results last week, Nokia said it expected market share to fall in the next few years as consumer demand weakens. Samsung, LG and Apple have all predicted the same.
Carolina Milanesi, research director for mobile devices at Gartner, says: “In these times less is best for mobile handset makers. Hyundai’s plans are too ambitious and coming in late will be a disadvantage to it.”
December 2008 UK market share figures from Mintel show Nokia dominates the market with 43%; Samsung has 21%, Sony Ericsson 18%, LG 7% and Motorola 5%.
But Hyundai says it will differ from its competitors by catering for all sections of the market. The full range will comprise four categories – Basic, Lifestyle, Music and Innovation.
Yet it risks being seen in the same light as other non-mobile companies that have lent their brands to telecoms: Porsche, Giorgio Armani, Ferrari and Prada have all launched mobile phones, albeit mainly through existing handset manufacturers.
Adam Leach, a principal analyst at Ovum, says: “Things could go one of two ways for Hyundai. It may be seen as a legitimate electronics rival capable of making good handsets, or it could be seen as a car brand looking to go places. Either way it won’t be a success unless it gets a good network or retailer on side to make it appealing to the buying public, like Armani and Prada have been boasted about by Samsung and LG.”