Sat, May 03, 2003 page11

• Diamond cellphones are golden for DBTEL

  MARKET NICHE The company is not the first to turn mobile phones into a fashion accessory -- but it is capturing the attention of hip consumers with its ritzy wares

  • REUTERS
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  Ask the young and fashionable in Taiwan if they've heard of DBTEL Inc (大霸電子) and the answer will likely be no. But mention diamond-studded cellphones and eyes gleam and heads bob in recognition.

  Without a household name such as Nokia or Motorola, DBTEL's strategy for survival in a saturated global handset market is to turn the mobile phone into a luxury fashion item, says DBTEL chairman Michael Mou (莫皓然).

  

  DBTEL chairman Michael Mou displays the world's most expensive cellphone -- a diamond-studded phone worth NT$1 million -- in this file photo.

  PHOTO: REUTERS

  His company, the country's largest own-brand handset maker, launched a series of handmade diamond phones in January, including what Mou says is the world's most expensive.

  The gold-colored item with a sparkling diamond-encrusted flip cover and a three-carat centerpiece costs NT$1 million (US$28,736), or about twice as much as a family car.

  "We view the mobile phone as very personal stuff and it's a fashion statement for many, like watches and clothes," said Mou, 53, sporting a gold watch himself.

  "Once people start to worship a brand, they will do whatever they can to own the products under that brand," he said recently at company headquarters in Taipei.

  While few can afford to buy diamond handsets -- the cheapest costs a cool NT$30,000 (US$862) -- the precious, colorless gems get the attention of shoppers.

  At DBTEL's flagship Taipei store, black, gold, red and white phones adorned with glistening diamonds and names such as Venus, Elf, Waltz and Allure are displayed in glass showcases.

  They raise the prospect of mobile phones joining watches, perfumes and leather bags in the world of branded luxury goods, at a time when handset sales are stagnant and the transition to third-generation technology under way.

  Taiwan is a particularly competitive cellphone market as it has about as many phones as people -- giving it the world's highest penetration rate, analysts say. That's because many people own more than one mobile phone.

  "Luxury handsets have a different value if you can see these diamonds sparkling," said Wang Yu-yiao, 27, peering into DBTEL's window display in Taipei.

  Pondering a diamond-encased phone with a swirling black and white design on a big screen TV, the magazine editor said she would consider buying one as a birthday gift for her best friend.

  DBTEL is not the first to promote mobile phones as status symbols for the very rich. Nokia, the world's top mobile phone maker, set up Vertu last year that sells a platinum-encased handset for about US$23,800.

  DBTEL declined to say how many diamond phones it has sold, but analysts say the flashy sets are just gimmicks.

  "Sales of these expensive mobile phones will be limited," said Kevin Lin, fund manager at Shinkong Investment Trust Co (新光投信).

  "Basically, companies are not going to make lots of money from them and what they want is to promote their names," he said.

  As brand recognition grows, it will be much easier for companies such as DBTEL to sell other products, said Lin, who helps manage US$580 million of funds for Shinkong.

  Like other domestic phone makers, such as BenQ Corp (明基電通), which generates more than two-thirds of revenue from contract manufacturing, DBTEL also sells cheaper, low-end models.

  Later this year, DBTEL plans to launch color-screen models with built-in cameras and picture messaging, Mou said.

  Mou is confident his strategy will pay off in coming years, especially in China, the world's largest handset market. He hopes cultural links will give DBTEL an edge over foreign rivals, such as Motorola Inc, Nokia and South Korea's Samsung Electronics Co.

  "The time's ripe for us to promote our brand there," he said.

  This year, DBTEL aims to win 15 percent of China's handset market, even as domestic players pose fierce competition.

  By its own estimate, DBTEL is the fifth-largest mobile phone producer in China. The company has an ambitious goal to grab the top spot with a near 30 percent share by the end of next year.

  Founded in 1979 as a cordless telephone maker, DBTEL later made handsets for Motorola. In mid-2001, it left the contract manufacturing turf to develop its own phones. DBTEL is now a US$170 million brand, but that is still tiny compared to Nokia's sales last year of about US$30 billion.

  DBTEL has also started tapping the European market this year, Mou said. The company plans to sell small and affordable cellphones in that crowded market.

  Luxury handsets pave the way for brand recognition, but Mou does not expect instant success.

  "It's like building a 100-floor skyscraper, we just want to have a solid foundation first," he said.
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