Mon, May 01, 2006 page12

• Home appliance makers make foray into 3C market

  OWN-BRAND PRODUCTS Kolin and Tatung, which are better known for home appliances, are now marketing electronics goods such as MP3 players and cellphones

  • By Jason Tan / STAFF REPORTER
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  Increased competition is expected in the domestic 3C (computers, communications and consumer electronics) industry, as home appliance makers are making an aggressive attempt to grab a slice of the growing market.

  One recent example is Taiwan Kolin Co (歌林), which launched its first own-brand handsets last month, after studying the market for a year.

  "Kolin has always been a home appliance brand equated with quality and reliability, but we haven't established a name in territory outside of the home," said Jen Lin (林壬林), vice president of Konlin Digital Technology Co (功林).

  "We now want to project a youthful, energetic image by unveiling new phones to reach out to a younger crowd," he said.

  Kolin holds a 70 percent stake in Konlin, a subsidiary it set up in 2001 to market its 3C products, including memory cards and card readers.

  Kolin, which was established 43 years ago, first entered the brand-name 3C industry in 2003, debuting the i-library eBook -- an electronic reading device with a 6.5-inch screen and MP3 functions.

  But the company thought there were other areas to explore in the 3C field. That prompted Kolin to ponder what would be the next hottest products, Lin said.

  The firm eventually chose handsets instead of digital cameras, as mobile phones are quickly becoming an all-in-one communication gadget integrating features such as cameras and music players, according to Lin.

  "The mobile phone market is huge and still growing. It gives us an opportunity to enter a new segment for product diversification," he said.

  Last month, the company decided the timing was ripe to introduce two handsets -- the Kolin KPH520 and K850i.

  Priced at around NT$9,000 (US$282), the two clamshell phones offer multimedia functions, such as a 1.3 mega-pixel camera and an MP3 player. The KPH52's exterior cover has a music-player control panel while the K850i supports FM radio.

  Consumers can expect the company to release another two to four models in the second half of the year, offering higher camera resolutions and gliding covers, Lin said.

  Though 3C products currently account for less than 5 percent of Kolin's overall revenues, the new handset lineup will help to gradually raise the segment's growth over the long run, he said

  While Kolin has just begun to test the waters, it's rival, Tatung Co (大同), has been more aggressive in establishing a foothold in the 3C segment.

  Tatung, whose first technology product was computer monitors made for IBM Corp 22 years ago, decided to focus on own-brand MP3 players and mobile phones two years ago.

  Its Photo Jukebox product, an MP3 player that can display photos from digital cameras, was launched in the summer of 2004, while the mobile phones debuted early last year.

  "With clients' orders coming and going, contract manufacturing doesn't bring much profit nowadays. Instead, the brand-name business is the long-term plan to sustain our operations," said Larry Hsiao (蕭綮鞍), president of Tatung Consumer Products Taiwan Co (大同綜合訊電), the marketing arm of Tatung.

  In January, the 87-year-old Tatung also entered the automotive electronics industry, launching its first branded global positioning system (GPS) for cars.

  The company has been selling phones domestically, but plans to market them overseas in the near future, as it did with its MP3 players and GPS products, Hsiao said.

  Last year, combined revenues for brandname 3C products and flat-screen televisions accounted for around 8 percent of Tatung's overall sales, and their contribution will double to 15 percent this year, he added.

  However, analysts expressed skepticism regarding the ability of home appliance makers to cause a stir in the 3C industry.

  "People will always go for the famous Tatung rice cookers, but will they buy handsets bearing the Tatung logo?" asked Ann Liang (梁嘉鈴), principal analyst of mobile devices and consumer services at Gartner Inc's Taiwan branch.

  Marketing and promotion of 3C products are a completely different ball game compared with home electronics, she said.

  Instead of using the same brand names -- which seem "old-fashioned" to local consumers -- on their 3C offerings, these firms might want to create a young, dynamic sub-brand, Liang said.

  This would differentiate the product lines from home electronics, she added.

  In the handset market, where giants such as Samsung Electronics Co and Nokia Oyj dominate, bundling mobile phones with major telecommunication operators' services is a fast way to increase product visibility, Liang said.

  However, regardless of the promotions used, the basic requirement that the 3C products offer compelling designs and distinguishing features still stands, she said.

  "Without this solid foundation, these products wouldn't stand out," she said. "Local home appliance makers ought to think harder about how to differentiate their products."

  For your information

  Branching out

  * Taiwan Kolin launched its first own-brand handsets this year, with camera and MP3 features. * The company plans to release up to four more models in the second half of this year. * Tatung began producing MP3 players two years ago. * The company moved into the automotive electronics segment in January, offering a GPS product. * Tatung also plans to market its cellphones overseas.
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