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With the exit of Sony, Casio Phone Mate and Toshiba from the home phone market, market share will be up for grabs at CES 2002, where the remaining competitors and newcomers will try to cope with a market chastened by a flat year and price wars.
To meet the profitability challenge, some suppliers will step onto the show floor with expanded premium lines of 2.4GHz DSS expandable phone systems, with single and multiline capability and up to eight extension handsets.
Several other suppliers, meanwhile, will make their first move into the 2.4GHz analog market to at least maintain share.
There will be some activity in the 900MHz frequency as well, with several manufacturers updating and/or restyling existing 900MHz analog and DSS product.
Other show highlights will include:
Memcorp's entry into the phone market with four new lines of cordless phones under the Memorex brand.
One supplier's launch of an expandable phone system featuring 2.4GHz DSS and Bluetooth technology.
A cellphone docking cradle lets people use any wired phone in the house to place outgoing calls via cellular to take advantage of a cellular calling plan's free minutes.
A new 2.4GHz DSS expandable system for less than $150. It will ship with a base station and two extension handsets.
Multicolored extension handsets for an expandable phone system.
An array of telemarketing terminators that intercept pesky dinner-time calls.
The launches will follow "a tough year" for the industry, said Uniden president/CEO Al Silverberg. "Quantity wise it wasn't bad, but price pressure really hurt."
If a supplier isn't engaged in its own R&D and manufacturing, it will have trouble staying afloat, he said. "A large portion of the cordless phone business is now a commodity business. New technology hitting the market quickly is very important."
Sony had outsourced its manufacturing to VTech and Toshiba farmed out manufacturing to Uniden, marketers said.
"Without those aspects, you can't react well to the market place," said Silverberg. "The cordless business is not growing exponentially, retailers are not devoting additional shelf space to the category, and in some cases they're decreasing it."
To combat this, manufacturers must either hit the market with attractive pricing or with premium cutting edge product that will earn higher margins, said Silverberg.
The price wars have forced a number of manufacturers to examine the heretofore ignored 2.4GHz analog frequency to stay competitive.
"It's a good gap product to fill the gulf between 900MHz DSS and 2.4GHz DSS," said Eldon Chuck, manager Thomson/At Links. According to Chuck, Thomson will use 2002 to phase out its 900MHz analog line in favor of 2.4GHz analog product.
"With pricing as competitive as it is, I think you'll see moves by a number of competitors into 2.4GHz analog just to keep share," said Chuck, whose company holds the unit and dollar share crown for the total cordless category for the first three quarters of 2001 (see table).
"We initially shied away because it doesn't offer any advantages to the consumer," said Silverberg. "But once 2.4 became a buzzword to the consumer, the race is on to see who can break new price barriers the fastest. One of the ways to do that was to get off the digital platform and onto the analog platform."
"When we approached dealers, they said they'd support a high-tech, higher priced line, but only if we came back with some lower priced analog product," said Paul Davis, Memcorp sales VP and former Uniden president.
The move into 2.4GHz analog does not come without consequences. According to manufacturers, the analog technology does not deliver measurable quality difference above 900MHz analog and pales before 900MHz DSS. Nor can 2.4GHz analog support the multi-handset systems that have captured consumer attention.
"With 2.4GHz analog, you don't have any of the capabilities of digital spread spectrum," said Frank Lasorsa, Panasonic's assistant communications GM. "In our evaluation of the technology, you're not able to get a better performance over 900MHz analog with 2.4GHz analog; the range is the same. The only clear benefit is that you're not transmitting on a crowded frequency. But users who purchase 2.4GHz are expecting better range."
Yet 2.4GHz analog does deliver the attractive pricing, said Lasorsa, and that obviously resonated with consumers in 2001.
CES will also mark the coming out of a new player in the home phone market: Memcorp, which will market under the Memorex brand name. Stocked with ex-Uniden talent, the company will be making an aggressive move in the home phone market, said Davis.
"The reception we've gotten from dealers for our new lines has been really good," said Davis. "We intend to be a major player and double the size of the company."
The other side of the technology coin, high-end expandable systems using 2.4GHz DSS, will also see increased activity. Memcorp and Thomson, for example, will have expandable systems.Cordless Phone Share
|January - September 2000|
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|January - September 2001|
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This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.