Handset makers vie to get message right

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Telecommunications analyst Jeff Kagan tells the story this way. During a recent discussion on a Detroit radio station, the host referred to his phone as his Sprint Treo, sticking with the name of the carrier, and not the handset maker of the smartphone, palmOne.

That vignette is symbolic of how the wireless carriers have taken the upper hand in marketing wireless services. They're increasingly calling the shots in their interaction with handset makers as they push higher-margin services like Web browsing, games and picture mail that require highly sophisticated electronics in cellular phones.

The ad numbers tell this story another way. Over the last four years, the deep-pocket wireless carriers have pushed ad spending in measured media 64.9% to a collective $4.6 billion in 2003, while building their subscription base from 86 million to 146.3 million. Individually, they tried to capture market share, but as a group they captured the market. Handset marketers, such as Nokia, Motorola, Samsung Electronics Co., Kyocera Wireless Corp., and LG Electronics, whose collective media spending dropped 30.9% to $149.9 million in the same period, are faced with the prospect of becoming mere commodities in the minds of U.S. consumers.

"The manufacturer of the phone doesn't get credit," says Mr. Kagan. "They need to fix that for them to be relevant-they need to be hot. If they become a commodity, they lose."

seeking brand recognition

Indeed, many of them are addressing the subject. LG has begun a $100 million branding effort tagged "Life is good." Kyocera is recasting its image using the word "Simple."

A whimsical Nokia campaign, targeted primarily to business cellphone customers, is dubbed "Archetypes" and features a series of clay-like characters such as Time Zone Tim, decked out with three wristwatches and an inflatable neck rest like those used by frequent fliers. With a quote of "Zzzzzzzzzzzz," his challenge is to get real-time corporate data and email, but also "needs to stay awake."

Also taking a closer look at marketing is Samsung, currently in the midst of a global review among ad holding companies for its estimated $700 million global account. Motorola, which has been touting its hip appeal through its "Hello Moto" campaign, is continuing efforts via agency WPP Group's Ogilvy & Mather, New York.

Executives at palmOne believe their brand will remain strong, particularly in light of its focus on technology. The Treo 600 has sold an estimated 250,000 devices since its introduction in October 2003, primarily through word of mouth spread among the tech savvy, says Page Murray, VP-marketing for palmOne.

Kyocera and palmOne both view their relationship with carriers as a partnership. They give carriers the high-tech features such as data functions that the carrier converts to more wireless time and more money.


Airports so far are the ad venues for Treo. Shops at Philadelphia and Newark airports were built to sell palmOne products. Treo sales have been brisk, even at a "$500 price point for an impulse item," says Mr. Murray, offering a reason: When executives gather around a table at meetings, the first thing they do is place a wireless device on the table. "It's like the OK Corral. All the high-tech weapons come out. And you're a gunslinger."