Chapter 1 Executive Summary
1.1 Outsourcing Prevalent in Mobile Handset Manufacturing
1.2 Current Market
1.3 Shifting Dynamics
Chapter 2 2 Introduction
Chart 2.1: Top Seven Handset Manufacturers by Shipments, 2005
2.1 What is Outsourcing?
2.2 Key Definitions
2.2.1 Defining an OEM
2.2.2 Defining an ODM
2.2.3 Defining EMS
2.2.4 ODM and EMS - Blurring Boundaries
Table 2.1: EMS and ODM Comparison
2.5 Methodology
2.6 Focus of this report
Chapter 3 Mobile Outsourcing Overview
3.1 History of Outsourcing
3.2 Why Outsource?
Chart 3.1: Reasons for Outsourcing
3.2.1 Drivers for Outsourcing
3.2.1.1 Reduce and Control Operating Costs
3.2.1.2 Improve Company Focus
3.2.1.3 Gain Access to World Class Capabilities
3.2.1.4 Free Resources for Other Purposes
3.2.1.5 Resources Not Available Internally
3.2.1.6 Reduce Time to Market
3.2.1.7 Accelerate Re-engineering Benefits
3.2.1.8 Function Difficult to Manage
3.2.1.9 Share Risks
3.2.2 Outsourcing Challenges
Table 3.1: Outsourcing Challenges
3.2.2.1 Loss of Control
3.2.2.2 Proprietary Information
3.2.2.3 Need for Tight Management Practices
3.2.2.4 Long Distances for Travel and Communication
3.2.2.5 Time Difference and Language Barriers
3.2.2.6 Need to Match EMS provider with OEM needs
3.2.2.7 Political Risks
3.3 Outsourcing Decision Making Considerations
Table 3.2: Considerations for Outsourcing Decision Making
3.3.1 Cost
3.3.2 Direct Benefits
3.3.3 Indirect Benefits
3.3.4 Risk
3.4 Achieving Success with Outsourcing
Chart 3.2: Top Factors for Achieving Success with Outsourcing
3.4.1 Selecting a Vendor
Chart 3.3: Top Factors in Selecting an Outsourcing Vendor
3.5 Outsourcing in the Mobile Industry
3.6 Advantages of Outsourcing in the Mobile Industry
3.6.1 Cost Savings
Table 3.3: Typical Cost Savings from Outsourcing
Chart 3.4: Average Global Handset Prices
3.6.2 Time to Market
3.6.3 Manufacturing Expertise
3.6.4 Spreading the Risk
3.7 Disadvantages of Outsourcing in the Mobile Industry
3.7.1 Proprietary Risks
3.7.2 Not the Focus of Attention
3.7.3 Lack of Specialist Production
Chapter 4 OEM Strategies
4.1 OEM Landscape
Chart 4.1: Mobile Handset Shipments, 2003-2007
Chart 4.2: % Increase of Handset Sales 2005
4.1.2 OEM Market Share
Chart 4.3: Mobile Handset Shipments, 2005
Chart 4.4: Mobile Handset Market Share, 2005
4.2 Nokia Outsourcing Analysis
4.2.1 Nokia Profile
Table 4.1: Nokia Key Financial Indicators, 2005
4.2.2 Nokia Outsourcing Strategy
4.2.2.1 Nokia: Traditionally Reluctant to Outsource
Chart 4.5: Nokia Handset Production, Outsourced vs In-house Levels, 2005
Chart 4.6: Nokia vs. Motorola Operating Margins, 2005
4.2.3 Nokia Outsourcing Contracts
Table 4.2: Nokia's Potential ODM Deals
Table 4.3: Nokia's LCD Panel Manufacturers
4.2.3.1 Nokia in Asia
4.2.4 Nokia Joint Ventures
Table 4.4: Nokia's Joint Ventures
4.2.5 Nokia's Overseas Factories
Table 4.5: Nokia's Overseas Factories
4.2.6 Nokia: Future Outsourcing?
Chart 4.7: Nokia’s Falling Operating Margins, 2003 and 2005
4.2.7 Nokia Outsourcing Summary
Chart 4.8: Nokia’s Handset Manufacturing Outsourcing as % of Total Output, 2006-2011
4.3 Motorola Outsourcing Analysis
4.3.1 Motorola Profile
Table 4.5: Motorola Financial Figures, Q4 2005
4.3.2 Motorola Outsourcing Strategy
Chart 4.9: Motorola's Q4 2005 Handset Production by Region
4.3.2.1 Motorola: Outsourcing Commodity Technology
Table 4.6: Motorola Outsourcing Strategy
4.3.3 Motorola Outsourcing Contracts
Table 4.7: Outsourced Motorola Handsets in 2005
4.3.3.1 Motorola Overseas R&D
4.3.4 Motorola Outsourcing Future
Chart 4.10: Motorola’s ODM Production as % of Total, 2006-2011
4.4 Samsung Outsourcing Analysis
4.4.1 Samsung Profile
4.4.2 Samsung Outsourcing Strategy
4.4.3 Samsung Outsourcing Future - Changing Policy?
Chart 4.11: Samsung Market Share Stagnation 2004-2005
Chart 4.12: Samsung Outsourcing as % of Total Production Forecast, 2006-2011
4.5 Sony Ericsson Outsourcing Analysis
4.5.1 Sony Ericsson Profile
Table 4.8: Sony Ericsson 2005 Financial Facts
4.5.2 Sony Ericsson Outsourcing Strategy
4.5.2.1 Sony Ericsson: Equal Share
Chart 4.13: Sony Ericsson's Manufacturing Production
4.5.2.1.1 Manufacturing Synergy
4.5.3 Sony Ericsson Outsourcing Deals
4.5.4 Sony Ericsson Outsourcing Future
Chart 4.14: Sony Ericsson Outsourcing as % of Total Production Forecast, 2006-2011
4.6 LG Outsourcing Analysis
4.6.1 LG Profile
4.6.2 LG Outsourcing
4.7 BenQ-Siemens Outsourcing Analysis
4.7.1 BenQ-Siemens Profile
4.7.2 BenQ-Siemens Outsourcing Strategy
4.7.2.1 BenQ: ODM / OEM conflict
4.7.3 BenQ Siemens Outsourcing Future
4.8 OEM Outsourcing Summary
Chart 4.15: Proportion of Leading OEM Handsets Outsourced by % of Total Production, 2006
Chapter 5 ODM/EMS Provider Strategies
5.1 ODM Landscape: Emerging Markets Presenting Further Opportunity
5.1.1 Operator Opportunities
5.1.2 Global Outsourcing Market
Chart 5.1: Revenue Growth Rate of the Outsourcing Industry
Chart 5.2: Average Value of Outsourcing Contracts, 2004-2005
Chart 5.3: Global EMS Market Value, 2004-2006
5.1.1.1 Eroding Margins
Chart 5.4: Average ODM and EMS Profit Margins, 2005
5.1.2 Top ODMs and EMS Providers
Chart 5.5: Top Five EMS Providers (All Industries), 2005
Chart 5.6: Top Five ODMs (All Industries), 2005
5.1.3 Importance of the Outsourced Mobile Handset Market
5.2 Flextronics
5.2.1 Flextronics Profile
Chart 5.7: Flextronics Net Income, Q3 2005 vs 2004
Table 5.1: Flextronics Fast Facts
5.2.2 Flextronics in the Mobile Handset Industry
Chart 5.8: Handset Manufacturing as a % of Flextronics Total Revenue
Table 5.2: Flextronics' Main Handset OEM Customers, 2005
5.2.2.1 The Importance of Sony Ericsson
Chart 5.9: Flextronics Biggest Customers, 2005-2006
5.2.2.2 Alcatel and Kyocera Deals: Attracting Smaller Companies
5.2.3 Manufacturing Base: A Global Operation
Table 5.3: Flextronics Operations in India
5.2.3.1 Industrial Parks
Table 5.4: Flextronics' Industrial Parks
5.2.3.2 Flextronics' Business Model
5.2.5 Flextronics' Future in Mobile Outsourcing
Chart 5.10: Flextronics' Revenue from Handsets Forecast, 2006-2011
Chart 5.11: Flextronics' Handset Shipments Forecast, 2006-2011
5.3 Foxconn (Hon Hai)
5.3.1 Foxconn Profile
Table 5.5: Hon Hai Turnover 2005
5.3.2 Foxconn in the Mobile Handset Industry
5.3.2.1 FIH Major Customers
Chart 5.12: FIH Handset Customers by % of Revenues
Table 5.6: FIH's Manufacturing Facilities
5.3.2.2 Attracting More Customers
5.3.3 FIH's Manufacturing Capability
5.3.4 FIH Future in Mobile Handset Manufacture
5.4 Arima Communications
5.4.1 Arima Profile
Table 5.7: Arima in 2005
5.4.2 Arima's Customers
Chart 5.13: Proportion of Arima Total Output for Sony Ericsson
Table 5.8: Sony Ericsson Handsets Manufactured by Arima, Q1 2006
5.4.2.1 Arima to Receive BenQ Orders?
5.4.3 Arima's Manufacturing Capability
5.4.4 Arima's Mobile Manufacturing Future
Chart 5.14: Arima Handset Shipments Forecast, 2005-2007
5.5 Compal Group
5.5.1 Compal Profile
Chart 5.15: Compal Group Handset Shipments, 2005
5.5.2 Compal Customers
Table 5.9: Motorola Handsets Manufactured by Compal
5.5.3 Compal Manufacturing Capability
5.5.4 Compal's Mobile Manufacturing Future
Chart 5.16: Compal Handset Shipments Forecast
5.6 High Tech Computer (HTC)
5.6.1 HTC Profile
5.6.2 HTC Customers
Table 5.10: HTC's Palm Products
5.6.2.1 HTC Relationship with Operators
Table 5.11: HTC Handset Production for OEMs
5.6.4 HTC Mobile Manufacturing Future
Table 5.12: HTC Shipments by Market Segment in Thousands
Chart 5.17: HTC Handset Shipments Forecast, 2006-2011
5.7 Lite-On Technology
5.7.1 Lite-On Profile
5.7.2 Lite-On: Example of the problems for ODMs in the Handset Industry?
5.8 Quanta Computer
5.8.1 Quanta Profile
5.8.2 Quanta's Customers
5.8.3 Quanta Mobile Handset Manufacturing Future
Chart 5.18: Quanta Handset Shipments Growth, 2004-2007
5.9 Chi Mei Communications (CMCS).
5.9.1 CMCS Profile
5.9.2 CMCS Customers
Table 5.13: CMCS Handsets for Motorola
5.9.3 CMCS Mobile Handset Manufacturing Future
Chart 5.19: CMCS Handset Shipments Growth, 2004-2007
5.10 Elcoteq SE
5.10.1 Elcoteq Profile
Table 5.14: Elcoteq Fast Facts
5.10.2 Elcoteq Customers
Chart 5.20: Elcoteq's Major Customers by Sales, 2005
5.10.3 Elcoteq's Manufacturing Bases
Table 5.15: Elcoteq's Overseas Manufacturing Plants
5.10.3.1 Elcoteq as Manufacturing Pioneers
5.10.4 Elcoteq's Mobile Manufacturing Future
5.11 Cellon
5.11.1 Cellon Profile
5.11.2 Cellon Customers
5.11.3 Cellon - Differentiation through Design
5.11.4 Cellon Mobile Manufacturing Future
Chart 5.21: Cellon Handset Shipments Forecast. 2006-2011
5.12 ODM/EMS Provider Summary
Chapter 6 Major Regions for Handset Manufacture
6.1 China and Taiwan
6.1.1 China
6.1.1.1 Chinese Handset Production
Chart 6.1: % of Handsets Manufactured in China by Vendor
6.1.1.2 Chinese Manufacturers
Chart 6.2: Handset Market Share in China by %, 2005
6.1.1.2.1 Ningbo Bird
Chart 6.3: Ningbo Bird Handset Shipments, 2004-2005
6.1.1.2.2 Lenovo
6.1.1.3 Chinese Manufacturing Attributes
6.1.1.3.1 Labour: More than Cost Effectiveness
Table 6.1: Average Manufacturing Costs in China, US and UK, 2004
6.1.1.3.2 Chinese Handset Manufacturing Areas - Supply Chain and Infrastructure
6.1.1.3.2.1 Northern China
6.1.1.3.2.1.1 Tianjin
6.1.1.3.2.1.2 Beijing
6.1.1.3.2.2 Eastern China
Table 6.2: Yangtze Delta Advantages
6.1.1.3.2.3 Southern China
6.1.2 Taiwan
6.1.2.1 The Majority of ODMs, Not the Majority of Handset Shipments
6.2 India
Chart 6.4: Indian EMS Industry Value Forecast, 2004-2008
6.2.1 Why Handset Manufacture in India?
6.2.1.1 Emerging Market
Chart 6.5: Indian Handset Shipments Forecast, 2005-2008
6.2.1.2 Government Schemes
6.2.1.3 Labour Force
6.2.1.4 Location
6.3 Telecoms Companies - Relocating to India?
6.4 Disadvantages in Outsourcing to India
6.4.1 Poor Existing Infrastructure
6.4.2 Poor Electronic Component Supply
6.5 Handset Shipments by Region
Chart 6.6: Handset Shipments by Region, 2006
Chart 6.7: Handset Shipments by Region, 2011
Chapter 7 Handset Customisation
7.1 Why Customisation?
7.1.1 Definition of Customisation
7.1.2 The Trend for Customisation
7.1.2.1 Shifting Market Dynamics Due to New Technology
Chart 7.1: Decline in European Operator's ARPU
7.1.3 Advantages of Customisation for Operators
7.1.3.1 Easy to Use Services
7.1.3.2 Better ARPU
7.1.3.3 Less Churn
7.1.3.4 Differentiation
7.1.3.5 Branding and Market Segmentation
7.1.3.6 Controlling the Mobile Ecosystem
Table 7.1: The Mobile Ecosystem
7.2 The impact of Customisation for Operators on the Mobile Handset Outsourcing Industry
7.2.1 The Outsourcing / Customisation Circle
7.2.2 The Impact upon Manufacturers
7.2.2.1 Impact on OEMs
7.2.2.2 Impact on ODMs / EMS Providers
Table 7.2: OEMs vs. ODMs on Customisation
7.3 Operator Customisation in the Handset Industry
7.3.1 Vodafone - Growing its Brand Strength through Own-Brand Handsets?
7.3.1.1 Examples of Other Operator Branded Handsets
Table 7.3: HTC Operator Branded Handsets
7.4 Third Party Entrants
7.4.1 Market Entry for Microsoft
7.4.2 Niche Market - ESPN Mobile
7.4.3 Other Third Party Handsets
7.4.3.1 Dolce & Gabbana (D&G) Handset
7.4.3.2 Vodafone Ferrari Handset
7.4.3.3 Aston Martin Handsets
7.4.3.4 Elle Glamphone
7.5 Customisation Requirements for Handset Manufacturers
Table 7.4: Key Elements for Customised Handsets
7.6 Opportunity in the Customised Model
Chapter 8 Analysis and Forecasts
8.1 The Mobile Handset Market - Drivers for Increased Outsourcing
8.1.1 Emerging Markets
8.1.2 Handset Customisation
8.1.2.1 Operator Customisation
8.1.2.2 Third Party Customisation
8.2 Outsourcing Future for OEMs
Chart 8.1: Forecast % of Handsets Outsourced Globally, 2006-2011
Table 8.1: SWOT Analysis for Outsourcing Handset Manufacturing
8.3 Outsourcing Future for ODMs and EMS Providers
Table 8.2: SWOT Analysis for Handset Manufacturing ODMs and EMS Providers
Chapter 9 Conclusions and Recommendations
9.1 Conclusions
9.2 Recommendations
Appendix A Lead author’s profile
Appendix B About visiongain
Appendix C Report evaluation form