Goodbye and Hello – BenQ plans a future for Siemens mobile.

Philip Rambech joined BenQ Mobile on 1 October, when the Siemens Mobile UK business was formally taken over and renamed. Philip Rambech is a veteran of Sony Ericsson – he spent seven years working

 for the company in the Far East – and subsequently had a stint as European sales head of PalmOne before he got the BenQ job.

When Taiwan’s BenQ announced that it was intending to buy Siemens Mobile, a Nokia executive was quoted as saying “two turkeys won’t make an eagle”. We caught up with Philip Rambech, newly installed as the UK head of the newly formed BenQ Mobile, to find out how the eagle-building business is coming along …

What’s the difference between new improved BenQ Siemens and the old-style Siemens?
Previously we all took a top-down approach. We invented technology, sold on the basis on technology, trained the buyers to ask for technology. We aim to offer more than that. Being in the forefront of technology is important, of course. But we don’t want to sell technology for technology’s sake.

We want to reinvent BenQ Mobile using the Siemens platform – its technology, its reputation, its distribution arrangements already in place.

Formerly the goal was market share, especially in the prepay space. Siemens aimed at high volumes, and up to now it has been too dependent on the idea of ‘affordable quality’. We want to break the mould to some extent.

Now people are getting into lifestyle. So we’re looking at target segments. We are aiming to build partner relationships with selected networks and distributors, and we want to follow our targets through the whole shipping experience.

Would you regard this focus on the shopper as a USP for you and your new business?
I have a very clear idea of the product categories that BenQ Siemens wants to be good at and the markets where we want to be strong, what you might call the ‘sweet spots’ – areas that are not being addressed well today by the mobile phone business.

We are exploring new areas, and that’s our vision statement: “stay young and keep exploring”. We are not giving up on the things that Siemens has been good at – value, technology – but we want to explore ideas of brand and style.

The Poppy is the first example of that? Packaging an existing phone to appeal to a particular audience and then promoting it in the places where you find that audience?
Exactly. The Poppy was actually developed by Siemens before BenQ arrived, but it fits exactly where BenQ wants to go. For the Christmas market we took the Poppy outside the conventional mobile retail spaces – we promoted it in the changing rooms of fashion stores, in Coffee Republic, in womens’ magazines. We also associated with a breast cancer charity.

And there will be similarly placed products to come?
In 2006 you will see many new and exciting phones from BenQ Mobile with a total product experience. Q1 should see two or three launches. And over the long run it is certainly our policy to develop specific products to target particular markets.
We will also have a solid entry into 3G, never a Siemens forte. Our phones will be smaller and the displays will be better. But the guiding principal will be the total product experience, not the technology.

I would be happy to find ourselves with a smaller product range that we can do really well. There are too many product choices for the consumer. We shall cut out the clutter and make it easier for the retailer to sell our products.

But what part will BenQ technology play?
BenQ has some key technologies, especially in displays. In fact the group is the world’s second largest producer of LCD screens, though this is mostly OEM business so you don’t see the name everywhere. This will feed into new phone designs, but we will not emphasise technology for its own sake.

There’s obviously some curiosity in the market about how the takeover will work …
Well, in practical terms we will be utilising the value of the Siemens brand while bringing in some of the excitement of the BenQ way of doing things.

Siemens had a number of problems, including the fact that it was too slow to get its products to market. Maybe this is a problem with any large organisation that invests so heavily in R&D.

So Siemens basically invented the slider phone, and the SK65 was the first X-factor phone with the twist-out QWERTY keyboard, but neither has really been followed through properly with promotion and product development. We need a quicker response to the market, and we will have it. Over-long discussion is not the BenQ way: the company has a direct, positive approach.

Siemens was also forced too much into the entry-level space as it tried to establish market share. We will be taking a longer-term view, and we will be planning with our preferred partners for that. We won’t simply be the low-cost high-volume prepay player you’ve seen in the past.

But what are your goals for market share?
For Christmas 2003 we were at 18% of the market or so. But in Q3 2005 we had about 3%, according to GfK – virtually all prepay, virtually all low-value. For the end of 2006 I want to be at 7%.
It’s a tough target. All the big players are very active, and the UK market is saturated. But we’re in for the long run. We think that one or two of the major handset suppliers are getting stuck in their ways, and that gives us an opportunity. Overall we’re getting a very positive response from customers, both the networks and the consumers, and we will be building on that.
Customers buy propositions, not brands. They don’t really concern themselves too much about whose name is on the handset. If it works for them, they buy it. We have to make the product speak for itself.
That’s our real goal for 2006 – to make and sell the phones that fit the customers’ lives, that fit what the customers want. And I am convinced that there is still a lot of room to do exciting things in this industry.
Back in June Siemens and BenQ announced that Siemens Mobile Devices Division was to be transferred to the Taiwanese group. There had been persistent rumours that Siemens had wanted to offload its loss-making mobile phone business since mid 2004.

The deal involved Siemens paying BenQ e250m; the German group also had to buy a e50m stake in BenQ itself.

The new company formally started operations as BenQ Mobile on 1 October, with its HQ and R&D still based in Siemens’ heartland of Munich. Some 6,000 former Siemens employees have been retained, most in Germany and most on protected German employment contracts for a few months yet.

A licensing agreement allows BenQ Mobile to use the Siemens brand until the end of this year, and in theory a combined BenQ Siemens brand is available up to 2010. But the BenQ brand will certainly take over completely well before that. And BenQ Mobile is due to announce its first jointly-developed models at the CeBIT trade fair in Spring 2006, with “at least” 30 new models due to come to market each year.

Gartner estimates that BenQ Mobile has a combined global market share estimated of just over 5%. In theory that means it could challenge the likes of Sony Ericsson and LG for 4th place in the worldwide mobile phone market. Indeed, the head of BenQ Mobile, Clemens Joos, told a German business publication that he thinks a market share of 10% can be achieved “within a period of two to three years”.

He also expects to be in the black as early as next year; that would represent a major achievement.

Certainly BenQ is not short of ambition. Not only has it taken over Siemens’ sponsorship of Real Madrid for another five years (during which time they might just about win something), its President K.Y. Lee told the Financial Times that he’s actively looking for more merger and acquisition opportunities among Europe’s computing and consumer electronics companies.

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