Discussion Papers

Heike Belitz, Brigitte Preißl, Wolfgang Seufert

Die Entwicklung des Marktes für Telefonendgeräte in Deutschland Anfang der 90er Jahre
Nr. 146 / März 1995

Summary

The west German market for customer premises equipment for mainlines was fully liberalized on 1 July, 1990. This opened the way for the development of a market for telephones, answering machines and other telecom equipment for private households. The volume, dynamics and problems of this market were analyzed in the present study, which is updating a similar study conducted three years ago.

The results of the analysis can be summed up in five points:

a) Market volumes:
Liberalization caused a considerable expansion of market volumes. Between 1990 and 1993 the number of purchased telephones (newly leased or sold) rose to 9 million, i.e. by 50 per cent. Even without the additional demand coming from east Germany the growth might have been about one third. In contrast to former expectations, the average number of subsets per subscriber main line has only increased slightly. Market expansion was mainly stimulated by shorter life cycles.

b) Market shares of the former monopolist:
In the middle of 1994, only two third of the subscriber main lines were equiped with telephone plugs, allowing for an easy replacement of telephone equipment. Although, sales of telephones by the different retailing channels grew rapidly after 1990. The market shares of DBP Telekom (Deutsche Telekom AG since 1 Ja-nuary, 1995) dropped to 55 per cent in volume and 40 per cent in value.

c) Price trends:
Due to the intensified competition between telecom producers, DBP Telekom realized significant price reductions since 1990. Retail prices of telephones in 1994 were also about half the price in 1990. On the other hand, low-price products have gained only small market shares. In 1993, two thirds of the telephone retail market were covered by high-quality telephones, particularly cordless phones and tele-phones with integrated answering machines.

d) Market entry of foreign suppliers:
In 1993, the DBP Telekom ordered 30 per cent of its telephone equipment from companies with non-German head offices. In the same year, half of the telephone retail market was held by foreign suppliers.

e) situation of German telephone producers:
The production of telephones in Germany is shrinking. Two groups of producers were able to get along with the fierce price competition by better internal or external logistic. These were large telecom manufacturers on the one hand and small firms which are concentrating on design and development activities without own production facilities. The loosers of the evolution process from monopoly to competition were the German medium sized telecom manufacturers.

Only German language version available.

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