Mobile Industry Isn't Immune From Saturation, Recession

from the trying-times dept

One-time mobile phone giant Motorola came out with its latest earnings earlier this week, and as widely expected, they weren't pretty. The company's mobile-phone business has been spiralling downward since it peaked with the hugely popular RAZR, an iconic device for which the company could never deliver a successful follow-up. Motorola is becoming a "peripheral player" in the cell phone business, and there's been plenty of speculation that the company is searching for somebody to take the unit off its hands. Moto's problems are largely of its own making, but come at a time when economic reality is pushing handset sales down across the entire industry, and they've become a major part of the story about how "the cellphone industry's best days are behind it."

The gist of the NYT piece is that in terms of mobile phone subscribers, the world is essentially saturated. In the US, somewhere around 85% of the population has a mobile phone; meanwhile, more than 50 countries have over 100 percent penetration, meaning they have more mobile subscriptions than people. So, in some sense, though growth is slowing, there is still room for more. But, besides that, saturation doesn't mean the end of the road for handset vendors. Most of their sales in countries like the US have been replacement sales for quite some time, and as consumers become more sophisticated, they just have to -- gasp -- work harder to convince them to upgrade to new devices with better features, while the economic climate means they have to pay a lot more attention to value as well. Quickly growing markets may have simplified things for the mobile industry when simply giving people access to mobile handsets and basic services was the primary goal. There's a lot of innovation left in mobile devices and services yet, but like anybody else in this environment, mobile companies aren't immune from a slowdown. Playing that off and using the poor strategy and execution of one company to paint a picture of an industry headed for the brink may not be wholly accurate.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    ToySouljah, Feb 4th, 2009 @ 10:32pm

    Why?

    I always wondered why they stopped improving the RAZR. I like mine, but it has gotten old and will replace it in a few weeks, but looking through the "newer" ones...they look the same and offer the same features as mine that is over 3 years old! Come on Moto...you gotta have some tricks up your sleeve after a few years of R&D. If not then so be it...I will not be buying a Motorola this time around since there are better choices available for the price. I'll keep my RAZR for a backup, but that's about it now.

    Also, I thought I had heard they were giving up their mobile division like 1 or 2 years ago? They should either give it up or develop it...looks as though they just let it sit there and hoped changing the version numbers would fool every one (i.e., V3, V3i, V3xx, V3m).

     

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  2.  
    identicon
    Joel, Feb 5th, 2009 @ 2:06am

    Peripheral Player

    There's no doubt that Motorola is facing some tough times right about now. They've been trying to pawn off the mobile division since Jan 2008, if not before. Strategy Analytics had Motorola with 21.1% market share in the US in November (as reported by Reuters). I know that a 3.6 billion dollar loss in the 4th quarter is huge but to drop down to 6.3%? I'm not sure about that. I have not seen global numbers from 2008 yet but I believe that Motorola dropped from 3 to 4 in November as well.

    Now being number 2 in the US and number 4 in the world doesn't really seem to be a "peripheral player" to me.

     

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  3.  
    identicon
    mkam, Feb 5th, 2009 @ 10:49am

    Just for fun

    I currently have Verizon wireless and just for fun, go into there store and ask them to show me a phone that has wireless internet such as 802.11. They try to sell you on a new Storm phone that can connect to 'verizonnet' or whatever it is called. So you guys have a browser on this phone but no wifi? Oh you want me to subscribe to your stupid slow network to browse the internet.

     

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  4.  
    identicon
    JEQP, Feb 5th, 2009 @ 12:24pm

    Still falling...

    Joel, the 6.3 percent is a global figure rather than a US figure -- Motorola is far stronger in the US than anywhere else. 6.3 percent globally still puts it in the top 5, but it has been a terrible fall and it looks like the slide will continue...peripheral palyer is on the way.

    The culprit? Ed Zander, who didn't think the handset business was that important...

     

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