The Changing Nature of Handset Business

The Wall Street Journal (paid subscription req’d) has an excellent set of articles about the changes in the wireless device business. The European heavyweights are facing stiff competition from hungry Asian players. While Samsung and LG are probably the two most visible players right now, a new breed of smaller players is emerging. They are working hard to crank out new products quickly and open to white-labeling custom devices for carriers. All the players have a long way to go to catch up with Nokia, but Nokia has some of its own challenges. First off it’s fighting to get China to adopt WCDMA. If they fail, they will have a hard time making a dent in the Chinese market, which could hurt future growth. Second and more dangerous is that Nokia’s success has come from cranking out high volume handsets with big margins. But as wireless devices become commodity items that can be built with off-the-shelf components, Nokia will have to contend with smaller more nimble rivals that can react more quickly to market whims. As wireless networks and devices become more standardized, it seems inevitable that someone will pull a Dell and the bigger guys will have to race to catch up.

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