Will Mobile Mergers Kill Handset Makers?
Om Malik is predicting that the coming wireless carrier mergers are going to have a profound impact on handset makers. He predicts that these new bigger carriers will demand more from the handset makers, and won’t let them get away with selling them marked up handsets that they’ll need to subsidize for their users. He looks at mobile phones as becoming a commoditized product, where the big carriers won’t need to offer a Nokia phone, since they can offer a cheaper Chinese knockoff instead. While he’s right that the components of the phones are becoming a commodity, I think he’s leaving out one complicating factor that might make this trend a bit slower than he expects: consumers. Consumers are still influenced by phone. Consumers still see phones as a fashion accessory – and many want the “hot” phone, or the coolest looking phone. And, one thing that’s difficult to commoditize is something that people buy on perceived value – such as fashion items. If people are coming in demanding Nokia phones, it’s a bit tougher for the carrier to threaten to cut off Nokia completely. I agree with the basics of Malik’s argument – but think that this other side needs to be considered as well.Derek adds: Well written by Malik, but Techdirt has been presenting the same analysis for a year.