Telecom Roundup: Handsets Sag, Networks Bleed

Anyone?

I don't think this article portrays the entire picture.

Alcatel Lucent has been in the red since the merger. Sony Ericsson has been another troubled venture since its creation. Motorola had lost its market share after failing to produce a follow-up to its highly successful RAZR model.

As for carriers, they've been trying to get the most out of their 3G networks and they haven't really been able to convince people that 3G is a leap forward. To cap it all, they had to pay ridiculously expensive frequency licence fees in Europe (Vodafone in particular). Their investment was just starting to pay off and then the global downturn hit them like a brick on the head.

In the meanwhile, Apple comes out with a sub-par phone (no 3G, no camera, no Video, no copy & paste, limited Bluetooth capabilities) and captures the market in a blink of an eye. Their success lies in their iTunes store. HTC and RIM have snagged the high-end business phone segment. All of this left traditional players (Nokia, SE, Motorola) competing for the low- and mid-market segments ($30-$200 range phones).

The economic downturn might have exacerbated the carriers' and phone-manufacturers' problems, but it hasn't created them.

George, thanks for your insightful response.

I agree with what you say, except perhaps your assertion that Apple has "captured" the market. There's no doubt that the iPhone (no matter what you think of its hardware) has been a genuine market phenomenon, capturing the popular imagination and a huge amount of developer support. But it still represents a fairly small percentage of a global handset market that should be in the range of a billion units this year. (Researcher Strategy Analytics estimated Apple's third-quarter market share at around 2.5%.)

In any event, my four-paragraph blog posting wasn't intended to be a comprehensive look back at the many issues that have affected the mobile industry over the past 10 years! It was just a snapshot of third quarter results. I agree that the downturn has exacerbated pre-existing problems in the industry; the question now is whether we will start to see a turnaround in the fourth quarter and into 2010.