Telecom industry faces moment of truth Fri Feb 13, 2009 9:21am GMT
By Georgina Prodhan Reuters http://uk.reuters.com/articlePrint?articleId=UKTRE51C21620090213 LONDON (Reuters) - The world's mobile telecom industry will gather in the Spanish city of Barcelona next week, hoping to find ways to outwit the downturn, powerful new rivals and software developers threatening to steal their thunder. Mobile World Congress, the phone industry's biggest annual gathering, comes on the heels of a season of miserable 2008 results reports dominated by lowered profit outlooks, deep job cuts and slashed capital spending. The mobile phone sector is grappling with formidable new rivals from the computer industry and web such as Google and Apple who have been faster to realise the potential of the convergence of phone and Internet features. This year, a host of PC makers will join the fray. Taiwanese notebook manufacturers Acer and netbook pioneer Asustek are poised to debut new smartphones, and speculation is rife that PC maker Dell is also looking to revamp itself as a phone maker. Bengt Nordstrom of telecoms management consulting firm Northstream says notebook makers have developed relationships with operators as mobile broadband has become a reality, easing the next step to marketing their own phones. "Dell, Fujitsu, Lenovo, Acer -- they're very well-connected. Laptops have become an integral part of the mobile broadband market," he says. "And those companies are very good at logistics, streaming production." The mobile communications industry, formerly controlled by huge, integrated former state monopolies, has fragmented so that hardware, software and services can now easily be provided by different suppliers, lowering barriers to entry. Operating systems are now freely available from the likes of Google or the Nokia-controlled Symbian Foundation. Independent suppliers can market applications for music, photos or map navigation without network operator approval. HARD SQUEEZE Handset makers are being squeezed the hardest. Although mobile phones are more popular than any other consumer gadget in history, the number of phones sold is set to fall this year for the first time since 2001. Analysts expect 11 percent fewer handsets will be sold this year than last. Their estimates have been repeatedly cut over the last months and risk further downgrades. Even the world's largest mobile phone maker, Nokia, whose dominant market position once made it look untouchable, reported a 15 percent drop in handsets sold last quarter. To offset crumbling handset margins and sales, Nokia and others have pushed harder to sell services to consumers. Following the runaway success of Apple's AppStore that lets users buy and install thousands of iPhone programmes at the touch of a button, Nokia and Microsoft are rumoured to be among those planning to launch similar stores next week. Samsung Electronics, BlackBerry maker Research in Motion and others have recently unveiled such plans to realise the value of software that lets users choose the way they find directions, play games or listen to music. One focus of this year's Mobile World Congress will be on software that adheres to Internet standards and runs effortlessly on both phones and computers, technology research firm CCS Insight said in a recent report. "By 2010 there will be more widgets and Web applications than native programmes on mobile phones," CCS wrote. SURVIVAL TEST Network operators, too, have tried hard to break into the services and applications market, thus far with little success outside Japan with the exception of Vodafone. The operators fear becoming "dumb pipes" in the same way that Internet service providers did for the fixed-line Internet -- providing flat-rate access that enabled others who deliver search, media or online stores to reap most of the benefits. "It's very hard to avoid that destiny," says consultant Nordstrom, but adds: "It's not such a bad role. If you manage cost well and you are one of three or four players in a market it's still quite a lucrative business to be in." Nordstrom argues that the operators will be least affected by the downturn of anyone in the communications industry, thanks to the perception among consumers that mobile phones are a basic necessity of life. Also, after nearly a decade of struggle, mobile broadband networks are now in wide usage, boosting data revenue. Network operators, many of whom are former national monopolies with huge staffs, also have ample room and appetite for further cost cuts -- adding to the woes of equipment makers like Nortel, now under bankruptcy protection. Equipment makers such as Alcatel-Lucent and Nokia Siemens Networks have also been distracted by complicated mergers and have run the risk of confusing customers about which wireless technologies they will support. This has strengthened the hand of rivals such as China's Huawei and Sweden's Ericsson, allowing them to wrest away market share and gain the associated advantages of scale. If gear makers can help operators cut costs, though, they are still in with a chance, says Danish telecoms consultancy Strand Consult. "The year 2009 will be the moment of truth." "Simply put one could say that the mobile industry's market players either need to justify their right to exist -- or leave the business." -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
