Some of the world’s largest and most influential mobile handset vendors have been saying that they expect overall sales and shipments of mobile devices in 2008 and 2009 will fall short of their earlier predictions.
Recovery, it is whispered, may not come until 2010 at the earliest.
Today, market leader Nokia has again revised downwards its forecasts for itself and the industry as a whole, citing “insufficient visibility in the marketplace” for its inability to estimate market growth for 2008 and beyond. A key issue is a sharper than expected decline in demand from emerging markets.
This is not unexpected news as Nokia is exposed to negative developments in the low-end handset sector, where returns on device sales are lower and customers may be less inclined to replace or upgrade their handsets on a regular basis. Nokia is also affected by saturation in developed markets, where there are fewer ’new’ customers for mobile services and vendors rely heavily on short replacement cycles driven by mid- and high-end device users.
Consequently, Nokia is looking to the Smartphone market to help it to stave off the worst of the downturn. It expects its share of the smartphone market to grow in 2009, helped by the launch of the N97 in the first half of the year. The unveiling of the N97 took place this week, ahead of Nokia’s latest pronouncements, suggesting that the company is keen to maintain a positive profile in these uncertain times.
While the news certainly casts a pall over the mobile industry and we may yet see some weaker vendors exit the market (Motorola, perhaps?), it should be remembered that device sales growth/decline does not necessarily translate into customer and usage growth/decline, as some postpaid customers are locked into lengthy contracts and the majority of users will clearly not abandon their ‘indispensable’ mobile phones.
Thus, I would expect that most mobile network operators will have the ability to weather the storm – the exceptions being those overburdened with debt or volatile finances – especially if they elect to reduce their workforces and defer or abandon network investment or acquisition plans as a form of insurance.
Instead, we should look to other players in the mobile value chain for the first casualties of the recession, particularly in the content provision and application development fields.
What does everyone else think?
Tags: economic downturn, emerging markets, estimates, forecasts, handset replacement cycles, high-end handset, low-end handset, mobile devices, mobile industry, mobile market, mobile market saturation, mobile network operators, mobile phone sales, mobile phone shipments, mobile phones, Motorola, N97, Nokia, recession, smartphones
