“May you live in interesting times.” That’s one euphemism that many of the leading players in the mobile handsets market could live without hearing at the moment.
This week alone, we’ve seen Nokia announce sweeping job cuts and operational streamlining, rumours have surfaced that Motorola may offer up its handsets division to private investors and that Sony might buy out its partner in the Sony Ericsson handsets venture, and Palm is clearly struggling to maintain momentum and cash reserves ahead of the launch of its potential saviour, the Pre.
Today, Sony Ericsson said that it expects to shift just 14 million mobile devices in Q109; that would be down by 36% year-on-year and by over 40% quarter on quarter. Device ASPs (average selling prices) will remain stable, suggesting it’s the higher end devices that are most popular with consumers. This is not necessarily good news for the company, which specialises on mid-range consumer products such as cameraphones and music-centric handsets. It is the mid-range market segment that is being hit hardest as consumers switch either to low-cost budget phones with basic features or high-cost high-end units with more features on the premise that they’re getting better value for money.
Meanwhile, Sony Ericsson thinks its net loss could balloon to as much as EUR390, which would be a massive disincentive for the cash-strapped Sony to buy out its partner, as is currently being rumoured.
Palm’s net loss deepened by more than 70% y-o-y to $95 million in the quarter ended February 28, 2009. Its smartphone shipments totalled just 482,000 units in the quarter, down by 42% y-o-y. Smartphone revenue is down by 72% y-o-y. Although the new Palm Pre is expected to help turn around the company’s fortunes, Apple’s latest tweaks to the iPhone OS, anticipated price reductions on existing iPhones ahead of a possible unveiling of a new iteration of the device, as well as the expected launch of new handsets by HTC based on the Android OS, mean that the arrival of the Pre may end up being overshadowed.
And what of Motorola? Well, while the company is taking drastic measures in sharply reducing its output while it develops a new range of smartphones, the company’s financial stability is less assured and it could soon find itself preyed upon by private investment companies. Which may, in the long run, prove more damaging than if it were left to its own devices (no pun intended).
This does leave considerable room for manoeuvre by top-tier players such as Samsung and LG Electronics, but neither company is known for their innovative streaks and they are also exposed to falling demand in emerging markets where they’ve previously done brisk business with mid-range devices. Indeed, these markets are being actively courted by Chinese makers of low-cost handsets, such as ZTE and Huawei. The expertise these companies gain there may then stand them in good stead for an assault on the higher end of the market.
Interesting times ahead, indeed.
Tags: Android, Apple, cameraphones, China, Ericsson, financial results, high-end devices, HTC, Huawei, iPhone, LG Electronics, low-end devices, mid-range devices, mobile devices, mobile handsets, Motorola, music phones, Nokia, operating system, OS, Palm, Palm Pre, Samsung, smartphones, Sony, Sony Ericsson, ZTE
[...] “It is the mid-range market segment that is being hit hardest as consumers switch either to low-cost budget phones with basic features or high-cost high-end units with more features on the premise that they’re getting better value for money,” Kitson wrote on the Juniper blog. [...]