Mobile Industry Isn't Immune From Saturation, Recession

from the trying-times dept

One-time mobile phone giant Motorola came out with its latest earnings earlier this week, and as widely expected, they weren't pretty. The company's mobile-phone business has been spiralling downward since it peaked with the hugely popular RAZR, an iconic device for which the company could never deliver a successful follow-up. Motorola is becoming a "peripheral player" in the cell phone business, and there's been plenty of speculation that the company is searching for somebody to take the unit off its hands. Moto's problems are largely of its own making, but come at a time when economic reality is pushing handset sales down across the entire industry, and they've become a major part of the story about how "the cellphone industry's best days are behind it."

The gist of the NYT piece is that in terms of mobile phone subscribers, the world is essentially saturated. In the US, somewhere around 85% of the population has a mobile phone; meanwhile, more than 50 countries have over 100 percent penetration, meaning they have more mobile subscriptions than people. So, in some sense, though growth is slowing, there is still room for more. But, besides that, saturation doesn't mean the end of the road for handset vendors. Most of their sales in countries like the US have been replacement sales for quite some time, and as consumers become more sophisticated, they just have to -- gasp -- work harder to convince them to upgrade to new devices with better features, while the economic climate means they have to pay a lot more attention to value as well. Quickly growing markets may have simplified things for the mobile industry when simply giving people access to mobile handsets and basic services was the primary goal. There's a lot of innovation left in mobile devices and services yet, but like anybody else in this environment, mobile companies aren't immune from a slowdown. Playing that off and using the poor strategy and execution of one company to paint a picture of an industry headed for the brink may not be wholly accurate.

Filed Under: mobile industry, recession
Companies: motorola