Shifting fortunes

Gartner Group said recently that Nokia, the world leader in mobile handset market share, saw its share dip from 34.6% to 28.9% in just one year. Audiovox announced today that it is leaving the mobile handset market altogether, selling its business to UTStarcomm for $1.65 billion. What these pieces of news have in common is that they are the latest signs of how the handset market is changing dramatically.

Nokia was once thought to be untouchable as the planet's dominant mobile device maker, but the insurgence of new players (including Siemens, Samsung, LG and many smaller and lesser-known Asian vendors) and the resurgence of an old rival (Motorola) have narrowed the gap, making the handset market a volatile place in which to compete. That was part of longtime vendor Audiovox's logic for getting out of the market--the company said it could no longer be competitive enough to remain a major player.

Still, even amid the increasingly tight competition in the handset market, there are some companies willing to invest in solidifying and growing their market positions. UTStarcomm, which had been a minor player in the handset business before this acquisition, is one of them. Another is Panitech & Curitel, the Korean handset maker that reportedly had been in negotiations to acquire Audiovox before UTStarcomm stepped in.

The shifting fortunes of the handset business reflect other trends in the mobile industry. Software and applications developers, once beholden to the product development and release schedules of the five largest handset makers, now have many more partnership options as they look to get their solutions out to market. Some of these developers have realized that the best way to get to market is to bypass the handset makers by creating solutions that run on most or all commercially available handsets. (HeyAnita and Orative Communications are two of the firms that have recently pursued that path to market.) Carriers also have begun to use more of their own leverage to demand devices with better memory, among other capabilities, and to prove their point by diversifying to award deals to a far greater number of handset makers than they once did.

The handset still is the center of the mobile universe, even as data traffic increases. The handset provides the industry's access to users, and carriers and applications developers still need handset makers' cooperation to reach them. But the days when one or a few companies dominated the handset business may be over.

E-mail me at doshea@primediabusiness.com.