Handset market has that queasy feeling
Pull out the Tums, the Pepto Bismol and the Kaopectate. There’s more bad news looming in the handset industry. Similar to Ericsson’s (The company plans on focusing its efforts in semiconductors and components and will cease to be an independent manufacturer of mobile handsets. It also will bring part of its R&D and part of its manufacturing activities into a partnership with China Electronics. Philips will have the opportunity to sell through its own customer sales and distribution channels Philips branded products from the joint venture.
Gerard Kleisterlee, Royal Philips Electronics president & CEO commented that “by reducing the cost base drastically, we will be able to realize market presence with greatly reduced exposure.”
A recent report from Cahners In-Stat Group (
Nokia still remains the top dog. According to Brenda Sky, In-Stat wireless handset group industry analyst, the company’s handset business unit is accountable for 72% of Nokia’s net sales and is growing faster than its other primary business unit, Nokia Networks.
But Motorola and Ericsson have short-run profitability issues in the handset divisions.
What should other up-and-coming handset manufacturers learn from Philips? To survive, In-Stat suggested that manufacturers need corporate-level stability, effective management and the ability to quickly adapt to changing market conditions. The research firm added that in this competitive market, only two strategies have proved to work: a marketing focus and development of unique business models that drive effective content-provider partnerships.
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