The nation’s major cellular handset manufacturers caused a little commotion on Wall Street recently when they noted handset sales hadn’t grown at the phenomenal rate that analysts and industry execs are used to seeing.
Does this mean the cellular marketplace is finally slowing down? Should personal communications services operators stop their plans mid-track to re-evaluate how much money can actually be made in this industry? Or is the industry just reaching a plateau, taking a breath before it begins again with its climb?
Manufacturing behemoth Motorola Inc. was the first to report that handset sales in the United States were being affected by a “moderating growth rate” in the cellular subscriber base in the United States. Orders for the handset sector only increased 14 percent in the third quarter, compared with a 61-percent increase in orders in the same period one year ago.
Audiovox Corp. said the company experienced strong unit sales growth during the third quarter, but had to take a $7 million loss on the company’s cellular handset inventory because of the sliding prices of handset sales. “The downward pressure on cellular telephone pricing which began last summer has continued,” explained Audiovox’s president.
Nokia Corp. was quick to point out in the media that its handset business was not as dependent on U.S. sales, while L.M. Ericsson touted digital handset sales as the new money-maker for U.S. cellular.
But even as industry on one hand openly talks about slower-than-expected sales, millions more people (literally) keep signing up for cellular. Industry research firm Economic and Management Consultants International Inc. predicts 60 million wireless users in 2000-that’s just five short years away, folks.
In my own life, I’ve noticed the words “cell phone” becoming a bit more commonplace outside of work.
A friend recently received a fancy new digital cellular phone as an anniversary gift. She lives in the mountains and her husband worries about her driving home from work on outlying roads during snowy Colorado nights.
And my sister inquired the other day about just-how-much-do-I-use-my-cell-phone and what-do-I-pay-each-month. Seems she’s become hooked by AT&T Corp.’s mass promotion offering $30 a month for the service and a penny for the handset.
(These are both examples of women who would primarily use their cellular telephones for safety and security, fitting right in with the industry trend.)
Cellular may be going through only a moderate growth phase right now, but I hesitate to predict it’s the beginning of a downturn for the industry. Who knows, maybe we’ll never again see 40 percent yearly customer growth. But percentages are always a bit deceptive as anyone whose ever owned a penny stock that shot up 100 percent can tell you.
I’m betting the cellular industry is taking a little breather prior to the upcoming holiday season. After all, if cellular is truly becoming the mass market product the industry claims it’s going to be, it’s probably going to start showing the same characteristics as the retail market.
