PREDICTIONS ARE SO LAST YEAR.
Instead, let’s talk “expectations” – a term that seems to promise a more realistic look ahead at the new year. And there are questions worth asking that dog the conventional wisdom.
To keep it tangible, consider issues related to mobile handsets and their vendors. The issues range from the macro to the micro. One element that appears uniformly lacking: product-specific and carrier-specific tip-offs to device launches. Apparently, the stakes are too high.
The global picture
A general consensus that global shipments of handsets this year could hit 1.2 billion appears reasonable, but one analyst said that certain assumptions may not pan out.
According to Tero Kuittinen, analyst at Avian Securities L.L.C., the conventional wisdom is debatable. China and India – conveniently dubbed “Chindia” by some – fueled a good deal of last year’s growth.
“One big question is whether the 2007 growth spurt, particularly in China, was an artifact of an overheated consumer spending environment or a sign of mobile-handset hunger outside middle-class consumers,” Kuittinen wrote in his RealMoney column in late December.
“The 2008 projections for Chindia basically assume that the new, sub-middle-class expansion can continue while the region will not hit any major economic slowdown from U.S. consumers or global financial turmoil.”
“This,” Kuittenen wrote, “is an exquisitely optimistic scenario.”
Vendors launching early?
Apart from handset sales due to subscriber growth, the volume of handsets sold this year may also be affected by whether the major vendors deliver exciting products to entice consumers to upgrade. Analyst Iain Gillott at iGR said that, just as some states have moved up their presidential primaries to gain clout, he expects handset vendors to make most of their major announcements for the first half of the year at the International Consumer Electronics Show in Las Vegas this week or at the Mobile World Congress 2008 conference in Barcelona, Spain next month.
“There’s a certain desperation to get products out ahead of the curve,” Gillott said. (Of all the major vendors, Motorola Inc. made a lot of noise about its news last week. The question: will one be a post-Razr, future-facing platform?)
Nokia/Qualcomm resolution?
Several analysts agreed that, among other macro issues hanging over the industry, the cross-licensing dispute between Nokia Corp. and Qualcomm Inc. looms large.
Resolution might enable the Finnish giant to more effectively pursue U.S. market share, while freeing Qualcomm to tackle a host of other legal and regulatory challenges, including patent disputes with Broadcom Corp.
“I wouldn’t even want to speculate about Nokia/Qualcomm or Qualcomm/Broadcom,” said Avi Greengart, analyst at Current Analysis. “But resolutions in those two disputes could dramatically reshape the U.S. mobile device market.”
“Six months,” Gillott said flatly on the prospects for resolution between Nokia and Qualcomm. “I’m optimistic. After all, we’re in the business of making money here.”
Nokia in the U.S.
Nokia’s approach to the U.S. is critical, according to Bill Hughes, analyst at In-Stat, whose expectations are built around vendors’ strategic needs. “Nokia has to bring its full product line to the U.S.,” Hughes said. “They cannot achieve their strategic objective of making mobile devices the center of personal digital communications without the U.S. If AT&T Mobility will not allow Nokia to change its role from entry-level vendor, Nokia should make CDMA phones and partner with Verizon and Sprint.”
AT&T Mobility, as the leading U.S. network operator, is widely expected to beef up its 3G portfolio and the two vendors most-often mentioned to supply that need are Nokia and Apple Inc.
AT&T COO Randall Stephenson has already publicly stated that consumers can expect a 3G iPhone sometime this year. (And ARC Chart Ltd. analyst Matt Lewis has said he expected built-in GPS as well, part of an overall prediction that location-based services will soar this year.)
In response, said analyst Michael Gartenberg at Jupiter Research, handset vendors across the board are likely to attempt to “wrestle some mind share away from Apple.”
“Expect to hear the term ‘iPhone killer’ and the phrase ‘it’s a lot like the iPhone but better because .” Gartenberg said. “I also expect to see the iPhone begin to evolve into a family of products that appeals to an even wider audience.”
Samsung stronger in India
Recent news that Samsung Electronics Co. Ltd. – now the No. 2 handset vendor – had hired away Nokia’s head of sales in India, Sunil Dutt, to lead its own sales effort in that country easily translated to an expectation: Samsung is working the volume front to hold its new global ranking.
“Samsung is far more aggressive in Chindia than it has been in the past half-decade,” said Kuittinen. “Nokia’s weak point in Chindia is dependence on bar design, but there’s pent-up demand for thin sliders (that favor Samsung) in the Chinese urban upgrade market. And most of China’s sales will be upgrades in 2008.”
Motorola’s future
Perhaps the greatest expectation, or at least question, for 2008 is ‘whither Motorola’?
“Moto still hasn’t pulled the original Razr from the market,” said Greengart, “which makes the company look stodgy while making it exceedingly difficult to sell anything new.”
While Gillott is pessimistic about Motorola’s ability to offer a convincing, post-Razr platform anytime soon, that is precisely what Kuittinen is looking for.
“I’m expecting a major new platform announcement from Motorola either in January or February,” Kuittinen said. “(This will be) the debut of a large touchscreen/high-end camera module device similar to the LG KU990.”
As for Sony Ericsson Mobile Communications, Hughes said that the vendor, like Nokia, needs to re-evaluate its no-CDMA stance, particularly to expand sales in the U.S.
“From my perspective, Walkman phones can compete with the Apple iPhone,” Hughes said. “Relying solely on AT&T Mobility will not get them critical mass.”
For LG Electronics Co., two news items seem to spell e-x-p-e-c-t-a-t-i-o-n: the company has appointed a new executive to lead its overall consumer electronics efforts in the U.S. and it has raised its guidance on 2008 global handset volumes on that sweet, conventional wisdom that this will be a banner year. And now the year begins unfolding at CES, shedding light on which great expectations will be fulfilled.
