A recent advertisement for HEAD tennis racquets shows a photo of tennis sensation Andre Aggasi and below it, the caption, “Long live the radicals.”
It’s a cute slogan for tennis, but not one the wireless industry will covet. Nothing, radical or otherwise, seems long-lived in wireless these days. The motto is more along the lines of “You snooze, you lose.”
Telecommunications is moving faster than the speed of light, and manufacturers are under intense pressure to keep up with that pace. Reaction to the competition must be swift, if nothing else.
Say your company loses its No. 1 position in market share to a rival Finnish handset manufacturer. Later, you have to announce your balance sheet is not going to look as good as analysts have been predicting, perhaps by as much as 15 percent to 20 percent. What do you do?
If it’s the end of 1998 and you are Ericsson, you decide to be aggressive in implementing changes, shoring up support from Wall Street even while your news tells a different tale.
You work quickly to avoid the mistakes you saw fellow telecom manufacturer Motorola Inc. make when it fell out of Wall Street’s favor a little earlier in the year. As much as anything else, it seemed Motorola was penalized for reacting to changes too slowly.
Ericsson seemed to move quickly to try to turn things around, including plans to cut about 10,000 positions in the company. At the time Ericsson made its plans public, CEO Sven-Christer Nilsson said, “My expectation regarding Ericsson’s long-term growth remains unchanged. We shall exceed the market growth.”
Last week, Nilsson was let go because he wasn’t implementing those changes fast enough.
Only instant reactions seem to garner Wall Street’s approval these days.
Sony’s decision to exit the U.S. handset business last week underlines that philosophy. Sony held 6.6 percent of the U.S. digital handset market for the first quarter, according to recent Dataquest numbers. But that’s not good enough.
Sony, Ericsson and Motorola all at one time or another experienced delays in getting handsets to market.
If wireless execs are looking to learn any lessons here, avoiding product delays may be a good place to start.
