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99:1 - Mobile Goes Awry. Losing Bulge From The Middle
99:1 - Mobile Goes Awry. Losing Bulge From The Middle
By: Bikram K Singh

One completely unrelated thing hogged the limelight when President Obama took the office. People in the know felt proud of it, while others, scoured the web to find more information on the Canadian maker to understand what BlackBerry was and why newly-elected president wanted to carry it to the office. Obama’s insistence to use BB, as its users address it, was the testimony to the success of RIM and its patented device.

Fast forward 3-4 years, and you will notice skeletal self of once sleek-and-sexy BlackBerry.

In 2012, it is not just RIM which is coughing blood. Nokia, once the market leader, has also booked loss. These two telecom giants are close to their book value. Another biggest loser is HTC, which was termed as “the iPhone” on Android platform. It has lost 70% of the meat it had 12 months ago.

These numbers would have made perfect sense if they were coming from a dying industry, but not in the mobile industry, which is growing in double digits – revenues is up by 20%, profits by 52%, smartphone sales by 47%, and overall unit sales by 7%.

Bulging ends, squished middle

The big fat midriff of mobile industry is getting squished since Apple has launched iPhone on the top and Samsung pushed its way up  and China has thrust low-quality mobile phones at the bottom. The fattening of top and bottom has squeezed life out of middle section of mobile industry where Nokia, BlackBerry, HTC, LG, Sony Ericson, and Motorola were operational.

Apple and Samsung, among them, have distributed 99% of operating profit of the industry, whereas, HTC accounts for 1%. Rest of the players is bleeding red.

This has taken place even when the profit potential of the whole industry has expanded in the last 2 years. Two years ago the recorded profit of the industry was $5.5 billion, which has rose to $14.4 billion in 2012.

Commoditized “feature phones”

If Apple and Samsung has sucked the juice out of the middle section from the top, Chinese brands, which are numerous, has punctured the midriff from the bottom. Now the people who cannot graduate to reach the top is getting towards the bottom of the market where Chinese as well as non-regulated (without IEMI number) phones rule.

The demand for such phones is still higher (250 million a quarter), but Chinese phone --  – both branded and unbranded – is consuming the bulk of the market share. Samsung is a major player in this market as well.

In the “feature phone” market, Nokia is the biggest loser, despite its attempt to come up with low-priced phones to cater to the need of the market.

These two major changes have squished the mobile industry from the middle creating two distinct groups of consumers with no overlapping among them. This change is noteworthy more because of the effect penetration of smartphones on the Internet. As per a study titled Our Mobile Planet: Global Smartphone Users, conducted by Google, more and more people are using smartphones to access web.