Despite the continued upheaval in the world's financial markets and doom-laden predictions of an economic downturn, the mobile phone vendors will be almost immune from these events--that's if you believe the latest study from Credit Suisse (CS).
Having conducted interviews with Nokia and Sony Ericsson at the recent Mobile World Congress, CS research analyst, Kulbinder Garcha, came to the conclusion that there was little trouble ahead. "Despite the concerns in financial markets around the macroeconomic impact, we believe that our meetings suggested only a slight impact on infrastructure, with a limited impact on handsets so far," commented Garcha.
To support this optimistic stance, Garcha pointed to a Nokia comment: "The company notes that one difference in the current environment versus the previous downturn in 2001 is a relatively more globally diversified geographic focus with the importance of emerging markets being a key factor in developing growth."
This admission that emerging markets are going to save these vendors from a fallout in the more 'developed' regions is 'interesting.'
Emerging markets are, by their very definition, prone to unusual events. The current situations in Kenya, the Balkans and Pakistan are testament to this. So, for companies the size of Nokia and others to look to these volatile and unpredictable markets to be key growth drivers is worrying.
And this is without, seemingly, consideration of China Mobile's intention to deploy TD-SCDMA infrastructure--a move that CS recognised as potentially disruptive to Nokia's plans.
While Nokia might have the marketing muscle to weather any economic downturn, others might not. While consolidation has been talked about in the handset and infrastructure businesses for some time, the next couple of years could prove to be the final straw for some. -Paul