Gathering gloom
Though the telecommunications industry, and specifically its mobile component, has shown itself to be more resilient than other industries to the economic and financial meltdown, the threat of worldwide recession cast a pall of gloom over this year’s congress.
Nokia, the world’s largest cellphone manufacturer, says industry handset volumes are likely to shrink by 10% this year, driven by a sharp slowdown — not only in the developed world, but also in developing markets.
However, the industry is still talking bullishly about a return to strong growth over the next few years. More than 4bn people worldwide use cellular phones, but device and equipment manufacturers, as well as mobile network operators, are already talking about how they are going to connect the remaining 2,7bn people.
Key to achieving this will be driving down the cost of handsets even further. Device costs have fallen to below $20. To reduce costs further, manufacturers need to ship products in enormous numbers to generate economies of scale. They also need to standardise the components in the phones as much as possible, says Nokia executive vice president of markets Anssi Vanjoki.
“This doesn’t mean you’ll have the old Henry Ford thinking which says you can have [any colour] as long as it’s black — you still have to cater for different tastes,” Vanjoki says. “The secret . is mass customisation.”
He says there is a mathematical limit to how cheap cellphones can get, and the industry is near to it. But there’ll be constant pressure to drive price points lower still.
Meanwhile, the push into the high end of the market, with ever more powerful smartphones, continues unabated.
The market for these high-end and necessarily expensive devices, which can browse the Web, provide satellite navigation and process e-mail, is one of the few that is still growing, in spite of the state of the global economy, says Vanjoki.
Yet, even in smartphones, the product announcements at this year’s congress lacked oomph — they were more evolutionary than revolutionary.
Many handset manufacturers are still playing catch-up to Apple’s iPhone product, which was launched nearly two years ago. Korea’s LG Electronics, for example, unveiled a new 3D interface for its mobile phones that was a poor-quality rip-off of the iPhone interface.
Arguably the best new handset on show came from Nokia in the form of the E75, a superthin device that slides open to reveal a full Qwerty keyboard. But even that offering lacked revolutionary new features.
The Finnish company has also finally introduced HTML-based (rather than text only) e-mail on its phones. That’s a feature the iPhone has had since its launch.
Then Nokia also used the conference to launch the Ovi Store, a central repository for smartphone applications similar to Apple’s iTunes Store. The Ovi Store, which will launch in mid-2009, will offer apps based on your location and on what you and your friends have downloaded previously.
And Microsoft, which makes operating system software for handheld devices, unveiled a similar online store. If imitation is the sincerest form of flattery, Apple CEO Steve Jobs must be blushing.
All in all, two years after Apple introduced the iPhone, the industry is still scrambling to catch up. The Californian company didn’t have a stand at the Barcelona conference. In spite of this, its presence was keenly felt.
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