The Mobile Phone Industry

PK* Says:

In 2008, Motorola lost $4.16 billion, or $1.84 per share and the sales were $30.1 billion, down 18 percent from 2007. Now, Motorola still tries to reproduce its old-fashioned products while many companies have already shifted the focus from making a device to creating a new platform. Though there is nothing wrong to develop a product strategy based on the expansion of the existing platform, the company should be aware of the change in the competitive environment too.

Apple is new for the mobile-phone industry, but it could create a fundamental change which has a large impact on the existing market. Apple has successfully built a design-driven culture and connected it to the users’ experiences and emotions. On the other hand, Motorola doesn’t really have a design culture, but the engineering culture that try to be a creative team. The real definition of DESIGN, as an essence in the innovative process, is far beyond the development of a physical object. A good design has to deal with both functionality and emotion. The physical assets are now less important than the force of the ideas. That is all about the interaction in different forms and levels that has a great impact on the consumers.

Nokia is probably better than Motorola in the innovative process and product development, but its way is still far behind in the future of smart-phone market. The change in its unit sales has dropped -3% despite the fact that Nokia got 42% market share (Q3, 2008); while the iPhone, for example, has increased +328%. Therefore, it seems to be difficult for them to compete in the U.S. market, where the mobile phones are dominated by strong smart-phone developers (i.e., iPhone and BlackBerry). Interaction design, in a very large scale, has to deal with the market trends, cultures and the social impacts. In America, people buy phones and services together, unlike in Asia and Europe. The price of a new iPhone is lower than the production cost, but Apple still has the profits because of the partnership agreement with At&T. Nokia doesn’t have this strong relationship though it tries to make some. This type of product and service innovations may have a significant impact on the user experience and purchasing behavior. By the way, the wireless standard in America is CDMA, not GSM. This is also a big challenge for Nokia which most of its products rely on a different operational system. Nokia claims that it continuously updates the view of global marketplace, but many evidences show that it is now losing attention from the software developers in the U.S. which can help support the future market – the smart-phone industry!

In 2004, because of the fast development of Nanotechnology, I wrote and predicted about the “e-book” as a new wave of innovation that could change the whole industry, and then a few years later, Sony and Amazon have started developing the real e-books till now. I’m not surprised. However, I forgot to look across the industries: e-book and mobile phone. Businessweek mentioned that many entrepreneurs have recently set up websites where people can download books to the mobile phone in a lower price than the one of e-books selling by Amazon or Sony.  This is a good example to remind us that we cannot focus only on a single industry, especially if we plan to do a global business. Do not underestimate the relative power of suppliers or partners too: the software and web developers, in this case.

For me, as I look at the evolution of the new niche market, social networking, mobile phone, interaction design, and the development of some technologies, I realize that “A Small Portable Device” together with the modern principles of “Interaction Design” linking to the network will be a thing that changes our lifestyles and behaviors in the future. It’s a two-way developing process, running in a circle. This will change the industry structure.  In the future, when you carry that device, you will feel like having an account of “Facebook” in your hands. You don’t even need to think about connecting to the internet. I call it “Phone Hook”[© copyright]. It becomes a part of your nature. I believe people in the next generation (i.e. Gen-Y, and so on) will have less difficulty managing this device. People who are now in Gen-X and Y will replace the “Baby boomers” as a new executive. So what? I believe you can guess. That might be a long vision.

Today, if I can choose, I will definitely invest my time, money, and effort doing something related to the mobile industry because it seems to have a very good future as I mentioned. May I question why Apple and Google have recently jumped into this industry? Why??? …That is the same reason why I write this note. One day, I wish I could have a good experience working in this industry too.

It’s very challenging!!!

PK* [pkdatabase.wordpress.com]
Feb.03, 2009

References:

“Businessweek” (Issue: Dec.22, 2008)
“Businessweek” (Issue: Jan.19, 2009)
“Fortune Magazine” (Issue: Jan .19, 2009)
Brunner & Emery, “Do You Matter?: How Great Design will Make People Love Your Company” (2009)
Lindholm, “Mobile Usability: How Nokia Changed the Face of the Mobile Phone” (2003)
McGrath, “Product Strategy for High-Technology Companies” (2001)
Porter, “Competitive Strategy: Techniques for Analyzing Industries and Competitors” (1980)

http://www.businessweek.com/technology/content/feb2009/tc2009023_706976.htm?chan=top+news_top+news+index+-+temp_news+%2B+analysis (2009)

http://www.businessweek.com/ap/financialnews/D9643SPG0.htm (2009)