Can cellphones kick start the IT revival?
Nokia's good news lifts cellphone manufacturers
Cellphone stocks rebounded today on the back of a bullish earnings estimate issued by Nokia. The market leader, which accounts for one in three of all mobile phones sold, said it should beat its revised figures for the current quarter, and said it expected to shift between 105 and 110 million handsets in Q4 2001. In turn, that means that Nokia's GPRS handsets are being well received by the carriers. (Nokia is the last major player to market with packet data-capable phones).
So why was Nokia's good news reflected on its biggest rivals? In a word, demand.
Despite reduced subsidies from carriers, which ought to make this season's phones more expensive and so less attractive, than their predecessors, Nokia's volumes are holding up and its margins are heading North. And that means that the public's phone fancy could be more than just a fad.
It offers proof that consumers are indeed trading in last year's models for more sophisticated phones, rather than sticking with what they've got, or even downgrading. And so it gives plenty of encouragement to the school of thought that suggests that people will use their phones for more than just voice calls.
The jury's out on that one, but the appetite for new, fancier devices and the continuing explosion of text messaging suggest the idea has merit.
It also drives a stick between the spokes of the great commoditisation argument, which suggests that the phone business will become a low-margin box-shifting business, like today's PC. Nokia is staking much on the counter argument, and devoted key portions of its Capital Markets Day in New York last month to persuade investors so.
Now it's too early to suggest that the cellphone industry will lead the rest of the tech sector out of recession. But from our latest rip through Europe, the smartphone/wireless data business is very much seen as the new economy here, and we know how just how scarce optimism is back at our San Francisco base. ®
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