Mobile Revolution Upsets Tech Giants
October 20, 2012

Tech Giants: Early Winners And Losers Of The ‘Mobile Revolution’

redOrbit Staff & Wire Reports — Your Universe Online

The public's increasing desire to turn to smartphones, tablet computers and mobile apps is affecting the world's largest technology and telecom companies in vastly different ways, according to recent reports.

Over much of the past two years, smartphones have been outselling traditional personal computers, and tablets could secure a 25% share of the global PC market this quarter, The Guardian's Charles Arthur wrote on Friday.

Perhaps no company has been hit harder by those trends than Redmond, Washington-based Microsoft, who Arthur reports saw revenues decrease by 8% and total income drop by 26% over the third quarter of 2011.

"In the Windows division, revenues were down 33%, and profits by 50%, the latter to $1.6 [billion]," he said. "Even though the mood music emanating from the company is positive, the reality is that the world is changing, and Windows 8 is Microsoft's only chance to keep up with it."

Google has also been adversely affected by the growing demand for mobile technology, despite the fact that its Android operating system is the most widely sold for smartphones, according to the Guardian.

The Mountain View, California-based company recently reported -- earlier than it had originally intended -- their third-quarter earnings were below Wall Street expectations, and its search engine's cost-per-click rate (the average amount that companies pay each time a user clicks on an advertisement) fell 3% from the second quarter 2012 and 15% from the third quarter last year.

Chipmakers are also struggling as a result of what Poornima Gupta of Reuters refers to as the "mobile revolution." Intel has a "weak" outlook for the fourth quarter, AMD is preparing to eliminate more than 1,600 jobs -- 15% of their total work force -- as part of a restructuring effort, and Marvell reduced its revenue outlook by as much as 10% on Thursday, Gupta said.

While those companies are struggling, others are finding success in the burgeoning mobile market.

"Amazon and Apple Inc expected to fare better, analysts say. Apple, which reports Thursday, is struggling with capacity constraints and supply hiccups -- but analysts contend that's a good problem to have because it's spurred by raging mobile hardware demand," Gupta said.

"Amazon and eBay Inc, meanwhile, are succeeding in reaching consumers through mobile devices, particularly Amazon with its cut-rate Kindle Fire tablets," the Reuters reporter added. "About 800,000 shoppers made their first-ever eBay purchase through a mobile device."

Data storage developer SanDisk surpassed third-quarter earnings expectations, Gupta said, and thanks largely to iPhone-related wireless demand, Verizon Communications enjoyed record profits during the fiscal period.

Despite current trends, though, Arthur advised against writing off some of the traditional tech powers.

"We might think Google and Microsoft have problems, but we — and our governments — haven't even begun to think about what such connectivity is going to do to our learning, communication, businesses, civilization," he said. "A printer's slip of the finger might have hurt Google's shares temporarily, but it's silicon that will have the biggest effect in the coming years."