February 13, 2009

2009 Make-Or-Break Time For Telecom Industry

Mobile World Congress, the phone industry's biggest annual gathering, will take place Feb. 16-19 in Barcelona. Its purpose is to allow those in the industry to discuss how the telecom business can continue to recover from a dismal 2008 market that is likely to worsen in the coming months of the financial crisis, Reuters reported.

Google and Apple, who have been faster to realize the potential of the convergence of phone and Internet features, have proven formidable new rivals for the mobile phone sector.

And now a host of PC makers are poised to enter the phone market.

New smartphones are expected from Taiwanese notebook manufacturers Acer and netbook pioneer Asustek, and many are speculating that PC maker Dell is also planning a mobile phone.

"Notebook makers have developed relationships with operators as mobile broadband has become a reality, easing the next step to marketing their own phones," said Bengt Nordstrom of telecoms management consulting firm Northstream.

He said computer companies like Dell, Fujitsu, Lenovo and Acer are very well connected and laptops have become an integral part of the mobile broadband market. "And those companies are very good at logistics and streaming production."

Analysts say handset makers will be hit the hardest, as the number of phones sold is set to fall this year by 11 percent"”the first time the industry has seen a drop since 2001.

Even Nokia, the world's largest mobile phone maker, reported a 15 percent drop in handsets sold last quarter. Nokia and others have pushed harder to sell services to consumers in an attempt to offset falling handset margins and sales.

Both Nokia and Microsoft are rumored to be among those planning to launch stores similar to Apple's AppStore, that lets users buy and install thousands of iPhone programs at the touch of a button.

Technology research firm CCS Insight said in a recent report that this year's Mobile World Congress will focus on software that adheres to Internet standards and runs effortlessly on both phones and computers.

CCS said that by 2010 there would be more widgets and Web applications than native programs on mobile phones.

With the exception of Vodafone in Japan, network operators have had little success trying to break into the services and applications market.

But consulting firm Nordstrom argues that the operators will be least affected by the downturn of anyone in the communications industry, thanks to the perception among consumers that mobile phones are a basic necessity of life.

And mobile broadband networks are now in wide usage and boosting data revenue after nearly a decade of struggle. Network operators also have ample room for further cost cuts.

Danish telecoms consultancy Strand Consult said if gear makers can help operators cut costs, they still have a chance.

"Simply put, one could say that the mobile industry's market players either need to justify their right to exist -- or leave the business," it said.

"The year 2009 will be the moment of truth."


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