Year 2001 I was still working for the giant Telecom company Ericsson. During the fall that year Ericsson and Sony announced creation a joint company for manufacturing and distribution of the cellular phones. By late 90 Ericsson had huge difficulties in manufacturing and distribution of the Ericsson cellular phones. Technical and mechanical problems among other problems caused huge loss for Ericsson cellular business and for the Ericsson company as such. Magazine and technical press talked about 450 SEK ( $70.00) loss for each Ericsson cellular phone made and sold by Ericsson during 2000. I was among those colleagues who found it as an excellent TEMPORARY strategy before the complete exit from the cellular phone business. As one may recall Sony-Ericsson after some years of result with red figures was able to turn the result to none red figures and since last year completely owns by Sony.
Why complete exit from the manufacturing/distribution of the cellular phone business?
Ericsson by that time was mostly focusing on technical matters and telecom operators and had not much of understanding /knowledge about the customers (end-users) electronics neither any good distribution channel towards the consumer of the electronics. Companies which had a better understanding of the end users needs made a fortune by selling millions of more attractive cellular phones. Nokia was of the most successful cellular manufacturer which had a better understanding of the needs for end-users. At least TEMPORARILY. As you may heard today Microsoft acquires Nokia Mobile for almost $7.1 Billion and this is another exit from the mobile phone business.
What happened to the Cellular phone business?
Telecom giants involved in the business of cellular devices unfortunately did not have a deep understanding about the market, the needs, trends, new functions, … by that time and Apple successfully grabbed the opportunity and made lots of great effort to deliver cellular phones with the new and easier user interface. Apple also used the new and innovative ways of communications in cellular phone for communications, delivery of the data, music, video, graphics and tones of mobile applications. Apple users who adopted “the apple way” were among the new buyers of the new cellular phone and the iPhone developers which made the marketing extremely easier for Apple. Consuming base were already in place, waiting and in some cases queuing hours in night in front of the stores to be among the first “lucky ones who owns the new phone”. Currently it seems that the end-users found Samsung much more attractive so Apple may not continue to “surf on the waves” for ever and Apple possibly in few years could be replaced by other manufacturer.
The future of cellular phone industry
Google acquired Motorola Mobile business last year and Microsoft will own the current Nokia mobile business shortly. Earlier this year Nokia announced to deliver “entry level smart phone” based on Microsoft Windows phone 7 for price of $100 for the Asian/African market. A good strategic decision to deliver the “entry level of smart phones” to the market with a huge future selling potential of “smart phones”. May be a great opportunity to grab the bigger market for Microsoft.
Ubuntu and Firefox announcing their version of cellular phones and the cellular phone fight is not over yet when it comes to the cellular phone devices. Computing device like iPad, Surface or other “future devices” could be a natural replacement for the current cellular phone/smart phone. May be in near future the “cellular phone” will become smaller, simpler devices which would only be used no access to any computing devices with connection to the Internet is available. The necessary functionalities may reside in the cellular phone while other functionalities and services could be provided by using the cloud services.
Today some manufacturer have already put the “phone functionalities” in cameras since the camera has the wireless LAN, voice and video capabilities are already in place so why not using the camera as VoIP.