Mobile Profits are Skyrocketing as 67,000 Are Laid Off

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Mobile Profits are Skyrocketing as 67,000 Are Laid Off

Mobile is not your father’s tech space.

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Over the past two years, profits from the top eight mobile vendors has risen from $5.3 billion to $14.4 billion for a whopping increase of $9.1 billion and all this while over 67,000 people have been laid off in the technology. How is this possible you ask? I posited a similar query two months ago regarding Corning’s shares losing value – even while they supply Gorilla Glass to much of the booming mobile market.

FierceWireless sums up some of the companies shedding jobs in the wireless space just this year alone.

  • Google/Motorola shed 4,000 jobs but these were anticipated. Motorola like others on this list is losing share to Apple and more recently Samsung.
  • RIM shed 5,000 jobs and is betting the company on Blackberry 10 which is due out in Q2 of 2013.
  • Alcatel-Lucent has let go of 5,490. Similar to Nortel’s troubles, the company has suffered from a seemingly perpetual slowdown in carrier spending and competition from Asia.
  • Nokia has shed 10,000 jobs which makes sense as they lost the leadership role in smartphones to Apple and Samsung.
  • Nokia Siemens Networks has shed 17,000 jobs and faces similar challenges to other carrier equipment providers.

AT&T, Verizon and many other carriers around the world are benefiting tremendously from the massive spending on wireless connectivity from its customers and yet this money is not reaching the majority of equipment providers or device manufacturers. It is worth mentioning Cisco is certainly a beneficiary here and they will now get into the small cell market, making life even more difficult for existing players in the space.

In the past they haven’t been immune to cuts though as they recently laid off 11,300 people.

Sony too announced plans a while back to lay off 13,000 workers. This is the company that invented the mobile audio space, has historically produced some of the lightest and sleekest notebooks on the market and with its SonyEricsson division really led the way in mobile phones for a few years.

The challenge is the wireless market has a lack of competition for now. Apple and Samsung are so dominant the other players have to eke out a living in the shadows. Samsung has done an amazing job using technology and a plethora of devices sizes and shapes to fight this war. Another challenge – the aforementioned organizations are so large they can afford to design and in Samsung’s case, manufacture their own mobile chips. What this means is typical suppliers to a thriving market like Texas Instruments have trouble making a living. This is why TI announced they too are laying off 1,700 wireless employees… A staggering amount for an arms supplier in a wireless arms race.

This is a brave new world for technology – when the PC market was thriving there were hundreds of companies providing computers – some which you put together yourself and others which were bare bones models at discount prices. But now, prohibitive marketing budgets, need for a patent arsenal and carrier relationships have made it difficult for a no-name company to become a market leader overnight.

Google and Amazon are exceptions but they can afford to lose money in mobile for as long as they need to in order to further their core businesses.

Instead, the growth seems to have to come from the aftermarket space – meaning ecosystem plays. Apps makers, hardware add-on companies like Square and case making are the angles to play to generate big money in wireless. For traditional hardware arms suppliers like NSN and TI, mobile is not your father’s tech space.



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