At times when regular phone makers are going through a slump, smart phone makers are well set. As recent numbers show the smart phone makers Apple and RIM (BlackBerry maker) made good profits and saw demand increasing.
The global slump in demand for consumer-electronic products has taken its toll on Nokia as well as its peers. WSJ writes about this trend and how this puts Nokia in a defensive position. But not all phone companies are facing declines. Asian companies - LG for example - have done well.
Manufacturers of basic phones make virtually nothing, unless they have enormous scale. Nokia, the industry leader, manufactured 46% of the units sold last year but earned 55% of the profits, Mr. Modoff calculated.
Even Nokia is hurting. It long has been the top smart-phone maker, but its share in that market has been declining. It reported a 66% drop in quarterly profits on Thursday. Some manufactuers like Nokia have seen their share slip, others have cut prices to preserve volume, and others are operating at a loss. Also suffering was Sony Ericsson, a joint venture of Sony Corp. and Telefon AB L.M. Ericsson, which posted its fourth quarterly loss on Thursday.
Both Apple and RIM have advantages with segments of the market that will make them tough to beat. The iPhone boasts thousands of consumer applications churned out by outside developers, while BlackBerry’s email service is popular for its efficiency and security.
That hasn’t stopped others from trying to jump in. Smart-phone pioneer Palm Inc., once counted out of the race, is getting attention for its new Pre device. But it is unclear how many developers will leap to write programs for a phone with limited distribution.
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