Mobile Phone Industry Hits Glass Ceiling 2009

By Derek Hardman Feb 3rd, 2009

The mobile phone industry managed to begin as a luxury commodity in the 80s, trickle down into the hands of everyday professionals and early adopters in the early-to-mid 90s, before becoming a commonplace personal electronic the world over from children as young as 5 to the elderly many times their senior. It was a boon for the industry at large, with many companies seeing exponential growth, exceptional profit margins and cost effective technological advances, all within in a skies-the-limit environment.

However, with Motorola’s Q4 earnings report, “ubiquity” might not always translate to “profitability”. And, given the state of the economy as a whole, it might not translate to “necessity,” either.

Motorola isn’t the only one facing less-than-optimistic news. SprintNextel, whose decline began well-before the general recession, has announced plans to eliminate an additional 8,000 jobs in coming months. And even industry giants Verizon and AT&T’s Q4 earnings reports indicated future growth and profit-margin sustainability challenges. The industry as a whole has hit a glass ceiling through market oversaturation and is hastily being pulled back down to earth as subscribers prioritize expenses and refrain from upgrading to newer phones and service plans.

The industry isn’t likely to take a place in line behind the Detroit automakers, but analysts expect growth to be slower and profit margins to be smaller for the foreseeable future. Even new directions in mobile phone technology, from the incorporation of music and video players to the increase in internet and application functionality, will have to grow accustomed to a radically changed marketplace, one where rapid growth and double digit profit margins are the exception—not the rule.

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Mobile Phone Industry Hits Glass Ceiling

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