The problem - as always - is the profit margins. You see, Nokia is apparently the only phone manufacturer in the world who is actually concerned about making money. The rest of the crowd seems to be after market share. As a result, Matsushita, one of the top five mobile phone companies in the world, has had a stagnant share price for five years.
This is extraordinary - the mobile phone boom of the last half a decade has been beyond the wildest dreams of any people (except Finns). Yet one of the biggest phone makers in the world has apparently derived zero benefit from riding the boom.
Up to a point, same goes for Ericsson and Motorola (which have been succesful with other products, so their share prices have done pretty well). 1Q 2000 was the hottest mobile phone quarter in human history - yet the phone margins of Ericsson and Motorola were one step from zero.
What is different about Nokia's approach? For one thing, Nokia never gives a monopoly position to a single component manufacturer. Displays, plastic molding, batteries... and chipsets. Nokia has never put itself into a situation where it is totally reliant on a single vendor.
Because that's the beginning of the end. That's what destroyed the PC industry as an innovative, profitable, exciting manufacturing sector. Microsoft and Intel got chokeholds on two components necessary for PC's - and the manufacturers are now wrestling with 1.2% profit margins.
Tero |
