Those bloody Swedes... they were deliberately fudging the sales growth issue by talking about *six month* sales growth of 19%. Second quarter's sales growth was just 1%! So the real mobile phone sales growth tally for 2Q was:
Nokia 50%
Ericsson 1%
Motorola 0%
I think I'm starting to see why Wall Street was so upset. How to explain the way Ericsson's 35% growth in 1Q can slump to 1% in three months? The answer starts with a six and ends with a zero. Who would have thought than in the vast and diversified mobile phone market of 1998 one model can make such a difference.
Of course, WSJ shrugged off the current situation by chalking it up to differences in product cycles. Fair enough - but I'm seeing a clear qualitative difference between how these companies handle tough times. Even at Nokia's darkest hour, 4Q -97, company's phone sales growth never slowed down below 9%.
And here are Ericsson and Motorola with totally short circuited sales growth even though volume sales of 5100 and 8810 are only beginning. Nokia had to endure only one quarter with sub-15% growth... but both Ericsson and Motorola are facing at least two more quarters as bad or worse than we saw this month.
Third quarter will be a rout, nothing can change that since we're already well into it and Nokia's position is only strengthening. The only questions are whether Nokia will hit 60% or 70% growth and how bad will the sales contraction at Mot and Ericy be. I'm hoping for -10% to -20% for both; that should shake up the analysts (sorry, Daniel).
The big price is the fourth quarter, by far the most important quarter of the year, thanks to massive Christmas sales. Ericsson is evidently not launching new models by then, so Santa will be bringing a big lump of coal to Stockholm this December. Motorola is the joker; can they deliver on their promise of starting volume sales of several hot models by fourth quarter? Can the handsets match Nokia's quality? Can Motorola launch them simultaneously in high volumes in Europe, USA and Asia? Can Motorola deliver CDMA, GSM and TDMA models simultaneously to American market?
I think that's one question mark too many. Motorola might slow down Nokia to 50% growth but I doubt they can mount a comprehensive counterattack in all continents. Nokia has five months to ramp up the production of 5100, 6150 and 8810 before Christmas sales begin - Motorola will have just two months to do so and here is where they have screwed up royally in the past; rapid production volume increases under tight time schedule.
If they manage to botch the Christmas -98 they will literally end up with 14%-16% global market share by year's end. Mot had 22% market share in 1997... do the math yourself and find out where three quarters of 0%-10% growth in the market that is expanding at 35% rate leaves them. This would probably be the moment when Chris Galvin will be driven out of Schaumburg in tar and feathers.
Another special China moment for Nokia, Jim... that's cool.
Tero
|
