Ericsson overlook? Message Board

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Technology Stocks : Ericsson overlook?

ERIC 9.295

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Nov 20 3:59 PM EST

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To: slacker711 who wrote (3310)	6/3/1999 10:27:00 AM
From: tero kuittinen	Read Replies (2) of 5390

"We actually agree on a couple of things." Don't panic - I can fix that. The IS-95 growth rate is slowing down. There is no doubt about that. Just like the growth rates of GSM and TDMA are slowing down as well. The only question is about how rapidly the slow-downs are taking place - and who can handle the process best. I would argue that only companies with a strong ability to attract upgrade buyers will prosper in the long run. This boils down to a 12-month product cycle. This is the time it takes for Nokia to move from the 5110 entry-level phone to the 3210 entry-level phone. And the design/software/technology overhaul is thorough - these models don't look similar or have identical user interfaces; plus the latter can handle an extra digital band. I'm aware of exactly one company on track to realizing the new product cycle paradigm. Many industry observers seem blissfully unaware of the new demands of handset development schedules. Ericsson's current problem is the contempt bred by the familiarity of the T18 platform; it's another 688 look-alike. Qualcomm's problem is the absence of segmentation: nothing aimed at teenagers, nothing aimed at upmarket miniature handset buyers. The Model T days of pitching one basic model at all consumer groups are over. You have to admit that the keypad lay-out and the molding design of Thin Phone has all the sex appeal of a Zenith remote control. There's way too much emphasis on technology and too little on the consumer aspect of this business. Nokia can handle a 2-4 week delay in the 6185 introduction, since they still have dozens of other models selling in half a dozen different mobile standards. I don't think we can grasp the full impact of the Q-phone disappearance act until the second half of this year. That's the crunch time for Ericsson as well. If the T18 sales don't take off, we will see a real life experiment on what happens to margins of two mobile handset manufacturers without high-end hits. Tero

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