During the first quarter this season HTC, RIM and Nokia all surprised investors with not so great. The effect can be seen in the stock price of these companies which, in the case of RIM and Nokia is about book value, as well as in the case of HTC, neared Twelve month lows along with a 70% drop from peak.
These “misses” in earnings and expectations are saved to top of the already woeful news from Sony Ericsson and Motorola, which have not had profits for a long time and LG, that is borderline since late 2009.
Mixed with, this appears to imply a dearth of profits in a industry that is, by all measures, booming. Units are up 7% with smartphones up 47%. Revenues are up 20% and overall profits are up 52%. This are exceptionally strong numbers. Few industries can measure development in double digits.
Therefore if the industry is booming however the majority of participants in the industry are loss making (and surprisingly so) then what is going on? There are two answers: new market disruption and low end disruption.
The newest market disruption may be the migration of a large number of demanding customers far from phones-as-voice-products to phones-as-computing-products. The low-end disruption may be the migration of a large number of less demanding customers from branded phones to unbranded, commodity phones.