Big-5 Cell Phone Makers Losing Hegemony on Handset Profits

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Big-5 Cell Phone Makers Losing Hegemony on Handset Profits

5:45 am on May 13, 2008 | Category: Business, Mobile Devices, Cell Phones

The traditional top-five cell phone manufacturers have shown falling profits over the past three years, as new players gained a foothold in the market.

Nokia, Samsung, LG, and Sony Ericsson generated 84% of worldwide profits from mobile handsets in 2007, while American cell phone giant, Motorola, was unprofitable. These five companies held a combined profit share of 92% in 2004.

“The top 5 vendors may seem to be more dominant than 3 years ago but their income actually shrank,” commented Strategy Analytics analyst, Tom Kang. “An internal focus of cost cutting and growing scale has drained off resources that should have been channeled into competitive assets for use in the new market landscape. It is no surprise that these same vendors are now struggling to find a viable strategy in this new market paradigm.”

“RIM (Research In Motion), on the other hand, has only 1% of the volume market, but was able to earn 6% of the industry profits,” Kang went on to say.

“RIM has realized a 187% growth in profits over this timeframe and is redefining the competitive landscape of the global handset market, along with Apple and HTC,” added Chris Ambrosio, the executive director of Strategy Analytics’ wireless division.“These rich media specialists have carved out a 16% share of industry profits in 2007 using a device appeal that is uniquely complemented by a powerful mix of value-added services, applications and rich-media presentation.”