While has been trumpeting the fact that it has cracked the entry-level mobile
phone market, arch rival Motorola has been forced to announce yet more job cuts
in a dash for profitability.
Nokia CFO, Rick Simonson, recently told a bunch of analysts that Nokia's gross
margin for selling $40 handsets is above 25 per cent. He compared that result
with Sony Ericsson which typically sells its handsets for around $180 and gets a
30 per cent gross margin.
But then Nokia is selling bucketloads of entry phones. Last year it shifted
around 150 million of them which representing 42 per cent or nearly half of all
the handsets it shifted.
Given that emerging markets are the new kingpins of the mobile handset sector,
Nokia is obviously well placed to go with the flow. By contrast Motorola appears
to have seriously lost its way.
On top of the cuts it has already announced, the US based manufacturer plans to
lose an additional 4,000 jobs. That means during 2007 it will have cut its
workforce by about 11 per cent or 7,500 jobs out of a total workforce of 66,000.
Jennifer Erickson, a Motorola spokeswoman, claimed the cuts were "happening in
all businesses functions and regions." She added, however, that in "critical
areas" the company would continue to recruit.
Presumably that includes good designers and engineers to provide Motorola with a
product set that would once again grab market share.
Independent UK analyst, Jayker Shah, commented," Motorola don't seem to have
anything that stands out from the crowd." He claims that Motorola has finally
resolved its poor UI offering with the introduction of the Razr2.
However, the Razr's former USP – its thinness- has been supplanted by the likes
of Samsung which now boasts a whole range of slim phones. "It's got the Q which
plays in the high- end, hybrid PDA and phone niche," Shah added. "But, again,
that's become a very crowded market."
Nokia's even doing better at the mobile infrastructure game. Rick Simonson said
he was pleased with the targeted annual savings target of $2.01 billion for its
infrastructure joint venture with Siemens
