Focus? Who Needs It? Print E-mail
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Written by Mike Buetow   
Thursday, 03 September 2009 17:38

From Jim Collins to Michael Porter, the latest generation of management gurus argues companies must focus on core competencies and shed all other activities.Caveat Icon

Just what makes a “core competency,” however, is always in flux. And as electronics companies see sales plunging like cliff divers, they are quickly redefining the terms.

With its August launch of the Nokia Booklet 3G, Nokia, long synonymous with mobile phones, has now officially entered the netbook market. This makes Nokia just the latest in a string of high-profile OEMs that are trying to jump-start their revenues by going after what are increasingly commodity markets.

To wit:

  • Dell, in conjunction with China Mobile, is said to be looking at jumping in the mobile phone wars. In doing so, the world’s No. 2 computer maker would join Hewlett-Packard, Acer and Asustek as PC OEMs that either have launched or are planning to debut smartphones.
  • Meanwhile, China Mobile, AT&T and Far EasTone Telecommunications are among the mobile providers now pitching netbooks, the small-sized, low-priced mini PCs.

In The Wall Street Journal on Aug. 24, Roger Yuen, vice president of Acer’s Asia-Pacific smart handheld business group, explained the fascination. “[I]t is relatively easy for PC makers to make smartphones because the two devices share similar components and software.”

Which makes sense to analysts, I suppose, but is something of an insider’s joke in electronics manufacturing. After all, what today doesn’t have Intel Inside?

The moves are highly questionable. As the WSJ notes, “Analysts say PC makers are unlikely to reap significant benefits in the near term, as they need to develop better relationships with mobile operators to sell their products. It will also take time to develop differentiated products and market their own brands in a segment where consumers already have many choices.”

The WSJ hedges, adding, “[M]any agree that longer-term, PC makers have a chance to gain share, which would generate a new source of revenue growth and improve overall profitability.”

I don’t see it. These are extraordinarily competitive markets, flush with big-name brands with deep pockets. Lenovo. Nokia. Samsung. Dell. H-P. The list goes on. None is going to give in without a (very expensive) fight.

Meanwhile, the broader markets are showing some signs of leveling: Worldwide mobile phone sales fell 6.1% year-over-year to 286.1 million units during the second quarter. And the battle for the niche markets – like smartphones – may already be over. Nokia holds a 47% share of that market, and RIM has been entrenched in second place.

New players have found the going bumpy. Take for example, Apple’s much-ballyhooed entry, the iPhone. Measured in terms of style and buzz, it has performed exceedingly well. In terms of units sold, it’s another story. Apple shipped 5.4 million units in the second quarter, says research firm Gartner, good for 2.4% market share. It is almost as if Apple makes the equipment as a medium to sell its highly profitable catalog of digital music.

Given Apple’s lagging market share even in the face of its marketing and design savvy, it’s hard to fathom why other, less sophisticated companies would risk dominance in one market to attempt to conquer such foreboding – and possibly worthless – terrain.

It brings to mind one more business truism: that the grass – and the profit – is always greener on the other side of the fence.

PCB West. Speaking of green, one way to earn it is by knowing more about your field than anyone else. To that end, I strongly recommend readers attend PCB West later this month. This Silicon Valley-based show, now in its 18th year, is an outstanding forum for the entire PCB supply chain. (Disclosure: PCB West is sponsored by UP Media Group, the parent of Circuits Assembly.) PCB West will be held Sept. 14-18, at the Santa Clara (CA) Marriott. Show details are at pcbwest.com. Please support the companies that bring you this magazine each month by stopping by.

Last Updated on Wednesday, 09 September 2009 18:45
 

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