Mr. Harris: I think it's been stronger in the mobile device area. By the way, I follow companies in the wireless equipment areas; that would include mobile devices, infrastructure and satellite equipment. I generally do not follow companies in the wireline or networking area. Overall, I would say that the business has being stronger than anticipated in mobile devices or the handset area. Perhaps it's been somewhat softer than I had anticipated in the infrastructure area.
TWST: What's made the difference in the handset area?
Mr. Harris: It is very interesting. The mobile device market is growing at a
fairly good pace, so the number of unit shipments this year should exceed 1.1
billion compared to just under 1 billion in 2006. We have seen a segmentation of
the market. You no longer have a one size fits all strategy. We have seen the
growth in the smartphone market, including products by companies like Palm
(PALM) and Research in Motion (RIMM) and increased emphasis upon high-end
smartphone devices by companies such as Nokia (NOK) and Samsung.
We have also seen fairly significant growth in low-end or entry-level devices.
These could be products that can sell for less than 30 or 50 euros. In many
cases, it's just a black and white or monochrome screen and basic voice service.
The reason for the growth of these entry-level models is the increased number of
subscribers in emerging markets such as India and China. Africa is really
starting to grow right now. The millions of subscribers that are being added in
India and China are certainly adding to the unit volumes in the overall market.
The other thing that I think has created some additional demand and interest in
the devices space has been the introduction of the Apple (AAPL) iPhone on June
29 at AT&T (T). It's scheduled to be released at O2 in the United Kingdom on
November 9, at T-Mobile in Germany also on November 9, and at Orange in France
on November 29. The iPhone has placed increased emphasis on music and Internet
access devices with easy to use interfaces and touch screen capability. We will
see a lot of touch screen models from several vendors next year including
Motorola (MOT) and Nokia, in response to the Apple iPhone.
The infrastructure market, which is essentially the network equipment side of
the wireless area, has been something of a disappointment, frankly, thus far
this year. We have seen lower spending on the part of several of the US
carriers; for example, AT&T's spending on their former Cingular network on a
year-to-date basis is down. Sprint's (S) spending has been lower than
anticipated. Verizon (VZ) spending has been fairly flat year over year. There
also has not been a significant amount of growth in Europe.
The areas where the wireless infrastructure has been growing have been once
again in the emerging market. India, for example, because of the subscriber
growth, has seen increased demand for infrastructure equipment. The problem is
the profit margin on the sale of infrastructure equipment in India tends to be
somewhat lower than, say, the sales of infrastructure equipment in North America
or Europe.
Tickers included in this excerpt: AAPL, ALVR, GOOG, HRS, MOT, NOK, QCOM, RIMM, S, T, UTSI, VZ
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