Earnings Underline Handset Shift
By Carlo Longino, Tue Jul 20 23:30:00 GMT 2004

Quarterly reports from a few more companies reemphasize what's happening in the handset market.

A few years back, the problem in the handset industry was simply that sales were slowing and average selling prices were falling as market demand shifted to low-end devices, and device manufacturers were busy trying to figure out how they could remain profitable in such an environment. The market shifted of course, and some companies zigged when they should have zagged. But Samsung, Motorola and LG's earnings show they're still benefiting from the shift in demand towards high-end handsets.

All three companies reported higher handset sales in the second quarter, with LG and Samsung shipping record numbers of phones. The market is clearly playing to the companies' strengths, as LG and Motorola both said their profit margins grew while Samsung said its were hit by higher marketing expenses related to the upcoming summer Olympics. This would indicate that all three are well-positioned to deal with Nokia's price cuts, which have thus far been on older models. Sony Ericsson's president also says consumers' interest in phones with advanced features is what's driving the company's success.

The big shift seemed to happen around the end of last year when consumers found they could get more advanced phones at lower prices. The overall industry remains strong -- as Texas Instruments' record wireless sales show -- but the action is at the high end.