This week wireless titans from Apple to Qualcomm announced their fourth quarter results. Here's what you need to know.
Let's start with the carriers: AT&T Wireless continues to hold the lead in the US wireless market. The company reported record revenue and profit, no doubt helped by the fact that the company topped 70 million subscribers. Number two carrier Verizon Wireless is working hard to catch up, and managed to increase its customer base 21% to a total of 51 million. Both companies are benefitting at the expense of Sprint Nextel, which is bleeding customers, closing stores, and slashing 4,000 jobs.
News was similarly mixed at the handset vendors. Nokia continues to consolidate its position as the world's top brand; the company now owns an incredible 40% of the handset market. Nokia is doing particularly well in low-cost handsets. Its advantages in volume manufacturing and sales infrastructure will make it very difficult for competitors to catch up. Number two manufacturer Samsung also reported stellar results: It grew three times faster than the industry average. Motorola, on the other hand, continues to lose money and lose market share to Nokia and Samsung.
Now on to the chip makers: Results for market leader Texas Instruments were a mixed bag. TI saw strong demand for its 3G chips, but sales of chips for low-end handsets fell slightly. Neither result is too surprising. TI's 3G business is closely tied to Nokia, while its low-cost business is more reliant on weaker customers like Motorola. Number two vendor Qualcomm had a stronger showing, with revenues up 21%. Infineon also saw a 15% increase in revenue, mostly due to the strength of its wireless business. Going in the opposite direction, Freescale saw an 11% percent decline, mostly due to the troubles at Motorola, its largest customer.
Looking on to 2008, here are my predictions: market leaders will continue to consolidate their strengths, while smaller players will struggle. In the carrier space, AT&T and Verizon will see modest growth as the US economy enters a recession. Most of their growth will come at the expense of Sprint, which will take a serious beating.
For handset and chip makers, developing markets will be critical to growth. This will help Nokia continue to strengthen its position, and will also be a bonus to vendors like Infineon that supply its low-cost phone chips. The picture is murkier for TI, which needs new successes in low-cost markets. The forecast is also unclear for Qualcomm, which seems to be constantly caught in a storm of lawsuits.