The Great Debate UK
Apple has taken another bite out of Nokia. As customers stampeded for the new iPhone, the Finnish cellphone giant warned of disappointing sales and operating margins. It lost another 9.7 percent, or about $3.5 billion, of its market capitalization on Wednesday. Nokia is increasingly at risk of becoming just a commoditized, low-margin manufacturer.
Nokia pinned the blame for its lower expectations on several causes: competition in high-end phones; the weak euro increasing the cost of goods sold; and a shift in product mix to low-margin devices. But it is smartphone competition that is really vexing the Finns.
In electronics, the highest margins are typically found in bleeding-edge products. Customers are willing to pay a premium for the shiniest devices, while competition is fiercer in more easily produced, lower-end ones. Nokia is losing this battle. While it appears to be slashing prices to keep market share, Apple's customers are whining they can't get their hands on the new iPhone fast enough.
The dichotomy in margins is clear. Nokia says its devices and services unit will be lucky to get 11 percent this year. Largely thanks to the iPhone, it seems, Apple should achieve about 30 percent overall.
Five years ago the thought that we could be on the move accessing applications such as You Tube or Facebook, or watching TV or listening to music using our mobile phones was no more than a dream – today it’s a reality.
If we take a step back and assess the journey of the mobile phone over the past few years it has been nothing short of epic. It has progressed from a piece of technology for the modern business person to a must-have item.
The world's top phone and software companies need each other to compete with Apple, Google and Blackberry-maker Research in Motion (RIM), whose products increasingly define what users expect from phones and charge premium prices in consequence.
By Eric Auchard
LONDON (Reuters) - Intel Corp has cheered up investors by once again making forecasts about its financial performance. The trouble with reading too much into its rebound, however, is that this is largely due to productivity gains of its own making, rather than a broader awakening of demand.
To be sure, Intel's revenue, profit and margins surged past all published analyst expectations for the second quarter. Partly, this was merely the "snapback" that occurred after Intel throttled back production to as low as 25 percent of factory capacity in the first quarter, amid a glut of unsold chips and shriveling demand.