Street Fallout a Silver Lining for Wireless Market
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While this week's financial fallout from Wall Street will affect corporate IT spend, high-end smartphone makers won't experience any great pains given mobile handsets are critical business devices and market shakeup could even bring new business opportunities.
"Overall there will not be a big impact, though any time the economy is tough technology will experience somewhat of a hit," said Ryan Reith, an analyst at Worldwide Mobile Phone Tracker, IDC, told InternetNews.com. "But we don't foresee a slowdown in the high-end device market."
Such predictions aren't surprising given the strength of the mobile device industry and wireless data services markets. Nearly every vendor boasted good financials so far this year, with some celebrating double-digit growth in the first two quarters despite increasing competition both on the services and device landscapes.
The big reason is that mobile devices are spurring productivity, which do impact the bottom line, according to pundits, and so companies look to make budget and tech cuts elsewhere.
"When the economy environment gets tough, corporations look at limiting costs such as travel and IT," Carolina Milanesi, an analyst at Gartner covering mobile devices, told InternetNews.com.
"However, for many enterprises a BlackBerry or a smartphone have helped improve productivity and have become indispensable," Milanesi said. "They might not upgrade to the latest device but they will more than likely keep the service."
While Research In Motion (NASDAQ: RIMM), Verizon Wireless and AT&T (NYSE: T) declined comment about current stock market news, executives are indicating the fallout could be rosier than most expect.
Verizon Wireless' CEO told investors at a Goldman Sachs Communacopia XVII Conference today that the financial events could have a positive impact.
"The consolidation in financial services will create some [wireless] opportunities," said Denny Strigl, president and COO at Verizon Wireless.
Strigl's take is on par with Sprint CEO Dan Hesse's view, though Hesse sees another wireless market issue in play.
"The events of the last few days don't indicate a significant change, and there could be a benefit as users may keep their devices longer leading to less churn," Hesse told investors during his presentation. "Customers will still have to pay something to leave a plan so they may stay put," Hesse pointed out.
While RIM declined to comment for this story, stating it was in a quiet period, a Reuters story today reported co-CEO Jim Balsille as stating "there's clearly got to be a point where there is an impact," though Balsille declined to elaborate what effect, if any, the financial events will have on next earnings, which will be reported on Sept. 25.
Gartner's Milanesi pointed out that RIM's strong consumer focus this year may prove very valuable given the current business market moves.
"It is good news that RIM is increasing its focus on the consumer market and might be able to alleviate the impact if that was to happen," Milanesi said.
Yet one analyst expects there will be backlash on RIM, whose BlackBerry device is the leading corporate smartphone.
[cob:Special_Report]"It has to have impact and will affect all businesses," Ken Dulaney, an analyst covering mobile computing at Gartner, told InternetNews.com. However the big players such as RIM could also have an opportunity grab market share from smaller players who may be hurt more, said the analyst.
"We will see market share shift, with RIM and Apple grabbing more as they can offer more value in a competitive market," said Dulaney, who added that there's also another corporate tech trend that will gain steam.
"IT will increasingly be pushing handset ownership back to the users to reduce support costs," he said. "While they'll keep supporting e-mail and other business apps, the voice support will be on users to handle," he said.