By Kim Yoo-chul
Staff Reporter
Global handset makers are now facing slowing sales growth, the result of both the economic slowdown in the U.S. and Europe and less than compelling products.
Analysts say consumers are spending more cash on gas, food and other essential commodities whose prices have risen sharply in the past year. The stock of Motorola is down 54 percent, while even shares of industry leader Nokia are down some 36 percent.
``The main reason to date has been the economic slowdown in the U.S. and weakening consumer demand in Europe. Consumers are not buying as many new phones as they once were,'' John Park, an analyst at Daeshin Securities said, Friday.
Now, attention is being focused on whether sales of high-end smart phones such as Apple's iPhone and BlackBerry commonly known as Thunder, will help lift the mobile phone market out of the doldrums.
``Outlook in the overall cell phone sector is not good, however smart phones will continue to draw more attention thanks to increasing subsidies by telecom providers and several wow factors,'' the local analyst said.
Smart phones might offer the most promise for growth in the cell-phone business. Gartner, a market research firm, forecasts the total market for smart phones to soar 41 percent to 172.2 million units this year, up from 122 million units in 2007.
Samsung and LG Electronics, the world's No. 2 and No. 4 handset makers, respectively, are actively riding on such trends by strengthening relationships with regional telecom providers for marketing.
``Apple's aggressive moves will help major handset vendors find a breakthrough in the sluggish handset sector. The key thing is to increase initial marketing costs for the mass market,'' said a Samsung Electronics spokesman.
``Some cash-strapped consumers may need to be swayed by products with a striking wow factor, as they decide whether to buy a new model with a monthly data plan for Internet access,'' he added.
LG recently increased its number of high-end smart phones to five in North America by launching the Vu and Vantage models. Vu has been selling for $199 per unit in North America via AT&T.
But huge marketing spending raised further concerns among investors already nervous about growing competition from the iPhone and slowing economies.
``Maybe we are too 2001 in our thinking, but when a company cuts prices and adds features usually that's a sign they are having trouble finding demand,'' Deutsche Bank's Brian Modoff said.