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Even though Motorola sold six million more mobile phones than forecast, the company has reported that it missed its already reduced fourth-quarter sales target by $250 million. This will reduce profit margins, but Motorola is not alone in its suffering. Nokia, the largest cellphone maker in the world, predicted similar problems in October. The key factors include geography and saturated markets. With so many in the developed world already owning a mobile phone, vendors may expect people to upgrade to another phone to get new features, such as e-mail and MP3 players, and some may also replace lost phones. Therefore, Nokia predicts that the number of phones sold in Europe and North America will drop less than 10 percent each year into the future, which is about the amount that prices are lowered each year due to reduced cost of technology. Other new features might also prevent more price erosion. On the positive side, handset sales are strong in middle income and poor countries, with China Telecom, for instance, adding more than four million subscribers each month. The phones dont cost much, which is the reason that Motorola and Nokia can report large numbers of phones sold but still have disappointing revenues. Also discussed are the economics of ethanol, including the fact that geography makes other countries better than the U.S. for economically producing biofuel.
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Information Sources, Inc.
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