Sunday, April 17, 2005

MOBILE PHONES AND PRODUCT CYCLES

I am sure it is hard to become an expert on the mobile phone industry, but I wonder why the mobile manufactures often have problem to predict the life cycles of their different products.

Meanwhile, Sony Ericsson, a joint venture of Sony and Ericsson, turned in a dismal performance for the first quarter. The number of total cell phones shipped fell 25% from the previous quarter, as the big-name partnership got caught in a product cycle slump. (TheStreet.com, 04/15/05.)


What's Ericsson's explanation? From the article, Sony Ericsson Blames Weak Phone Market.

Sony Ericsson said that the entire mobile phone market had weakened in the quarter, partly because overhanging inventories made for a more competitive environment.

But the company also admitted to its own shortcomings, notably a lack of new mobile phone models to stir buyers' interest.

"The product line-up was mature and few new products were launched during the period," Sony Ericsson said. (Toptechnews.com, 04/15/05.)


Here is an excerpt from Nicholas George's article, Cheap phones cut into Sony Ericsson sales.

Sony Ericsson, the mobile phone producer, yesterday reported falling sales, profits and prices as consumers favoured cheaper phones and the market struggled to shift inventories built up before Christmas. (FT.com, 04/16/05.)


In the news:


Maybe they should read Eliyahu M. Goldratt's business novel, Critical Chain? [Hat tip to Jim Woods.] I have read the first two chapters. Here is an excerpt from the first chapter:

"Our products have a very short life-span. Right now it's about six months, and all indications are that it will continue to shrink. At the same time, in spite of all our efforts, our product development time is roughly two years. Do you see our problem?" (Page 5, ISBN 0566080389.)


For more information on the theory of constraints, go to the Avraham Y. Goldratt Institute.

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