Focus? Who Needs It?

From Jim Collins to Michael Porter, the latest generation of management gurus argued companies must focus on core competencies and shed all other activities.

Just what makes a “core competency,” however, is always in flux. And as electronics companies see sales plunging like cliff divers, they are quickly redefining the terms.

With today’s launch of Nokia Booklet 3G,Nokia, long synonymous with mobile phones, has now officially entered the netbook market.

But Nokia is just the latest in a string of high-profile OEMs that are seemingly trying to jump-start their revenues by going after what are increasingly commodity markets.

Dell, in conjunction with China Mobile, is said to be looking at jumping in the mobile phone wars. In doing so, the world’s No. 2 computer maker would join Hewlett-Packard, Acer and Asustek as PC OEMs that either have launched or are planning to debut smartphones.

Meanwhile, China Mobile, AT&T and Far EasTone Telecommunications are among the mobile providers now pitching netbooks.

In today’s Wall Street Journal, Roger Yuen, Acer’s vice president of Asia-Pacific smart handheld business group, is quoted as saying “it is relatively easy for PC makers to make smartphones because the two devices share similar components and software.”

Which makes sense to analysts, I suppose, but is something of an insider’s joke in electronics manufacturing. After all, what doesn’t have Intel Inside?

The moves are highly questionable. As this article today in the Wall Street Journal notes, “Analysts say PC makers are unlikely to reap significant benefits in the near term as they need to develop better relationships with mobile operators to sell their products. It will also take time to develop differentiated products and market their own brands in a segment where consumers already have many choices.”

The WSJ hedges, adding, “[M]any agree that longer-term, PC makers have a chance to gain share which would generate a new source of revenue growth and improve overall profitability.”

I don’t see it. These are extraordinarily competitive markets, flush with big-name brands with deep pockets. IBM. Nokia. Samsung. Dell. H-P. The list goes on. None is going to give in without a (very expensive) fight.

Meanwhile, the broader markets are showing some signs of leveling: Worldwide mobile phone sales fell 6.1% year-over-year to 286.1 million units during the second quarter. And the battle for the niche markets – like smartphones – may already be over. Nokia holds a 47% share of that market, and RIM has been entrenched in second place.

New players have found the going bumpy. Take for example, Apple’s much-ballyhooed entry, the iPhone. Measured in terms of style and pizzazz, it has performed exceedingly well. In terms of units sold, it’s another story. Apple shipped 5.4 million units in the second quarter, Gartner says, good for 2.4% market share. Very likely, Apple makes the equipment as a medium to sell its highly profitable catalog of digital music.

Given that, and given that few companies boast Apple’s marketing and design savvy, it’s hard to fathom why a company would risk dominance in one market to attempt to conquer such foreboding – and possibly worthless – terrain.

It brings to mind one more business truism: That the grass – and the profits – is always greener on the other side of the fence.

What a Waste

All sorts of nonsense is erupting in our industry’s corner of the environmental arena this past week. Let’s go to the tape:

  • On May 14, Rep. Michael Burgess (R-TX) introduced a bill that essentially codifies the EU RoHS Directive for the US as well. The bill proposes to prohibit the manufacture after July 1, 2010 of “electroindustry products” that contain lead, mercury, cadmium, hexavalent chromium, PBBs, and PBDEs above the maximum concentration levels specified in the European Union’s RoHS Directive.
  • Today, the Electronics TakeBack Coalition issued a statement opposing a toxic e-waste bill scheduled to be introduced in the House later this week. The bill, sponsored by Rep. Gene Green (D-TX) (how’s that for irony?), Rep. Mary Bono-Mack (R-CA) and Rep. Mike Thompson (D-CA), permits e-waste exports under a loophole under which any type of entity can export toxic e-waste to developing nations for reuse and refurbishment, the Coalition asserts.

    “By passing a law that only appears to restrict exports to developing countries without actually doing so, the bill would undermine those recycling companies which are in fact managing their e-waste responsibly, and providing jobs here at home. This bill fails in serious and even critical ways.”

  • And in between, IPC issued a press release boasting how 22 of its 2700-odd members managed to trek to Washington in support of a permanent R&D tax credit, something that just about every technology company operating in the US already supports anyway — and many of which are priming the lobbying pump to ensure it goes through.

    So in summary, we have a Republican from Texas trying to overlay (absurd) European laws onto US manufacturers, an industry environmental advocacy group trying to shoot down new proposed environmental regs, and the major US PCB trade association completely in the dark about all of it.

    Not too good.

  • iSuppli ‘Green’ Survey Sheds No Light

    Don’t be fooled by iSuppli’s latest report saying that consumers are going green. The data actually say the opposite.

    The research firm issued a press release today stating more than half of US LCD-TV buyers say that environmental issues “influenced their decision when selecting a set to purchase.”

    A look at the rest of the picture tells a different story.

    According to the April survey, 27.5% of LCD-TV buyers “listed green factors as important influences” in their purchasing decisions. Another 23.1% responded that they looked for green features when buying an LCD-TV, but those features were not an important consideration [bolds mine] in the overall purchasing decision.

    From this, iSuppli somehow concludes that “more than half of US LCD-TV buyers are paying attention to environmental features, making ‘green’ a key selling point that needs to be highlighted wherever possible in branding and marketing efforts.”

    Here’s the rub: Fewer than 16% of respondents highlighted recyclability as a feature on their purchase.

    Say it with me: Electronics aren’t green. They require lots of mining and other nasty actions to produce, consume billions of tons of plastic, and hog energy. And if you can’t recycle it, it’s even less environmentally friendly.

    Not long ago, I spent 30 minutes or so standing in the electronics department of the Seabrook, NH, Wal-Mart, asking customers why they chose their TV. (I’d say I did this just for fun, but have you ever tried randomly starting a conversation at a Wal-Mart? It’s not easy.) The most common answers? Price and “it looked good.” Not one customer mentioned environmental reasons. Not one.

    Granted, there’s nothing scientific about my poll. And customers don’t shop at Wal-Mart because they like the pretty store décor.

    But consider this: What’s the simplest move a consumer can make to save energy? Change the light bulbs to compact fluorescents, right? Yet those bulbs are used in only 11% of the available sockets in the US today.

    Why? Maybe because the list price is several times higher than that of an incandescent.

    It all comes down to price.

    There’s a color for what iSuppli is pitching, but it’s not green. It’s brown.

    iSuppli Ups the Ante

    iSuppli is on to something, and it’s about time.

    The research firm today distributed its estimates for the smartphone market in 2009. But instead of forecasting a single number, the company provided a range based on the best- (new options compel new purchases) and worst-case (customers sit on their wallets) scenarios.

    This is a much wiser, useful way to approach forecasting. Whereas some may call it a copout — by providing a range, iSuppli gives itself a greater chance of being “right” — I see it as a long overdue move into what is standard practice elsewhere. Indeed, providing a range is a method many researchers in other fields use to describe what might actually happen.

    The next step would be to offer probabilities for the different scenarios; in other words, 50% of the time, sales will be up by X%; 75% of the time, sales will be up by Y%, and so on. But I’ll settle for other research firms picking up on what iSuppli has started. Kudos!

    Standards, How They Should Be Done

    This week at the annual GSMA Mobile World Congress, 17 of the top mobile operators and manufacturers agreed to adopt Micro-USB as the universal charger interface for new mobile phones.

    The initiative, says GSMA, centers on having a universal charger interface by 2012. The group further agreed that the majority of chargers shipped at that time will meet the high efficiency targets set out by the OMTP (Open Mobile Terminal Platform). The move could reduce the number of chargers built each year by as much as 50% — a whopping half a billion units.

    “The mobile industry has a pivotal role to play in tackling environmental issues and this program is an important step that could lead to huge savings in resources, not to mention convenience for consumers,” said Rob Conway, CEO of the GSMA. “There is enormous potential in mobile to help people live and work in an ecofriendly way and with the backing of some or the biggest names in the industry, this initiative will lead the way.”

    This is great news for consumers, who will no longer have to ditch their working chargers every time they upgrade phones.

    The initial group of companies that have signed on include AT&T, LG, Motorola, Nokia, Qualcomm, Samsung, Sony Ericsson, T-Mobile and Vodafone, among others. There are a couple big exceptions: Apple and RIM, so far, are not playing ball.
    Here’s hoping they eventually enter the fold.

    But what’s really nice to see is the number of competitors working together in a way that should lower the end-product and usage costs for the consumer while also enhancing the convenience, all while ensuring millions of old chargers won’t be headed to the world’s landfills. That’s what good standards development should do.