TOUGH TIMES AWAIT NORDIC GIANTS
DN’s Pia Gripenberg writes that both Nokia and Ericsson have struggled to hold onto their market positions, and while Ericsson has successfully implemented changes, Nokia has some difficult times ahead. Nokia has lost ground to Asian companies in markets where it once reigned supreme. Sales and profitability do not appear to be on the rise, and the company risks layoffs. Ericsson’s profitability owes much to its efficiency measures given the drastic reduction in prices for new base stations compared with ten years ago. To remain competitive, Ericsson has chosen to sell its products for less and then compensate by providing aftermarket upgrades and services. The extreme price pressure that Hans Vestberg referred to in Dagens Industri in September, coupled with a decline in the dollar, has forced Ericsson to often forego profitability in new deals to maintain market share. In light of this, however, Gripenberg refers to the competitor NSN’s strategy of several years ago for every transaction to be profitable, which started to become its downfall. It is difficult to determine what Ericsson can do to increase profitability, as there are no more factories to close and cutting back on research and development is highly risky for a technological leader. For Nokia, it is easier to see what needs to be done. The Finnish company, however, has a tough time accepting this. This is where Ericsson has the advantage; it has identified what it needs to work on, writes DN.
DN’s Pia Gripenberg writes that both Nokia and Ericsson have struggled to hold onto their market positions, and while Ericsson has successfully implemented changes, Nokia has some difficult times ahead. Nokia has lost ground to Asian companies in markets where it once reigned supreme. Sales and profitability do not appear to be on the rise, and the company risks layoffs. Ericsson’s profitability owes much to its efficiency measures given the drastic reduction in prices for new base stations compared with ten years ago. To remain competitive, Ericsson has chosen to sell its products for less and then compensate by providing aftermarket upgrades and services. The extreme price pressure that Hans Vestberg referred to in Dagens Industri in September, coupled with a decline in the dollar, has forced Ericsson to often forego profitability in new deals to maintain market share. In light of this, however, Gripenberg refers to the competitor NSN’s strategy of several years ago for every transaction to be profitable, which started to become its downfall. It is difficult to determine what Ericsson can do to increase profitability, as there are no more factories to close and cutting back on research and development is highly risky for a technological leader. For Nokia, it is easier to see what needs to be done. The Finnish company, however, has a tough time accepting this. This is where Ericsson has the advantage; it has identified what it needs to work on, writes DN.
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