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I usually read the industry publications to get a sense of what is happening in the communications market. Lately, we have seen evidence of heightened conservatism due to the shaky economy. Yet many companies in the telecommunications space are posting record Q3 revenues and year-over-year numbers, with only a couple posting horrid Q3s. Here, for example, are some rounded numbers showing year-over-year revenues (most figures were pulled from http://www.convergedigest.com/):
If you didn’t read the news, and looked at these earnings, you would think we were having a good year in the communications business—and we are. The scary part, however, is that these companies will likely have a poor year in 2009. This is not necessarily due to dwindling demand or business issues, but rather the fear-based decision-making taking place in the minds of consumers and business leaders.
Everyone fears hard times ahead. In response, they are preparing to tighten their belts, cut the fat, and get lean. And in doing so, this gives rise to the self-fulfilling prophecy. But will these measures have an impact on the communications business?
The numbers above reflect the effects of emerging market growth, new technology hitting the market, and consolidation in the United States. What about next year? It’s hard to say. On the one hand, people might think: It’s my cell phone, and I’ll never get rid of it, bad economy or not. On the other hand, they think: If I have to cut spending, I have to cut regardless.
What do you think? Will telcos sail through next year, or just hit flat water? Will NEMs have the same or different experience?
| BT up 4% ALU down 6.6% Ericsson up 13% Equinix up 77% Starent up 80% Extreme Networks flat Cisco up 8% Adva down 10% Qualcomm up 45% Sonus down 18% NTT Docomo flat | Sprint Nextel down 13% Comcast up 10% Bell Canada up 4% Qwest down 2% Verizon up 5% Atheros up 14% Juniper up 29% Netgear flat Tellabs down 7% Broadcom up 37% |
If you didn’t read the news, and looked at these earnings, you would think we were having a good year in the communications business—and we are. The scary part, however, is that these companies will likely have a poor year in 2009. This is not necessarily due to dwindling demand or business issues, but rather the fear-based decision-making taking place in the minds of consumers and business leaders.
Everyone fears hard times ahead. In response, they are preparing to tighten their belts, cut the fat, and get lean. And in doing so, this gives rise to the self-fulfilling prophecy. But will these measures have an impact on the communications business?
The numbers above reflect the effects of emerging market growth, new technology hitting the market, and consolidation in the United States. What about next year? It’s hard to say. On the one hand, people might think: It’s my cell phone, and I’ll never get rid of it, bad economy or not. On the other hand, they think: If I have to cut spending, I have to cut regardless.
What do you think? Will telcos sail through next year, or just hit flat water? Will NEMs have the same or different experience?
 | David Gehringer has served as Fanfare's vice president of marketing since 2006. Learn more about David >> |
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