Lumia Supply (and Demand) Issues ...
Yo Zax,
<< Sumar asks: Anyone care to speculate what may be going on here? >>
Sumar hasn't spent too much time in the mobile device or semiconductor industries I would guess, if he has to overly speculate. I spent too much time in them, chasm crossing and bringing new product to market, speculating too much myself in the early stages, and I still bear the scars to prove it. <ggg>
Admittedly we must speculate because Nokia isn't whining and moaning publicly (not there conservative style), and while supply shortages have their downside, on balance they often have an upside. When demand exceeds supply for a product for which demand is building, and that's certainly the case with the 4 Lumia models and their variants, and particularly the 800 and 900, prices stay up. A glut of finished product or components results in fast falling prices (and stuffed channels slowing down orders for the quarter to follow). Macroeconomics play a big role as well and we are not out of the global recession whose signs were 1st manifested in late 2007 just as Nokia was finalizing their finest quarter and finest year of the last decade after recovering from 1st the telecoms recession of the early part of that decade, then their own crash of H1 2004 which was blamed on their paucity of clamshells but really was caused by several strategic errors and being sorely in need of a broad device refresh.
Right now demand exceeds supply for integrated wireless IC's that use the latest process technologies. Allocation occurs when that happens and its a beast, and I surely can testify to that. The words I most hated to hear from one of my own marketeers or business development managers, or a regional or national manager of one of my own semiconductor channel partners is that "allocation is in effect, and we are affected and ALL our customers are affected."
The 800 & 900 have pigmented milled polycarbonate bodies in a variety of colors. The bodies can not be produced as quickly as other plastics, and for Nokia (and others) since the product is brand new it's difficult to forecast production for a particular market. I suspect both issues are in play here and their may be supply constraints on other components as well. Then there is the network opertator(s) forecasts and purchase orders to Nokia. If they are overly cautious and end user demand exceeds their forecast, the end product can't keep pace with demand. And so on and so forth.
Sumar writes "If the delays are due to Nokia’s supply chain, normally expected to be a strength of the company, it suggests Nokia may have more problems than previously suspected."
Logistics and supply chain management at Nokia has been and still is an exceptionally well developed strength of Nokia for well over a bakers dozen years. They have consistently been ranked number 1 or 2 in the whole IT industry (flip flopping with Apple in recent years) and that has included the proven real life capability to troubleshoot and work with a vendor to get over the hump in case of a production facility's fire (that drove Ericsson out of the handset business) or a region's tsunami or other natural disaster.
Forex and intelligent hedging become another issue in an exceptionally volatile currency market that Nokia has had to contend with for the last decade, ever since the Euro started strengthening against the US Dollar and currencies pegged to that dollar, despite the best efforts of the industry's finest CFO's: Legally trained OPK, (originally Nokia's CLO, later married to another Nokia CLO, a two time Nokia CFO and author of Nokia's exceptional and shareholder friendly balance sheet strategy, with experience as an operations leader globally and in the US, and eventually CEO, where he finally flubbed the dub); Rick Simonson, handpicked by OPK with exceptional command presence; and now Timo Ihamuotila, a finance and treasury guy who earned his operations leadership stripes in San Diego managing and evaluating Nokia's CDMA BU.
<< Syl ... given a reasonable alternative, I will post to the board where Lahcim Leinad is banned. >>
Whoa! I understand what you are saying but please remember that I consider all 3 of you to be my virtual friends. I simply moderate a board differently than any one of you. <ggg>
Cheers,
- Eric - |
