The European Mobile Crisis Deepens

Cutbacks Could Provide a Strong Pedigree to Those in Need

Sony_building_lIn the 1990s, Alcatel, Ericsson, Nokia, Philips and Siemens were among the top global handset brands. Today there aren’t any mainstream European mobile phone makers. But this is about more than handset market shares — Europe has fallen behind the US and Asia in mobile influence. Economies that became dependent on wireless growth now need to take up the slack with new technology opportunities.

Yesterday, Ericsson announced cutbacks of more than 2,000 research and development jobs in Sweden — more than 12% of the company’s employees in the country — as part of a cost-saving program. Ericsson aims to save more than $1 billion through personnel reductions and increased efficiency.

The announcement follows a statement from Sony Mobile earlier in the week that it would lose 1,000 employees, also in Sweden, as part of a global workforce reduction of 2,200. These skilled wireless workers will soon available to start-ups and established industry players.

A net total of 15,000 mobile-related jobs have disappeared in Finland in the past decade as Nokia’s handset business changed hands and its global brand faded. Like many other economies that enjoyed dividends from GSM’s global success, the region has now lost its mobile market influence and needs to fill some significant voids.

In less than a generation, Europe’s wide mobile lead changed to a trailing position, with hardware design and production shifting to Asia and software and services moving to the US. Ericsson and Nokia are mobile infrastructure leaders and ARM Holdings is a dominant player in mobile processors, but thought leadership rests with the brand names that consumers hold in their hands.

Europe has had its niche and start-up successes in recent years, with the likes of Jolla, King Digital Entertainment, Rovio and Spotify having enjoyed at least provisional or niche success thanks to smartphone sales and penetration rates in most markets. However, there continues to be an excess of mobile talent in countries hit worst by the recent disruptions.

CCS Insight believes that current soft European currencies offer companies with reserves of US dollars an opportunity to fund experience at a discount. A growing number of personnel with solid wireless pedigrees are hitting the market. Potential growth in adjacent sectors like virtual reality and the Internet of things mean that Europe’s talent could be siphoned for a post-mobile era.

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