Comment: Lessons for the mobile industry

People are not spending money on high-end phones

Motorola's latest financial results are yet another sign that the days of spectacular growth for the mobile industry are well and truly over.

Nearly half of the world's population now owns a mobile phone, many European countries show more mobiles than people, and the market is approaching saturation.

The mobile phone sector is seeing the same issues as the PC industry, in that there is no real reason to buy for many people. Connection speeds are not going to get much faster than 3G and HSDPA for a while, and the mobile operators are not in a hurry to upgrade their networks.

With regards to handsets there is also very little reason to upgrade. Touch screens are all well and good but, with the iPhone, BlackBerry Storm and Palm Pre all costing as much as the food budget for a month, sales are not going to be as high as expected.

The PC industry is going through the same problems. Intel's Nehalem chip may be fast, but computer technology has advanced to such a level that people no longer need the fastest chips unless they're running data centres or managing high-end graphics and video.

Instead, the fastest growing market segment in the computing industry is netbooks, neutered laptops that can access the internet and carry out word proce ssing but are very little use for anything else.

The same is true for phones. Nokia is expecting a downturn and Motorola's results show just how quickly businesses and consumers have decided that a new mobile phone is not a priority any more.

At the same time a host of Far East manufacturers are pumping out basic 2G phones at a fraction of the cost of their western equivalents. The technology to build such devices is established and cheap, so when it comes to sales volume the big four phone manufacturers - Nokia, RIM, Apple and Motorola - are left by the wayside.

The situation is dire for companies used to people upgrading their mobile phone every year or so. Faced with a choice of spending money on a device, or living with what you've got, people are choosing the latter.

The current economic situation is making the situation worse. People will no longer buy technology just because it's the latest thing. Instead, businesses and consumers are taking a measured approach to buying, asking the key question: Is it really worth it?