Visitors to the Mobile World Congress this week in Barcelona, used to the annual event’s grand product-unveiling spectacles, free refreshments and lavish parties, should lower their expectations this time around.
Europe’s carriers and network-gear makers, which typically dominate the showcase, are cutting back as debt loads and the continent’s contracting economy weigh on earnings. Expense cuts ranging from fewer headcount to eliminating free snacks signal the likes of Vodafone Group Plc (VOD) and Nokia Siemens Networks are focusing on business meetings rather than putting on a show.
That’s leaving more room for Asian and U.S. competitors to boost visibility in a move that reflects the industry’s shift in competitive landscape. As European technology companies are firing workers and selling assets, counterparts from China’s Huawei Technologies Co. to Qualcomm Inc. (QCOM) in the U.S. are reporting rising revenue and profit, fueled by increasing smartphone and tablet demand.
“What we see at the event matches the trends we have in the industry,” said Michael O’Hara, chief marketing officer of mobile carriers’ association and congress organizer GSMA. “Europe is the flatter piece of the equation.”
Huawei, Qualcomm and South Korea’s Samsung Electronics Co. are taking up the most space this year, together with European exception Ericsson AB. Their growing presence has bumped Alcatel-Lucent SA (ALU) and Nokia Siemens off the podium after years of leading the show, O’Hara said.
Organizers expect 70,000 attendees, up from 60,000 last year, underscoring the size of the opportunity to meet potential clients, partners and investors. How much companies spend to make an impact will mostly depend on the space they rent, how many executives they fly in, local advertising and, for some, on food, drink, and props. Last year, the event generated more than 300 million euros ($395 million) for the city.
“MWC is a hub, everyone is there,” said Olivier Piou, chief executive officer of smartchip-maker Gemalto NV (GTO), which will be promoting mobile-payment technology. “Companies go to show their latest innovations, show where their future lies.”
This year, Newbury, England-based Vodafone is cutting the number of executives and guests it sends to the show by 20 percent, and showcase only technology for corporate customers, getting rid of promotions and products for consumers, said a person with direct knowledge of the matter.
The company will have a smaller booth and do away with free snacks. Its reception area, which previously served chips, drinks and coffee, will be reduced to a minimum, the person said, asking not to be named because the plans aren’t public.
TeliaSonera AB (TLSN), Sweden’s largest phone company, is sending 15 percent to 20 percent fewer executives to the event this year, though it isn’t cutting its budget as a whole, said Masha Lloyd, a spokeswoman for its Spanish unit. Like last year, the Stockholm-based carrier won’t have a stand, instead renting meeting rooms for executives.
Nokia Siemens, the Espoo, Finland-based network-equipment maker, has rented a smaller stand in a different spot than in previous years, said a person familiar with the situation.
Huawei, meanwhile, is focusing on promoting its brand as it tries to sell more high-end devices with its own logo, rather than the carrier’s, said a person with knowledge of the matter. In last year’s most expensive display, Huawei built a 19-feet (5.7-meter) tall Pegasus statue out of 3,500 smartphones.
The company yesterday unveiled the Ascend P2, dubbing it the world’s fastest smartphone. The device has a 4.7-inch screen and a quad-core processor for higher Web-download speeds, and will start selling in the second quarter, Huawei said.
Huawei, China’s largest maker of telecommunications equipment, became one of the top five smartphone vendors in the world last year, behind Samsung and Apple Inc. (AAPL), which together made up half of the 216.5 million devices sold in the fourth quarter, according to researcher Canalys.
As part of its attempt to stay ahead, Samsung yesterday introduced the Galaxy Note 8.0, a tablet with an 8-inch screen that also allows users to make phone calls. Further blurring the line of smartphones and tablets, the device may compete with large smartphones as well as Apple’s iPad mini tablet.
The euro area’s economy shrank by the most since 2009 in the three months ended Dec. 31, a fourth quarterly contraction. The slump has hindered consumers’ ability to spend on phone packages, putting a further squeeze on carriers such as Telefonica SA (TEF) and Telecom Italia SpA (TIT), which are dealing with falling call prices and debt that has ballooned. Their budgets for network investments have suffered as a result.
The bigger companies’ woes are an opportunity for added visibility for companies focusing on emerging technologies, such as Gemalto and chipmaker NXP Semiconductors NV. NXP is sending as much as 40 percent more people than before and rented more space as it seeks to promote payment, transportation and shopping solutions, said Steve Owen, senior vice president of global sales.
To draw attention away from their reeling home markets, some of the big European carriers are set to highlight growth initiatives in other regions.
In one example, Telefonica and Deutsche Telekom AG (DTE) are among carriers set to introduce phones running Mozilla Corp.’s Firefox operating system, rival to Google Inc.’s Android and Apple’s iOS. The companies teamed up last year to market cheaper smartphones in countries such as Brazil and Poland. Huawei, LG Electronics Inc. (066570), ZTE Corp. (000063) and TCL Communication Technology Holdings Ltd. (2618)’s Alcatel One Touch brand are among manufacturers that have indicated that they’re planning to make such phones, according to executives at an event in Barcelona yesterday.
Nokia Oyj (NOK1V), the handset maker struggling to reverse falling sales, today introduced the Lumia 520 and Lumia 720 to broaden its smartphone line to lower price points. It also showed the dust- and splash-proof Nokia 105, its cheapest phone ever at 15 euros, as it targets markets in Africa, Asia and Europe.
In Spain, where consumers are faced with increasing unemployment, cheaper smartphones are catching on, according to Jean Marc Vignolles, the country head for Orange. Sales of Orange-branded phones are rising and the company may carry other affordable smartphones from makers such as Huawei, he said.
That’s another boon for Huawei, already benefiting from faster growth in phone markets such as China and outpacing its European network-gear rivals with affordable equipment.
“Older players in the market have difficulty announcing new things -- they come from a tough spot, are losing money,” said Lars-Christian Weisswange, head of the company’s devices unit in Western Europe. “We are growing nicely, we are profitable. We have positive news to tell.”