Who to believe Nokia or Ericsson IBM or Sun Microsystems Microsoft or Siebel Rarely have the fortunes of technology companies appeared to differ so widely. Nokia, the world’s largest maker of mobile phones, this week reported better-than-expected sales for the latest quarter. holding out the prospect that its market share would soon reach new highs. By contrast, Ericsson, a rival, was full of gloom. Reporting bigger losses than expected, the company said that sales of its mobile phones were likely to tumble by 20% this year.
Motorola, another maker of mobile phones, is in a similar boat. On October 15th, the company reported a return to profit in its most recent period after a run of losses, but lowered its forecasts for the rest of the year and for 2003. Demand in wireless, broadband and semiconductors continued to slow, said the company. Unimpressed, investors marked down Motorola’s shares to a ten-year low.
The pattern of haves and have-nots is repeated in software too. While Microsoft was in chipper mood this week—revelling in a 26% increase in sales and a doubling of its profits after tax for the quarter to the end of September—Siebel Systems and PeopleSoft, two of America’s leading suppliers of business software, were down in the dumps. While PeopleSoft managed a modest profit, Siebel reported a loss for the last quarter and said it expected the present quarter to be equally tough. Despite (or because of) their contrasting fortunes, Microsoft and Siebel announced a joint marketing deal on October 21st: Microsoft is to sell Siebel’s customer-management software through. NET, its web-services product.
Why are some companies doing better than others One reason is that, now more than ever. those that are competitive seem to be punishing those that are not. Nokia has stretched its lead over Ericsson which, in addition to lower sales of mobile phones, has suffered from the severe fall in demand for telecoms infrastructure, its biggest business. There was. however, some good news for Ericsson’s shares on October 18th, when the company said that the infrastructure unit came close to breaking even in the most recent quarter.
Cost-cutting has also helped SAP, Europe’s largest developer of business software, has reduced its expenses by 8%. As a result, its margins have improved a lot compared with those of its competitors. Microsoft has employed different tactics. It has capitalized on customers’ fears that the cost of upgrading their software, such a s the company’s Windows XP operating system, could climb. Many have rushed to buy now in case prices rise. In tune with the times, Microsoi’t is also keen to demonstrate how its products can save its customers money. Understandably, this is winning its sales.
The pattern of haves and have-nots in software industry refers to the fact that ().
A. Microsoft is prospering while Siebel and Peoplesoft are still losing ground
B. Microsoft dominates the market while Siebel and Peoplesoft are cast out of the market
C. Microsoft has software for various purposes while Siebel and Peoplesoft have only business software
D. Microsoft strikes a marketing deal with Siebel and refused to cooperate with Peoplesoft
