Mobile phone companies consolidate while the smartphone market expands

In Japan’s second cell-phone merger this month, Fujitsu and Toshiba said Thursday they will merge their handset operations … NEC, Casio Computer and Hitachi merged their phone units earlier this month.

via Fujitsu and Toshiba to Merge Cellphone Units – DealBook Blog –

Mergers usually happen in a mature industry when there is excess capacity and decreasing growth.  In the mobile phone market we’ve seen several companies disappear or merge over the past decade:

  • Ericsson
  • Sony
  • Alcatel
  • Siemens
  • Casio
  • NEC
  • Hitachi
  • Fujitsu
  • Toshiba
  • Palm
  • Handspring
  • Motorola tried but failed to get itself acquired.

But we’ve just seen forecasts where the smartphone market is growing and is expected to continue growing at 40%. Why is there consolidation in a growing market?

The obvious answer is that none of the companies listed above had any significant smartphone businesses.  But that begs another question: why? Is the smartphone market so different than the mobile phone market?

If the answer is yes, then there is an implied asymmetry.  Asymmetry is symptomatic of disruption. Disruption then leads one to ask how the other incumbents will cope?