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The Executive School of the University of St.Gallen

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Prof. Winfried Ruigrok

Prof. Winfried Ruigrok

Dean

Dean of the Executive School of Management, Technology and Law and Director of the Research Institute for International Management at the University of St.Gallen (HSG) […]

Nokia and BlackBerry

The advantage of being based in large or protected markets

After the Microsoft-Nokia deal earlier this month, this will be the second deal involving the sale of a mobile phone maker based in a relatively open and relatively small economy. If this bid succeeds, BlackBerry may eventually be sold to a bigger producer (quite possibly based in Asia). The world’s largest mobile phone makers will then exclusively be based in very large markets (Apple in the U.S.), in protected markets (Samsung or LG in South Korea) or indeed in both very large *and* protected markets (ZTE, Huawei, Lenovo or TCL all in China).

Apple and Samsung have been leading the industry in terms of innovations, and observers are quick to point out that Nokia and BlackBerry have had their share of failures and disasters. Yet there is one aspect to this story that has received little attention. As the Financial Times pointed out on Sep 24th, a “vicious consolidation is well under way”. Mobile phone production today has taken on an importance not unlike that of computers in the 1970s or semiconductors in the 1980s: governments of large advanced countries all want to assure their future presence. Under such circumstances very large and protected markets offer their domestic producers invaluable country-specific advantages. Mobile phone makers from open and smaller economies inevitably will get trampled.

This blog post was also posted as an annotation on Financial Times online.