Mobile phone prices expected to fall - why all the fuss?

"Nokia posts 29% hike in third-quarter profit but shares fall after the Finnish company says phone prices will drop. Nokia said Thursday its third-quarter profit rose 29 percent, beating expectations, but its shares fell nearly 7 percent after the company predicted phone prices will fall....
"We expect Nokia’s average selling prices in the fourth quarter to decline sequentially,” said Nokia CEO Jorma Olilla. “This is primarily because mobile device volumes from Latin and North America, where low-end products predominate, are expected to represent a significantly higher proportion of Nokia’s overall device volumes in the fourth quarter, compared with the third quarter.”
Nokia said it grew its market share by one point to 33 percent over the course of the year. Nokia also raised its forecast for global cell phone growth. The company said it expects the overall mobile phone market to reach about 780 million units for the full year, up from its previous forecast of 760 million, and an increase from last year’s 643 million." in Redherring
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Sometimes I am surprised the way the markets (financial markets, in particular) react to statements like this. That prices will be squeezed and profit will slimmer down is not news – it is a fact that everyone is expecting to happen sooner than later. Think back at what happened in the PC market – today you buy a PC for a fourth of the price you had to pay in the early 90s. Technology evolves, but so does competition – good news, in particular for the consumer. Price competition is only healthy.

Nokia, better than anyone, knows it is not the sales of smartphones that bring the big bucks, but the high volumes of entry level (and increasingly, mid range) headsets sold in emerging markets like China, India, Russia, Mexico, Brazil, etc. The cheap mobiles make the wheel move on. Ericsson (today Sony Ericsson, result from a joint venture with Japanese giant Sony) disregarded the entry-level market in the 90s and the result was catastrophic - the company was on the 90s the market leader, today it is ranked in a 5-6th shy position.