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MWC 2012: the smartphone stars come out to play

All eyes turn to Barcelona as the 2012 Mobile World Congress gets into full swing

One of the more dramatic moments at this year’s Mobile World Congress – the industry’s monster annual get together in Barcelona – came when Vodafone chief executive Vittorio Colao had to be evacuated, along with a room full of journalists, from the company’s pavilion.

The building had buckled and was being propped up by a forklift truck. Collapsing, as Colao quipped, under media pressure.

Meanwhile, the Chinese were out in force. Huawei, the network equipment maker, took over an entire pavilion the size of a bus garage. Security guards in sunglasses barred entrance to anyone who did not have a meeting.

Huawei used Barcelona to launch a phone and a tablet computer with “quadcore” processors, designed in house, and so powerful no phone has a use for them yet.

By next year, the company wants to treble handset sales to 60m, a number that could turn Huawei into the fourth largest smartphone maker overnight.

While the East is in the ascendant, with Samsung having seized top spot in the smartphone race last year, the European companies that created the mobile phone industry are indeed under pressure.

Nokia has been left trailing by Apple and Samsung, and cost cutting saw the last of its European factories closed, with production now largely in Asia. Meanwhile, Europe’s big five mobile operators are starting to feel the pinch of regulator imposed cuts to call prices.

They gaze longingly at Apple’s 0 (£314) share price, the near 0bn cash pile it has amassed, or at Google which just achieved its first bn revenue quarter. These fortunes were built using their networks, but the profits are not spilling back into Europe.

Telefonica and a number of other operators, faced with declining income and a need to ramp up investment in order to carry the internet traffic being generated by Apple and Google customers, have been cutting dividends.

They are no longer the cash cows they once were. Google chairman Eric Schmidt’s comment at Barcelona that the mobile operators are being “regulated to death” overstates the case though. France Telecom still has margins of over 30% (before tax and the spend on its network), while many other European operators have margins of 40% and above.

They may need a breather from new price cuts as money is ploughed into building faster networks, but anyone using their phone abroad will know that competition alone does not always deliver a fair price for the customer. Regulators still have a role to play. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds