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Phone manufacturers learn to cope with ash cloud

A build-up of inventory at the end of the first quarter has helped mitigate delays, according to Gartner

By Mikael Ricknäs and Dan Nystedt, IDG News Service
April 21, 2010 09:41 AM ET

IDG News Service - Most mobile phones are shipped on airplanes, which has made deliveries vulnerable to the ash cloud that has spread from the Icelandic volcano Eyjafjallajökull.

At this point, the impact on distribution has varied among vendors.

A Swedish reseller has suffered short delays so far. Phone manufacturers have rerouted their shipments to countries where the airports have remained open, and then sent the phones via trucks to their destination, according to Daniel Lindholm, CEO at Swedish reseller The Phone House.

The switch to trucks has resulted in a three-day delay, but that can be handled with The Phone House's current inventory, Lindholm said.

There was a small build-up of inventory during the end of the first quarter in Europe, and that has helped phone manufacturers during the transportation mayhem caused by the volcano, according to Carolina Milanesi, research director at Gartner, whose new iPad was supposed to arrive via UPS from the U.S. today, but is instead stuck at an airport in Spain.

Most phones come to Europe from Asia, and Taiwanese smartphone maker High Tech Computer (HTC), which ships its devices by air, said the air transportation trouble in Europe haven't affected its shipments so far.

"We ship by air but we don't ship every day," said Maggie Cheng, an HTC representative. "There is no shortage of HTC phones now and we don't anticipate any."

Europe is one of HTC's most important markets, accounting for nearly a third of its revenue last year. The company had also slated shipments of its latest smartphones, including the Android-based Desire and Legend, as well as the Windows Mobile-based HD Mini, to Europe in March and April.

However, Swedish operator 3 has seen an impact on the availability of the Desire. The shortage is mainly caused by the Desire's and the Nexus One's popularity, but the ash cloud has aggravated the situation, according to a spokesman at 3. The devices are now expected to become available again on May 3, according to its Web site.

In general, the ash cloud hasn't had an impact on availability of other phones, the spokesman said. Devices like the iPhone 3G and Sony Ericsson's new Xperia X10 are shipped within two or three days, according to 3's Web site.

Executives in other Taiwanese electronics businesses weren't so optimistic. Terry Gou, chairman of the world's largest contract electronics maker, Hon Hai Precision Industry, said the air cargo situation in Europe will definitely have some impact, but that it's too hard to tell now because the volcano remains active. He was speaking to the media on the sidelines of an industry gathering in Taipei.

The impact will largely depend on what happens next, according to Lindholm. On Wednesday, things were improving -- 21,000 flights are expected to take off, compared to 28,000 in the previous week, according to a statement from Eurocontrol, the European organization for the safety of air navigation. On Tuesday, 8,000 fewer flights took off, Eurocontrol said.

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