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'Umble, Very 'umble Nokia bids to be the next Sony

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Analysis Hearing Nokia's senior management profess to approaching new markets with "humbleness" for the fourth time before breakfast on Monday almost made me wish I was listening to Dr. Irwin Jacobs.

Well, not quite - but it did bring to mind a whizz-bang presentation the Qualcomm CEO gave at a financial analysts' conference several years ago. In a few minutes, the arm-wrestling chieftan had whipped the room into such a state of evangelical fervor it was easy to forget the fact that Qualcomm's progress might be impeded by an already established global digital cellular standard.

You might wonder what kind of pyrotechnics Nokia executives might have set up if they had been led from Mountain View, not Espoo, or Tampa Bay rather than Tampere. If anyone is permitted to gloat, it's Nokia. Their handsets still lead the pack in terms of usability, functionality and style, and their deep tentacles into both the standards tracks and the carrier business put the company at the head of the industry. In the nineties Nokia overtook its Swedish neighbors LM Ericsson despite the latter's sixty year head start. But gloating just isn't Nokia's style.

(Nokia's most dazzling communicator is an American, Erik Anderson, who didn't disappoint us this week. But then it's equally difficult to imagine the Qualcomm founder adopting the ostentatious humility of Dickens' Uriah Heep.)

Report Card

Looking past Nokia's understated presentation, the most important thing the company wished visitors to take away was a subtle shift from being a phone manufacturer to a kind of Nordic Sony. The word 'phone' hardly features in Nokia presentations. They reckon they have mobile gaming and mobile imaging licked, and the emphasis is on subtle 'lifestyle accessories' such as the Nokia music stand. Called, in typical Nokia style, "Nokia Music Stand," this is one of the small sideway moves that a consumer company needs to make. (Like most 'lifestyle' consumer gadgets, it's utterly superfluous - but extremely well thought out. It's a bedside charging cradle disguised as a pair of beefy speakers - into which you drop your Nokia FM radio phone. There's no chance of missing the alarm clock in the morning with this next to you).

Every other year at Comdex, Bill Gates announces some consumer electronics initiative or other, that generates acres of newsprint but has been forgotten by Christmas. A Bob, or a Spot. How he must wish that Microsoft could produce something as neat as this. But then the Gates of the world [how many are there? - ed.] are doomed to repeat the same mistake: anything on the assumption that people want to buy technology. Consumer manufacturers really, want to feed the punter's id, ideally in the form of a sub-$99 oven meal.

Hardcore gamers make a good case arguing why Nokia's N-Gage will fail, but connected handheld consoles represent a new market, and Nokia can afford a few wrong attempts. Intel's radio investments might seem equally whimsical, but as we concluded here, the company would be crazy not to invest. A disastrous radio business won't sink Intel, and a badly executed games strategy won't sink the Finns.

3G, whenever

More pressingly, Nokia this week said that they expect volumes in the 3G handset business but not before the second half of next year. Not surprisingly, given the technical problems associated with W-CDMA, there hasn't been a compelling 3G handset yet. Operators have barely begun to market 2.5G GPRS to consumers, and the major European networks only reached interoperability agreements vital to the success of picture messaging this spring.

However, the 3G handsets are good news for some people, at least. Analyst company ABI, which pays close attention to the semiconductor business, reckons that at $400 3G handsets are almost three times the average selling price of $146 for 2/2.5G models, which "boost margin and content for IC [integrated circuit] suppliers." No shit, Sherlock.

Interestingly Nokia chose a somber cut for its mass market 6600 handset this week. No "flips, flaps, slides and folds," as Anssi Vanjoki told us on Monday. Nokia boasts more about its design pedigree these days, but sometimes good design simply means delivering the utility in a simple package. Or maybe Nokia is mindful, as some readers are, that persuading the IT department that a cameraphone can in fact be an effective business tool.

We were probably more impressed by the new 3100, or at least by what it represents. This is the the low end youth model, a humble Series 40, and it flashes like a fairground when taking an incoming call - which apparently the kids love. It boasts a similar, if not identical screen to the fashionistas' 7210, and that more than anything else indicates how far and how fast the mobile phone business is being driven. A couple of years ago this would have commanded a premium.

What does this mean? If Nokia face problems, they're the same problems that afflict the rest of the industry: ennui generated by oversold technology (WAP, 3G) and overproduction. In the aftermath of the Internet bubble, the technology companies deservedly took a pasting. It ought to be years before the tech sector earns investors' trust again. The best way to deal with a saturated market, with punch drunk consumers, is to stimulate demand, which makes the 3310 and the consumer accessories arguably far more important to the health of the mobile phone industry than 3G, or the Next Big Thing. Think of old fashioned, Keynesian pump-priming. ®

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