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Technology Stocks : Nokia (NOK)

NOK 6.645

-0.2%

2:47 PM EST

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To: Joar who wrote (4154)	4/13/2000 1:12:00 PM
From: tero kuittinen	Read Replies (1) of 34857

I'm suspicious about this argument: "When the product then gets older, the price decreases. There is nothing peculiar with that price reduction." T28 and 8210 started shipping within 4 months of each other. T28 is not an "older" model - it's the direct competitor of 8210. Moreover - T28, 8800 series and the digital versions of Motorola's V series will debut in North America simultaneously this spring. These three handset ranges all belong to the same generation; and they are all arriving to USA at the same time. In this situation, competing on price looks like moving downmarket. This is the same discount move Ericsson made when Nokia's 3210 low-end model hit the European and Asian pre-paid markets last summer. Ericsson responded by slashing the prices of its competing low-end phone. They can't compete in the long term by caving in every time Nokia launches a new phone. They will end up looking like a Walmart brand. This is bad enough in the low-end market; it's intolerable in the high-end bracket. You can't compete on price in the GSM market. Bottomfeeders like Alcatel, Philips and Samsung will always go lower, no matter what you do. The race to the gutter can't be won. Both Ericsson and Motorola got blindsided when 3210 arrived last summer and started selling out in the pre-paid market. Now they're both facing an identical challenge in the high-end market from 8210. Unless Ericy and Mot make a stand with WAP models and show that they can charge the same price for a phone that Nokia does they will have to rethink their handset strategy. The WAP sales are going to be the key test on whether Nokia's competitors can remain premium brands; they've lost the non-WAP market already. Tero

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