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Technology Stocks : Nokia (NOK)
NOK 6.160+1.5%Dec 8 3:59 PM EST

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To: Wyätt Gwyön who wrote (4602)5/7/2000 10:49:00 AM
From: tero kuittinen  Read Replies (2) of 34857
 
Dealing with multiple vendors can be very difficult - unless you coreograph the situation in advance and manage it competently. In plastic covers, Nokia has created a booming market for two important vendors, Eimo and Perlos. They are kept competing against each other and innovating new technological solutions to land the best deals.

The winner gets the high-end business, the loser is stuck with older models and lower margins. During the next round of bidding, the loser has an incentive to bid very aggressively to improve its position - the places may be switched and the cycle starts again. The result is the Nokia look of relatively complicated, intricate features like roller-ball navigation device, metallic keypads, aluminum insets circling the display and exchangeable covers that demand a very durable plastic parts produced by a high-precision injection moulding technology.

This dynamic, free market competition-oriented outsourcing approach works so much better than the archaic Motorola system based on the 1985 electronics manufacturing philosophy.

The ecology of vendors has been planned and managed with exquisite care. It has transformed many of the companies involved completely - the boring, troubled, unfocused 1996 firms like Eimo, Perlos and Texas Instruments are now dynamic mobile telecom growth engines.

The system has worked just fine - and it stops working if adding one new vendor suddenly disrupts this network by forcing expensive redesigns on several other vendors. We can speculate on how good the Nokia's CDMA chipset design team is - but we can't know until the year 2000 model range arrives.

Judging Nokia by looking at the 6185 specs is not reasonable. That model was not a priority when it was launched, because Nokia's Texas plants are working at full capacity just trying to meet the demand for the 6160, 6190, 5160 and 5190 models.

Tero

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