Nokia's Next Hurrah
Tara Murphy, Forbes.com, 06.15.01, 2:45 PM ET
NEW YORK - Nokia says the troubled economy and waning demand for new handsets are putting a big chill on its second-quarter results. Until the industry warms up to the next generation of phones later this year, the telecom giant's sales and margins could remain frosty.
Demand for phones will stay weak through the second half of 2001, but the outlook should improve in December. "You have … the holiday season, and, secondly, we will have a new product cycle," says Tim Long, analyst at Credit Suisse First Boston. That new product will be built on the so-called 2.5G option, or global packet radio service (GPRS), which enables high-speed wireless Internet service.
In Europe, BTCellnet--a segment of British Telecom (nyse: BT - news - people)--and Vodafone (nyse: VOD - news - people) have launched products with GPRS technology.
Expect to see the first wave of Nokia (nyse: NOK - news - people) products in September, which will likely drive the company's growth. Long expects Nokia to ship about 2 million to 3 million units in the fourth quarter of 2001.
Cell phone makers must continue to upgrade their products if they want to remain a growth business, says Charles Disanza, analyst at Gerard Klauer Mattision & Co.
"At some point, annual net additions to the base are going to flatten out and actually decline as you get to 70% penetration," says Disanza, noting that handsets are already heartily embraced by consumers globally. For example, Italy, which boasts one of the highest rates of cell phone usage, has about a 75% wireless penetration.
On June 12, the company's stock fell 19%, to $23.27, after warning that year-over-year sales growth for the second quarter would fall below 10%. The company, which had first-quarter revenue of $8 billion and earnings of 20 cents per share, said if weaknesses continued in the economy as well as in demand and capital spending, the outlook for the second half of 2001 could be shaved.
Investors took Nokia's warning as a foreboding sign that its competitors, Ericsson (nasdaq: ERICY - news - people) and Motorola (nyse: MOT - news - people), have a tough road ahead and shot the stocks down 3.6% and 5.7% respectively. "The Ericssons and Motorolas have much more inventory in carrier channels than Nokia, and they've also been cutting the prices of their products more aggressively because their products haven't been selling through the channels," says Long, referring to the soft market's impact on Nokia's smaller rivals.
For the second quarter, Long sliced his year-over-year revenue estimates for Nokia to 5%, from 20%. He predicts similar figures for fiscal year 2001. Meanwhile, Credit Suisse First Boston expects shipments to tally 400 million to 420 million units this year.
Nokia says its network business' revenue in 2001 will be flat compared to a year ago, but Long says it continues to capture market share and attributes weakness to industrywide problems, not company blunders. The unit accounts for roughly 27% of its business.
"The only impact on the infrastructure business will be economy, capital markets impact on carrier spending as well as some potential delays due to some technology transitions."
On June 13, Nokia struck a $680 million deal with Brazil-based operator Telemar to supply the country's initial global system for mobile communications, or GSM, network and GPRS technology.
But Nokia's guidance for stagnant revenue growth in its network's business could spell weakness for Ericsson, since it's heavily exposed to the telecom equipment market. Merrill Lynch and Lehman Brothers cut fiscal 2001 and 2002 earnings estimates for Ericsson on June 13, one day after Nokia's warning.
"If something is hitting Nokia on the infrastructure side, it's probably going to hit Ericsson, because they're almost twice as big of a player and they're everywhere," Long says.
forbes.com
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Jordan: Fastlink announces first call using GPRS technology on a live GSM network
15 June 2001
AMMAN (JT) -- Fastlink has claimed a milestone for broader-band communications with its announcement of the first end-to-end demonstration of General Packet Radio Service (GPRS) capabilities. The demonstration used a smart GPRS phone to connect a laptop computer to the Internet at the speed of 30Kbps (Kilo bits per second) and included web browsing and downloading data, according to a statement from Fastlink.
Fastlink revealed that it had first tested the new technology on a live test network, successfully placing its first GPRS at midnight June 3, before moving its trials to the real GSM network where it met further success. Pending further trials involving a group of 100 users, Fastlink promises a full-fledged commercial roll out of its GPRS services before the end of the year.
"Such step-by-step approach to the deployment of GPRS will give Fastlink a competitive edge in terms of speed and seamless rollout of the service. This early, yet surely, deployment of GPRS will place Fastlink and Jordan in a wireless technology leadership role," said Haytham Fatayer, system engineering manager at Fastlink.
GPRS is an advanced GSM (Global System for Mobile Communications) bearer service utilizing high speed, packet switched technology that allows for always-on Internet access and data transmission speeds of up to 115 Kbps. The technology is considered a stepping stone to broader-band third generation (3G) wireless telephone networks set to revolutionize the notion of telecommunications in the years to come.
"Fastlink is once again taking technology forward in Jordan at Internet speed, leading the way with the first implementation of GPRS wireless data. The GPRS trials conducted successfully is another example of Fastlink's constant commitment to keep Jordan on a par with the latest technological advancements in the world," said Michael Dagher, president and CEO of Fastlink.
"These trials underline Fastlink's capability to provide a true end-to-end GPRS data solution, and their success gives us full confidence in the reality of high speed mobile Internet," he added.
For mobile users, the launch of GPRS will bring the enjoyment of continuous connectivity to the Internet, and open up a host of new applications accessible through laptop computers, smart mobile phones and other handheld devices. It will usher in such applications as: Advanced access to Internet and email; access to corporate databases; e-commerce, telemarketing and stock quotes; information services including newspapers, weather reports, yellow pages; location based services including: Maps, tourist information, vehicle tracking and traffic information; entertainment and gaming; and still video image transfer.
The other main advantage of GPRS is that customers can afford to be continually connected to the Internet via their mobile equipment, and will only be charged for usage rather than time online. Furthermore, the new technology allows for innovative forms of billing based on an entirely new set of criteria including time of use, volume of data exchanged, grade of service, bandwidth allocated, access to value added content, number of transactions completed, or different combinations thereof.
"GPRS brings faster speed for both receiving and transmitting data. In Jordan, it will significantly increase the speed of mobile data communication from the current 9.6 Kbps to 30 Kbps, and then to 115 Kbps as available technology progresses," said Fatayer. "Customers can be continually connected but they will only be charged for what they do on Fastlink's network rather than how long they take to do it."
zawya.com
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Talking about the third generation
By SHAUN MCFALL
Network World, 06/04/01
3G is a specification developed by the International Telecommunication Union for the third generation of mobile communications technology, (analog cellular was the first generation, digital PCS the second). 3G digital cellular technology promises increased bandwidth: up to 384K bit/sec when a device is stationary or moving at pedestrian speed, 128K bit/sec in a car, and 2M bit/sec in fixed applications.
GSM (Global System for Mobile Communications) is an open, nonproprietary system that is the dominant cellular technology throughout the world today. GSM uses a variation of the Time Division Multiple Access (TDMA) protocol. Data is digitized and compressed, then sent down a channel with two other streams of user data, each in its own time slot. It operates at either the 900-MHz or 1800-MHz and 1900-MHz frequency band.
Another so-called second-generation wireless air interface is CDMA (Code Division Multiple Access). CDMA is a form of multiplexing, which allows numerous signals to occupy a single transmission channel, optimizing the use of available bandwidth. The technology is used in cellular telephone systems in the 800-MHz and 1.9-GHz bands.
Current circuit-switched GSM networks transmit data at 9.6K bit/sec or up to 43.2K bit/sec using multitime slot high-speed circuit switched data (HSCSD) upgrades. GSM's 3G counterpart, Wideband Code Division Multiple Access (WCDMA), offers much higher data speeds. WCDMA can support mobile voice, images, data and video communications at up to 2M bit/sec (local-area access) or 384K bit/sec (wide-area access). The input signals are digitized and transmitted in a coded, spread-spectrum mode over a range of frequencies. A 5 MHz-wide carrier is used, compared with 200 KHz-wide carrier for narrowband CDMA.
In fact, 3G technology applies equally to all standards that are being considered, including CDMA2000 in the United States. CDMA2000 can support mobile data communications at speeds ranging from 144K bit/sec to 2M bit/sec. Deployment is in the planning stages.
GSM-based packet radio services (GPRS), already extremely popular in Europe, are being rolled out now in the United States. With GPRS, datastreams are broken up into packets of data rather than the continuous stream of GSM circuit-switched networks. Packetized GPRS offers "always on" connectivity versus GSM, where users pay if they occupy a channel and don't transmit data or voice. GPRS is central to the promise of mobile Internet capability, delivering voice, video and data to subscribers at up to 115K bit/sec. In Europe, GPRS-equipped handsets are projected to be available for the mass market by early 2002.
The next stage in GSM evolution is Enhanced Data rates for Global Evolution (EDGE), with potential 384K bit/sec capability. Developed specifically to meet the bandwidth needs of 3G, EDGE is a new modulation scheme for the air interface that retains the basic frame structure of GSM and uses GPRS packet data protocols. EDGE is more important to GSM providers that have not or could not acquire the 3G license. As such, EDGE may well be a step in which the 3G license holders will skip in their evolution from GPRS to 3G.
Handset manufacturers are racing to deliver entry-level 3G cell phones that will deliver data, e-commerce, wireless Internet and intranet access to users anytime, anywhere and which may eventually replace much of what is now done on a desktop PC, laptop or a simple PDA.
Multimedia Messaging Service (MMS) may be the first killer app. MMS lets users record text messages synchronized with audio and video, and transmit them in non-real-time to cell phones and other hand-held devices. Handset manufacturers and application developers are also teaming to deliver real-time, interactive, multiple player gaming over a wireless device that will support 2.5G and 3G technologies.
Packet-based services present new challenges for carriers that are used to billing calls based on time and distance. Now they're faced with the need to measure, track and bill for information as digital packets of data.
However, since these enhanced service-level strategies are still in development, operators will need to tighten their alliances with infrastructure suppliers to try to distribute the initial costs of their spectrum investment. Their initial concern is to limit the costs for the construction of a new network that supports up to three times the transmission capacity of their existing 2G infrastructure.
A higher-capacity 3G network is a parallel network, requiring different base stations and many new and additional sites. In many cases, 3G base stations will be co-located with existing lower-capacity GSM base stations, thereby leveraging existing sites, towers and backhaul links.
As an interconnect solution for base stations, microwave radio can be installed, commissioned and redeployed easily and quickly, and provides a high degree of flexibility in terms of distance and traffic capacity. Wireless enables newly licensed operators to self-provide backhaul links without the need to rely on leased circuits from competitive, incumbent operators.
McFall is vice president of product marketing for DMC Stratex Networks. He can be reached at Shaun_McFall@dmcwave.com.
nwfusion.com
Sorry, nothing about EDGE, sort of like the mirage you see when driving in the desert with Joshua trees and sand, like U2, (The Joshua Tree the biggest U2 album ever? u2faq.com but when you get there, there is no there there, not even vapor. Can not use the term vapor ware if no vapor? |
