WIRELESS INTERNET MOMENTUM BREWING TROUBLE FOR NOKIA
by Lynnette Luna
Telephony, Apr 15, 2002
Verizon Wireless' plans to launch mobile Internet services based on BREW
technology could derail the momentum Nokia finally established in the CDMA
handset market.
The advent of BREW — or binary runtime environment for wireless, a
Qualcomm-developed wireless Internet platform — runs counter to Nokia's plans to
sell a unified portfolio of handsets based on J2ME (Java 2 Micro Edition) and
Symbian operating system devices, a core part of its Series 60 line. But at least one
of its largest CDMA customers, Verizon Wireless, will launch BREW-based service
nationwide next month. Verizon sees a long-term strategy with Java applications
eventually running over a BREW platform. A Verizon spokeswoman declined to
comment about how that might change the dynamics of the carrier's relationship
with Nokia, but analysts say it could strain the bond.
“This could be a potentially serious disconnect Nokia needs to address if it wants to
maintain its momentum,” said Bryan Prohm, senior handset analyst for Dataquest.
BREW currently is supported only by Qualcomm's CDMA chipsets, although
Qualcomm has indicated it is committed to enabling competitors' chipsets and other
air-interface technologies with BREW technology. Nokia makes its own CDMA
chipsets, and adding a BREW capability could cost more in R&D and licensing fees to
Qualcomm.
“[BREW] could be problematic for Nokia,” said Mark Roberts, analyst with the
wireless communications technology practice at Wachovia Securities. “If they
support BREW, it will be as they have typically approached CDMA. They will do it
because they have to, not because they want to.”
Nokia's primary focus today is on developing J2ME-based handsets, but the Finnish
powerhouse is willing to work with its customers to support their technologies, a
Nokia spokesman said. Last month, Nokia introduced two new models of CDMA 1X
handsets, one supporting J2ME, that will hit the market in the second half of this
year.
Nokia, which currently has a worldwide handset market share of more than 30%,
has a poor history when it comes to CDMA. The world's largest handset maker
struggled in 1999 and 2000 to overcome technical issues that prevented Verizon
Wireless from purchasing the manufacturer's CDMA handsets. Sprint PCS stopped
selling Nokia phones altogether and has declined to sell any models to date.
In late 2000 and early 2001, Nokia made a turnaround of sorts by partnering with
Telson Electronics in Korea to target the Korean CDMA market. It also opened more
R&D and support centers, and focused heavily on performance.
Last year, Nokia made inroads with Verizon, selling large volumes through the
carrier in the fourth quarter, according to analysts. Nokia even agreed to
incorporate an OpenWave WAP browser instead of its own browser in the 3285
model.
Jorma Ollila, chairman of Nokia, told analysts in January that he was pleased with
the growth of Nokia's CDMA market share in 2001, which reached double digits.
“We will see 1X in volumes at the end of the second quarter,” Ollila told investors
during the company's first-quarter conference call. “We will have about 20% of the
global market in the near future. We have our act together, so we're making solid
progress.”
And while Nokia can sell into CDMA markets such as Latin America, Korea and soon
China, the U.S. market remains the biggest market for CDMA. It also is the most
competitive, with cutthroat wholesale pricing on all wireless devices. Designing
one-off solutions like BREW in that environment could be a difficult task.
“The CDMA market across the Americas is a critical piece of Nokia's long-term
success because competitors in GSM are going to expand quickly in 2002,” Prohm
said. “More of the Europeans and Japanese are coming to the U.S. market. GSM is
going to be more competitive in the states than CDMA has ever been.”
Still, it remains to be seen just how successful BREW may become. Sprint PCS is
running in the J2ME camp, while other CDMA operators — including Leap Wireless —
have not yet decided whether to embrace BREW. In the end, Nokia may be forced
to decide just how important Verizon is to its overall CDMA strategy. |
