Thanks for the plug Eric. I try to limit my posting on message boards, as they can get to be an addiction, but occasionally I can't help myself. I see two main misunderstandings that have created the investment opportunity in NOK.
First, the mobile device market is a closed cartel, not an open competition. Nokia, Motorola, Samsung and SonyEricsson are on the inside, Siemens has one foot in and one foot out, and everyone else is on the outside. New vendors without patent rights, volume or experience with the rapidly expanding complexity of these products have NO chance. Cumulative royalty burden for players with no relavant IPR tops 10% of sales in GSM and double that for UMTS. Many players, particularly Asian, are currently operating without valid IPR licenses - the big patent holders are moving to resolve this. Note Ericsson's suit against Sendo and Nokia's suits against Vitelcom and Sagem. Action against LG, Sharp and others could follow.
Second, Nokia is greatly advantaged, even within the insiders club. Cost structure, logistics, R&D leverage, experience, patent ownership, brand, distribution, software skills - Nokia is top of the class in all of these things. Yes, Nokia got caught blindsided, as I describe in the post that you have referenced, but it is systematically working to assure that it will never be too inflexible to respond to market conditions ever again. IMHO odds are very high that Nokia takes market share and increases margins this year vs. last in a strongly growing handse market. |
