The Game Nokia Plays ...
NF,
<< Leaving stuff out (especially HSPA) saves them a few euros on their royalty expense line. >>
Leaving HSPA (HSDPA at the current time, since their 1st HSDPA product won't be on shelves till late Q1) saves them NOTHING on the royalty expense line, and since the market is tiny, and there are few services widely proliferated that support the increased transmission speeds and lower latency that the mass market is willing to pay for, it costs them no meaningful share.
You do realize I hope, that Nokia has been a prime contributor to HSPA development, and along with Motorola, they moved HSPA definition along in early 2000, well before QUALCOMM committed meaningful resources to 3GPP (mid-2001), and they partnered with Moto on the 1XTREME initiative in 3GPP2 which drew on the same concepts that they were evolving in 3GPP. I realize that this is contra to slides shown by a pop silicon manufacturer and wannabe R&D aggregator who counts on the majority of their faithful flock having a higher GQ than IQ, but such is life in the real wireless world's dominant ecosystem.
Nokia pioneered the much emulated platform build concept in mobile devices and since they did that they have evolved that concept through (at least) 5 generations of terminal platforms with one or two more in the hopper as we speak, always at least one complete generation ahead of any competitor. They mate the hardware with 4 distinct software platforms and for the mid-range those are Series 40 for feature phones and Series 60 for smartphones -- both in their 3rd edition -- and they have built and support a huge 3rd party development community (Nokia Forum).
First to market is not always best to market. It's all about right timing. Take a look back at Nokia's GPRS entry, or their UMTS WCDMA) entry. Look also at their contrasting EDGE entry, and WEDGE entry. Once you have done that ask yourself if Nokia right timed market entry while realizing they are the leading global supplier of GPRS deices, EDGE devices, WEDGE Devices and WEDGE/FI devices. Is their any doubt in your mind that they will not be the leading supplier of HEDGE and HEDGE/Fi devices by the time the market really is a market.
Nokia commits to volume silicon when interoperable network software is stable -- that's right timing -- and while the 1st stop on every silicon manufacturers road to market should be Ericsson's IOT labs, the 2nd should be Nokia's IOT labs, and the 3rd should be Siemens IOT labs (and Nokia Siemens Networks will combine those labs). Everything starts with the network, and that's why Nokia remains in the network business despite its tight margins and expensive talent resource demands.
<< Leaving stuff out >>
You are obviously not paying attention to what Nokia puts in mobile devices, at EVERY price point, and for every market segment. Their is literally no meaningful competition for their N-Series and E-Series devices on the high end. No manufacturer matches the functionality of their high end EDGE and WEDGE product range.
Take a detailed look at the features and functionality of the Nokia N95 HEDGE/Fi device that will ship in the following quarter and visualize the innovation that went into silicon which includes a multi-engine ARM11 based apps processor, software, and componentry to bring that device which features a HLOS with real time kernel to market.
Nokia competes reasonably well in the mid-range where most of their competitors crowd, although they would like to be -- need to be -- more dominant in that range. They totally dominate the low end even though they do not sell ULC devices. They also dominate the high end converged device segment of the market with a whopping ~50% share.
<< Isn't their game today to continue selling perceived phone "innovations" while minimizing the funds traveling towards SD? >>
Part of Nokia's game today is certainly to minimize royalty outflow while maximizing royalty inflow. That's what company's with huge R&D budgets and extensive IP portfolios do in this patent or perish world when innovative patent predators who shield themselves from cross licensing by not manufacturing whole product stalk the land.
Nokia's primary game today however is the same game they have played since they were a comparatively small ($3 Billion annual turnover) and unfocused conglomerate back in 1992 when Jorma Ollila decided to bet his company's future on mobile wireless telephony and transitioned it profitably over time to a market leading mobile wireless pure play. It is the game that allowed them to overtake and rocket past Motorola who once had 50% global share as the handset market leader in late 1998 and separate from the pack in networks to close somewhat on Ericsson.
As we entered this decade Nokia was the 6th largest comms equipment manufacturer as measured by annual revenue turnover, behind Motorola, Lucent, Ericsson, Nortel, and Siemens Comms. Today they are the largest and sport the largest market cap, and they are the most profitable. They also generate sufficient cash to buy back 5% of their shares per annum and pay a dividend with industry leading yield ad infinitum without denting their cash hoard. They are number two in mobile wireless networks, and in handsets they have the broadest mobile device product line, and industry leading mobile device margins. That's been their game, and the game is now to stay there by not becoming complacent, in a highly competitive market.
<< They may have exchanged their PET machines for metal stampers and added a designers touch to their marketing flare but that doesn't necessarily translate into technical innovative. >>
I'm sorry to say that your big picture appears to me to continue to be very out of focus. The only individual you are misleading is yourself. If you are invested in any wireless sector plays other then Nokia you owe it to yourself to develop better focus and to assess the competitive or adversarial threat they might pose to your fav's position more realistically, IMHO.
Nokia has consistently excelled at upstream innovation and at downstream innovation in hardware and in software, internally and in partnership and collaboration with others. and that's why they are a $45 billion corporation with an 80 Billion market cap today. Let me assure you that they didn't earn that position by exchanging "their PET machines for metal stampers" although they do have the most automated production and quality assurance lines of any manufacturer in the industry at their 10 strategically located handset manufacturing facilities globally.
Best,
- Eric - |
