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Technology Stocks : Nokia (NOK)
NOK 6.745-0.4%2:31 PM EST
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To: Jim Lurgio who wrote (1159)11/10/1998 1:35:00 PM
From: tero kuittinen  Read Replies (1) of 34857
 

The worm has turned. When I predicted last spring
that Nokia's new models would have a big impact on
the US standards war the suggestion was brushed off as pure spin.

OK, we're beyond spin now. It's time for cold, hard facts. GSM is growing faster than CDMA in USA in the third quarter of 1998. There is one reason why a more expensive standard with narrow national footprint could put in a stellar 158% growth performance: the handset features that no other standard can match really matter.

It might be a good idea to

* stop referring to CDMA as the fastest growing
digital standard in USA.

* forget about that 50% digital phone market share
in USA for CDMA in 2003 - ain't gonna happen with
these GSM numbers.

* re-evaluate Nokia's position in USA - the GSM
resurgence will change the dynamics of the handset
business. This is where Nokia's decision to deliver their best and brightest models to GSM bears fruit: the growth of this standard in USA is turboboosted by the new 61xx and 51xx lines. No licensing fees and huge component volumes - the decision to bet big on GSM in USA was a Nokia masterstroke. They have exposed the vulnerable underbelly of CDMA - mediocre handset technology!

* stop dreaming about the ATT change of heart -
they have already talked about Nokia as their prime worldphone manufacturer. The convergence of TDMA
and GSM will give these standards an additional
boost from 2000 onwards.

Now that we have actual data about Nokia's impact
on GSM in USA we might all do well to contemplate
on the abyss between reality and conventional
wisdom. How many people made investment decisions
based on wildly optimistic projections about CDMA's superiority? How many assumed that by 3Q 1998
GSM's growth in USA would start to wind down? How
many have been totally blindsided by the actual
shifts in market place?

I find it ominous that the GSM growth rate news
have been studiously ignored at SI. Apparently CDMA proponents will not let facts mess up their
messianic view of Qualcomm. For average mobile
telecom investor this might be a good time to
re-evaluate how well their personal expectations
have matched up with reality.

Make some changes if you were surprised or dismayed by that 158% figure. You've been living in digital Pleasantville... and the colors are starting to seep in!

Tero
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