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Technology Stocks : Nokia (NOK)
NOK 6.790-3.4%2:09 PM EST
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To: JP Sullivan who wrote (1241)12/14/1998 7:55:00 AM
From: tero kuittinen  Read Replies (2) of 34857
 
It's over 1'000 US dollars even here in Finland, where the phone is manufactured for European markets. Nokia has taken a very hard line on the pricing - not even a 1% discount anywhere I've seen. Some punters predicted that the company would quickly introduce rapid price cuts after 8810 was launched, but Nokia is adamant about positioning this model as a genuine luxury product.

They're not interested in huge volumes with this handset - just building up their brand and having a niche hit with fat margins. In theory, one high-profile upmarket product should help the entire Nokia brand and lend the cheaper phones a touch of class... we'll see how well this conduction theory works in real life.

What is clear is that Ericsson is running a genuine risk of tarnishing their brand. The price cuts here in Europe are merciless and the once so classy 788 line is now a budget alternative. Discounting on this scale can cause permanent damage to the company image - especially as Nokia is currently pushing three luxury items: 8810, 6150 and 9110. For example, Nokia has been asking 700 dollars for the dual-band 6150, while Ericsson's dual-band flagship 888 is going for 30-40% less. Ericsson has no real executive models right now.

There is an undergoing shift in the way people perceive these two companies; it's getting close to Mecedes Benz/Volkswagen situation.

Tero
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