Actually, I'm an unbiased observer providing balanced commentary on the industry, not a spokesman for any particular thread or commpany. Anyway, full marks for Ericsson for pulling off the T28 offensive. Announcing a model half a year from production could have backfired, but they handled it well. There was a sense that the company had already taken a beating and as soon as the markets saw a plausible turnaround story, they pounced. There's definitely a switch from Nokia to Ericsson going on right now.
Some weak spots: T28 is largely a response to the 61xx series, not a move forward. The stand-by time is shorter than the industry benchmark from February 1998. The design is almost identical to E's 1996 platform. The display still has two lines of text, while Motorola, Qualcomm and Nokia have switched to five lines. The heavy hype will cannibalize the sales of existing Ericsson models in the next six months.
Ericsson is now using up the buzz from the summer model launch to fuel stock price gains - Nokia has not revealed their line-up. I think the whole premise of "Ericsson hits back" is more than a little premature, since we don't know what the competitive environment next fall will be. Ericsson was the first major manufacturer to announce a voice dialing in a major product - but that does not mean it will be the first one to sell such a product. Nevertheless, the markets are now looking at T28 and comparing it to phones currently in the shops.
What I thought was the most significant number in Nokia's result was the 114% sales growth in mobile handsets. It tells us that Motorola has not been able to slow down Nokia's sales. And it tells us that Ericsson's steep discounting has not forced Nokia to follow suit. The price pressure generated by Ericsson's 30% price erosion has not had much impact on Nokia. I think the company now has enough brand strength to sidestep the challenge from discounters.
Nokia's 1Q consensus is really low. I have a hard time figuring out where the momentum from the 114% growth is going to dissipate in three months. The crucial news from the T28 announcement was the timing - it gives Nokia the second quarter of 1999 as a bonus. Motorola is going to get optimal conditions for their V series launch: Nokia's 61xx is starting to age and Ericsson is out of the picture in the spring.
Ericsson is talking to investors in London today. Next week it's Jorma Ollila's turn (Feb. 9). It's a possible moment for some product introduction, especially if the markets force it on Nokia. More on debry.com.
Tero
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