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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Peter J Hudson who wrote (5346)	6/8/2000 1:07:00 PM
From: tero kuittinen	Read Replies (1) \| Respond to of 34857

Betting all on IS-95 put Samsung on the map - and now it's rubbing Samsung out. This cycle would have been appreciated by the Ecclesiastes. Unlike Nokia, Samsung never stopped depending on its domestic market for a hefty chunk of its sales - which is now turning into a major migraine. Korea has been a phone market on steroids until this spring; the handset subsidies have basically made phones free for consumers. This has seriously distorted the market. There has never been anything remotely like free market competition in Korean phone biz: operators decide which models to subsidize and how much. Cozy backroom arrangements with vendors have turned the situation into a hothouse of borderline grift. In contrast, consumers in unsubsidized markets like Finland have always paid the full price of the phone they're buying. Sales growth tracks real demand. Market share reflects the real appeal of various brands. This is the summer when Samsung's dependence on the murky Korean market finally becomes a liability. As subsidies are finally phased out, sales growth may simply grind to a halt - because this move coincides with the Korean market penetration hitting 65%. Korean phone market will finally have to adapt to free market competition. And Samsung has to finally stop depending on artificially souped-up Korean sales growth to jack up its global numbers. Kicking the Korea habit cold turkey will be hard - because Dataquest's 1Q 2000 figures indicate that Samsung's European GSM offensive is the most spectacular flop since "Ishtar". Last year, Samsung finally realized that Qualcomm's talk of the imminent CDMA boom in Russia, India and China is a vile scam. Samsung responded by a delayed GSM crash program; new models in all style and price ranges, backed by a heavy ad budget. Apparently the panic move is now backfiring; the costly program is not making the slightest dent against the resurgent Siemens and Alcatel or the entrenched Nokia. Samsung has zigged when they should have zagged and vice versa - they kept out of the crucial GSM boom in Europe, Russia, Africa and Asia during 1995-1998. Now they are trying to make a come-back... just as Siemens and Alcatel are moving in on Motorola and Ericsson in an almighty battle. Samsung finished with little more than 6% global market share during the first quarter of this year; an unmitigated disaster considering the cost of the GSM initiative. Now that the ambitious 1999 range of GSM phones starts aging, backlog has to be written off or sold at such a steep discount that the Samsung brand will be mud for years to come in GSM markets. Missing the boat to China; shooting itself in the foot in Europe; facing a sales stall in Korea. All in about half a year. I think that the Samsung execs are giving Bernie Schwartz a run for his money for this year's "New Coke" award for management excellence. I'm expecting Nokia GPRS phones in November or December; maybe not in large volume. Motorola and Ericsson may get the first phones out sooner - but that is not necessarily a smart move. The first generation of GSM-900/1900 models was not a commercial success; that came with the models that were competitive in price and weight. Tero