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

To: S100 who wrote (18066)	2/1/2002 10:19:08 AM
From: JohnG	Read Replies (1) \| Respond to of 34857

GPRS is DOA (Dead on Arrival). Missed its window. Who will pay for all those vendor financed networks? rd.yahoo.com*http://www.thestreet.com/_ yahoo/markets/tishwilliams/10007895.html The Wireless Revolution Is on Hold By Tish Williams Senior Writer 02/01/2002 09:21 AM EST Whatever happened to the general packet radio service, or GPRS, revolution? The 2001 holiday season was to be the first period in which all the top handset makers offered phones for the data-friendly service. European networks were supposedly in place, though phones came out a little later than some grumbling carrier CEOs would've liked. And North American wireless carriers were rolling out the service several cities at a time. Everything seemed to be falling into place to woo consumers back to the cell-phone kiosk to replace their old bread-and-butter Nokia with a jazzy new device that was small, had good battery life and could send and receive data at healthy speeds. Or so it seemed. In reality, Europe is still getting its networks up to snuff, working on the types of glitches that plague all new technologies. North America still lacks full coverage from any carrier. Nor is there a marketing push to convince consumers that they need phones that can send and receive messages and data. Reporting its fourth-quarter results, mobile-phone market leader Nokia (NOK:NYSE ADR - news - commentary - research - analysis) only vaguely described the millions of GPRS units it shipped in 2001 and nebulously referred to solid market share in the fourth quarter. Motorola (MOT:NYSE - news - commentary - research - analysis) expected to ship 5 million GPRS-capable phones in 2001, but fell short with just 4.1 million shipped by year's end. The handset supplier said it finished 2001 with 2.4 million more phones on order from 20 carriers, and attributed the slowdown in GPRS orders to a decline in GSM phone purchases from its customers. "Europe is the primary market, and it's just not happening," says Deutsche Banc Alex. Brown's Brian Modoff of GPRS. "In our view, carriers will be taking this year to fix it, which is discouraging, since carriers knew GPRS was coming since 1999." Bigger, Better, Faster GPRS is a technology upgrade for the mobile-phone networks that use GSM technology, the dominant standard in Europe and Asia. GSM was recently chosen by North America's AT&T Wireless (AWE:NYSE - news - commentary - research - analysis), and it also runs Cingular's network. With GPRS, however, networks are improved from being voice-focused to efficiently routing data traffic, giving mobile-phone users the "always on" connection for the quick delivery of instant messages and emails. Additionally, GPRS networks are supposed to provide faster data transmission rates. Carriers that run networks using Qualcomm-backed (QCOM:Nasdaq - news - commentary - research - analysis) CDMA technology also have an upgrade path for data, called 1X technology, which Verizon (VZ:NYSE - news - commentary - research - analysis) and Sprint PCS (PCS:NYSE - news - commentary - research - analysis) plan to roll out in the United States in mid-2002. The Yankee Group's Roger Entner estimates that the CDMA upgrade will allow data speeds between 40 to 80 Kbps. Doesn't sound super fast to you, oh connoisseur of T-1 data speeds? Entner explains that GPRS has only been capable of 20 to 40 Kbps speeds, roughly the same speed as a dial-up computer modem. Nonetheless, handset makers are counting on GPRS and new 1X phones to get the growing ranks of mobile-phone owners to consider chucking their old wares for something that uses data. Texas Instruments (TXN:NYSE - news - commentary - research - analysis) CFO Bill Aylesworth told TheStreet.com that 15% of TI's wireless revenues in the fourth quarter were from GPRS sales. Handset makers have to buy chips to build new phones, so it bodes well for GPRS sales in the first quarter -- though Motorola and Nokia have both forecast seasonal declines in the post-holiday period. Then again, experts warn that the mobile-phone makers will pad their stats by making GPRS a more predominant option. "GPRS as a percentage of revenue is a deceiving number, because GPRS is going to be like WAP," says Modoff of the technology that has allowed consumers to somewhat awkwardly surf the Web on their phones in the past few years. "A lot of phones have gone out with WAP, but how often have people used it? You're going to see GPRS going out as a part of most mid- to high-level phones." Handset makers will be happy just to get GPRS phones on the market as a start. Then it'll be time to discuss the complex issue of content, pricing and catchy services that appeal to distinct European, U.S. and Asian markets. Since we've yet to see smooth rollouts, we'll make do with new phone sales in a handset market that's expected to grow only 11% over 2001's depressed levels. From this early vantage point, 2002 doesn't look like the breakthrough year for data.

To: S100 who wrote (18066)	2/2/2002 4:41:33 PM
From: S100	Read Replies (2) \| Respond to of 34857

Tele-commodity Nokia's recent creation of Vertu, a division producing very high-end cell phones, received a blizzard of press but perhaps not for the right reason. Handcrafted, luxury handsets that cost several thousands of dollars apiece raise eyebrows, of course, but what does it say about the rest of the handset market? Nokia, owner of one of the most powerful global brand names, has gone to great lengths to keep the two names apart. Why is that? Some say it's a typically shrewd move by a company that's putting its foot gingerly forward into unknown waters and doesn't wish to risk hurting its image, just in case Vertu flops. That's probably part of it, even though Vertu might turn out to be a success. You don't need a Ferrari to go to market, but lots of them get sold anyway. But being the worrying sort, and at the risk of sounding like we are Nokia-bashing, we wonder if Vertu's birth is a backdoor admission that the cell phone has finally become a commodity product, like TVs and stereos? If so, the implication is that Nokia's vaunted 20%-plus handset operating margins will head downwards again. Nokia disagrees. A spokesman says Vertu is a sign that big opportunities remain in the traditional handset market, and that it expects average handset prices to rise beginning in 2003 due to the introduction of new technologies like 3G. Much was made of the 2001 fourth-quarter jump to a 22% margin from 19% in the third quarter and 21% in the same quarter of 2000. But that rise looks more like a one-time blip up in a downward spiral: In early 2000, margins were 25%. Over the long term, margins will likely continue lower, because once a product becomes a commodity, it's a market- share game won by the lowest cost producer. Barron's