Trailblazer or Burnout?

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You have to love a free press. In a single day, two wonderful publications, one venerable and ink-stained, the other new and ethereal, can paint two completely different views of Finnish cell-phone maker Nokia (NYSE: NOK).

Yesterday, the venerable The Wall Street Journal published a lengthy expose on Nokia's attempt to dominate the market in "smart phones" -- devices that resemble handheld mini-computers as much as they do telephones. The Journal's take: Nokia spent too much time thinking up fancy gizmos and trying to out-program Microsoft (Nasdaq: MSFT) in the race to provide the "brains" for the world's future smart phones. As a result, last year Nokia fumbled the mid-range cell-phone market, lost market share, and saw revenues decline in the midst of a worldwide phone-buying spree enjoyed by competitors from Motorola (NYSE: MOT) to Sony (NYSE: SNE) to Ericsson (Nasdaq: ERICY). Nokia should have enjoyed this spree, too. It didn't. (And of course, Nokia didn't make enough mid-range clamshell phones.)

Simultaneously, tech guru website CNET posted two articles on Nokia. One extolled Nokia's multimedia virtuoso 7610, which can take pictures, shoot films, add soundtracks -- in short, do most things artistic short of composing "The Nutcracker Suite" and painting the Sistine Chapel (and those two only because Nokia refuses to be an imitator). The other CNET article highlighted Nokia's domination of the smart-phone market in Europe, where it enjoys a market share of 48%, and its less impressive, but nonetheless respectable, 25% market shares in Asia and the U.S.

Of course, the Journal and CNET are probably both right. But the thing that strikes me is the different pictures that they paint. The Journal piece speaks as if the mid-range cell-phone market is the only real must-have market segment for cell-phone makers. And while the Journal acknowledges Nokia's performance in the el cheapo cell-phone market, it basically pooh-poohs the more expensive, high-tech segment -- the very segment that the CNET piece highlights as experiencing "strong growth in sales of smart phones."

Here's my take on the situation: Nokia has already done the low-tech thing -- it used to make rubber boots, for heaven's sake. Nokia decided long ago that its future, and its investors' best interests, was in focusing on making high-tech gizmos. If doing that causes it to lose a little market share among lower-tech customers in the short term, then perhaps that is the price it must pay to dominate the markets it really wants.

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Fool contributor Rich Smith owns no shares in any company mentioned in this article, although he has owned shares of Nokia in the past.