Nokia's Stunted Hybrid

Yesterday, long-suffering Nokia (NYSE: NOK  ) investors got some decent news for once. After a season of disappointing sales and lost market share to portable rivals like Motorola (NYSE:MOT) and Ericsson (:ERICY), the firm revealed a trio of new clamshell phones and announced plans to narrow its upcoming product lines.

But there was another interesting tidbit released yesterday regarding the N-Gage, Nokia's handheld device that can't decide whether it's a phone, an MP3 player, or a gaming machine. Nokia pushed back by a month the U.S. launch of the updated model, the N-Gage QD, which corrects some of the worst problems with the original, such as the previous requirement to remove the battery before swapping games. But some shortcomings, like the small screen, can't be remedied.

More ominous is the huge 50% cut in the estimate of the number of games coming to market. By the holidays, Nokia execs now expect to see 40 games, down from an original goal of 100. There are already some formidable titles in the library, including Electronic Arts's (Nasdaq: ERTS  ) Sims Bustin' Out, with more on the way, including Activision's (Nasdaq: ATVI  ) Call of Duty.

Nokia insists that we shouldn't judge the N-Gage's success until 2005, but shareholders should already wonder if this gadget is worth the fuss. Nokia had originally looked for shipments of more than 6 million units by the end of this year. Instead, the number is now reported to stand near 600,000. The firm is notoriously tight-lipped about those sales, which is another good indication that they're far below expectations. And I'm betting things get worse.

With Nintendo's (Nasdaq: NTDOY  ) GameBoy DS on the way, and an incredible-looking PlayStation Portable coming soon from Sony (NYSE: SNE  ) , N-Gage will most likely suffer an embarrassing, lengthy death. No one in Finland is asking for my advice, but that hasn't stopped me from mouthing off about Nokia's need for focus.

Here's another unsolicited suggestion: Kill the N-Gage now. Put it out of its misery.

For more Fool coverage of Nokia and the video game industry:

• Is Nokia ready to deliver?
• See why Nokia has taken some lumps.
• Market-beating Activision and Electronic Arts are Motley Fool Stock Advisor picks. Take a risk-free trial.

Fool contributor Seth Jayson loves gadgets, but he owns no company mentioned. View his Fool profile here.