Dialing for Divas

Would you spend $1,000 on a cell phone? If so, what would it need to do? Read you your e-mail? Browse the Web? Do a little soft-shoe tap dance while cooking you dinner? All of the above?

In a time when cell phones have become downright disposable for some and premium toys for others, Nokia (NYSE: NOK  ) is betting that more of us will go upscale. Certainly, prices have been rising. And with phones becoming the new style accessory, the Finnish phone maker is hoping the diva in you will pay up for the right mobile look.

Indeed, the new Nokia 8801 camera phone is expected to retail in Europe for 750 euro, according to News.com. There's no word yet on U.S. pricing, but at current exchange rates, the 8801 would command roughly $961 here. What would that buy you? Signature features include exclusive ring tones created by Japanese musician Ryuichi Sakamoto, reinforced glass for its screen, and chemical etching on the back plate to create the distinctive Nokia mark. The phone will also likely carry all of the same smartphone characteristics you'd find in the 8800, including Bluetooth connectivity, instant messaging, and Web browsing.

But is it realistic to expect that many of us will flock to spend to what amounts to at least a week's worth of salary for the average American worker? Yeah, I think so. Nokia has always been known as a premium brand, and the new phone reinforces that image. It also helps extend the company's beachhead in the battle with Research In Motion (Nasdaq: RIMM  ) and palmOne (Nasdaq: PLMO  ) for smartphone market share -- a battle that Nokia is already winning handily, by the way.

In the end, Nokia's attempt to dial for divas may not mean all that much. But the move ought to encourage investors, as the firm isn't sitting idle in the face of increased competition. It's also worth noting that the stock remains about as cheap as rival Motorola (NYSE: MOT  ) yet boasts $15 billion in net cash in the bank. Prodigious free cash flow, too, is helping the company fund a market-crushing 2.88% dividend yield. Even a diva can appreciate that.

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Fool contributor Tim Beyers owns a Treo. His wife uses a Nokia phone. Neither of them paid anywhere near $1,000 for their handsets. How much would you pay for a phone? Share your thoughts with other Fools at the Nokia discussion board. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile, which is here. The Motley Fool has a disclosure policy.


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