Post of the Day
October 23, 2000

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Subject:  Enough!
Author:  forloveofmoney

Ok, I've tried not to comment on all this anti-Nokia rhetoric. Really, I've tried. But now it's gone too far. Allow me to dispel a few of [the] myths about Nokia and 3G:

Myth #1: Nokia has to sign up for a 3G license with Qualcomm right away, or they're toast.

The truth: They don't need to sign up for anything until they start selling products. Their first W-CDMA handsets are going to be released late next year. Until then, no deal's necessary, and they're free to do their best to negotiate with Qualcomm for every last cent, as you'd expect them to considering how much money's up for stake. I'm sure that Nokia's doing plenty of research related to W-CDMA right now, and they're free to do it without a license from Qualcomm.

Myth #2: Nokia's going to get hurt because they won't be providing handsets for DoCoMo's rollout. Asian manufacturers will get a head start and eat Nokia's lunch.

The truth: 1. DoCoMo's initial rollout won't be that big, so Nokia won't be missing out on a whole lot of sales. 2. The Japanese market's far different from any other in the world. Phones that sell well in Japan rarely sell well elsewhere, and vice versa. Japanese consumers also have huge nationalistic biases, and will generally prefer to buy from a home-grown manufacturer. For Nokia to make a huge effort in creating Japanese-styled phones that probably wouldn't sell much anyway would be a mistake. Best to wait until late 2001 to early 2002 when the European rollouts get underway.

Myth #3: Nokia has no presence in the CDMA market today.

The truth: While Nokia is not as big in CDMA as in GSM/TDMA, they're gaining market share. The 5185i is very popular with Verizon as a low-end. One of the things I've always liked about Nokia is how they're able to target different customer groups. Most phones sold in North America target business users. The 5185i was especially meant for younger people, people without much money to spend, people that care for how their phone looks, and so on. It's doing very well. The 6185i will feature a WAP browser and should also do well. Though I'd like to see Nokia buy chips from Qualcomm and put out more advanced CDMA phones, they're still not doing too bad as it is.

Myth #4: CDMA is gaining a lot of market share against GSM right now.

The truth: This argument makes no sense for two reasons. First, CDMA's core markets are Korea, North America, and Japan. GSM is non-existent and Korea and Japan, and in North America, CDMA's main competitors are TDMA and analog. And in North America, the one big GSM operator, Voicestream, is signing up digital subscribers at a faster rate than both Sprint PCS and Verizon, the two leading CDMA operators. The only places that CDMA and GSM really compete a lot right now are China and Hong Kong. While CDMA's growing faster than GSM in these markets, it's a stretch to say that CDMA's taking a ton of market share overall. And recent subscriber stats showed that GSM grew faster than CDMA in the last three months. Though these numbers were skewed a bit by the Korean subsidy ban, they do show that CDMA growth isn't blowing away GSM growth right now. When 3G comes to market, CDMA will grow much faster. But not until then.

Myth #5: Nokia will lost a lot of its phone market share because they aren't experienced with CDMA.

The truth: How many times does it have to be said that wireless phones aren't technology products but consumer products? Nokia's problems with CDMA come because they don't get the advanced features in Qualcomm's chips. Companies like Neopoint and Audiovox had no CDMA expertise but came out of nowhere to create advanced phones in a very short amount of time by buying chips from Qualcomm. And Nokia's going to put a lot more effort into creating home-grown W-CDMA chips than they are into creating CDMA chips today. And even if those W-CDMA chips don't work well, they can buy from someone else and they'll be fine and will be able to dominate by making better looking phones with more features like they always have.

Myth #6: Handsets are a commodity like PCs.

The truth: This is the most absurd myth I've ever seen. Everything that's taken place in this industry over the past few years contradicts it. If handsets are a commodity, why do some models sell like hotcakes while others just sit on shelves. If they're commodities, why do some companies gain tons of market share in a year while others lose a ton? If they're a commodity, why is it that when people buy phones, a couple of them stand out for them, and they're compelled to buy one phone above the others? If they're a commodity, why do people like to show off some models and why do they cringe at the thought of displaying others? Reality is that some phone producers make more popular phones than others and develop competitive advantages. Nokia's one of those companies.

I remember trying to explain the CDMA/W-CDMA issue for a long time on this board, post after post, and it just frustrated me. I'm not making the same mistake. This will be my first and last post defending Nokia on this board.

Regards,
Mark

P.S. - Morgie, I like a lot of humorous comments, but please don't quote posts off the SI Qualcomm "Coming Into Buy Range Board." 90% of the people there are complete fanatics. I wouldn't be surprised to find some of them passing out pamphlets at airports proclaiming that Irwin Jacobs is the second coming and that there's secret, apocalyptic scripts hidden in the code used for Qualcomm ASICs. Those guys should meet up with the people at the TMF Metricom board. I'm sure they'd find that they have a lot in common.


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