David,
> Nokia has indeed done a fantastic job at that. But they didnt really
> have any solid competition yet.
I am not pro Nokia, but they had formidable competitors. Many Japanese,
Korean and Taiwanese have already tried and fail. Partially because they
lacked a strong GSM home market. But Sony has tried again and again.
> The Japanese handset manufacturers are some of the best brands for
> electrical goods in the world. And they have financial resources to do
> whatever it takes to get into that market if they want to and its a fair
> bet that they do.
We are really talking big pockets here. No one subsidizes phones but
operators and MVSNs. They are the only ones that would benefit from
subsidies (and it is not clear as whether this has always been true).
Nokia's success is not due only to big pockets. They were small once. I am
not saying they are out of this world but I have seen then in the US,
Western Europe, Brazil and Eastern Europe interacting with many different
operators, technologies and distribution models. They are serious and
normally of the whole lot they now their trade best.
> Dont forget that Sony was willing to sell Playstation at a loss in order
> to ensure market lead in that space. The mobile handset is a MUCH
> bigger market and its moving in the direction of their traditional
> markets (PDA's, games, walkman etc.) making it a defensive move as well.
The mobile phone market, and the money involved for subsidies is of a much
larger scale that the gaming-console market. The business model is different
too. Unless things change, while Sony is to profit from the sales of future
PS2 video games and thus can subsidize partially the cost of the hardware,
this is not true for mobile phones (Nokia is trying to change this though).
Future revenues to compensate for a phone manufacture's subsidy will have to
come either from future sales or the sales of accessories. While there is
money in accessories, it is not enough. Future sales stop materializing the
minute that you stop subsidies. Ericsson has tried for years compensating
the lack of success of its phones with artificially low prices. They have
given millions of phones free to operators in exchange of them buying
Network equipment. It is not easy. You can not throw money at it. Being
competitive internationally is a combination of things and one by one Nokia
as come to dominate most markets outside Asia.
> Not being in Europe I cant judge how strong the Nokia brand truely is
> but I think it cound be put to the test very soon.
Nokia has a lot of information in their website. I recommend the
presentations by its CEO. Nokia is very candit about releasing this info
that makes it look so good.
> Or.. agressive new competitors will see this as an opportunity to
> undercut Nokia
Nokia has challenged its best customers not the consumers but the operators.
Operators should be catered for and Nokia has made moves to try to take away
power from them. With Club Nokia, in a surprising move, Nokia would never
admit this, Nokia is trying to shortcut the Operators' relationship with the
customer. This bold message to the Operators can not be welcomed by them.
Operators (Vodafone, Telefonica, FT(Orange), TIM, DT... etc need for their
investment to pay off. They need to be in the loop, the last thing they want
is to become dumb pipes like their fix line counterparts in the US.
Here is where the Japanese and rest of Asian manufacturers come in. But
Asian phone manufacturers better put their money into after sales service
and limiting Operators headaches than into phone subsidies. Let the
operators do the promotion and spent their money acquiring customers.
If Nokia is to loose their lead is because they were not satisfied with the
piece of the pie they got and they started to take away Operators' slices
too.
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Received on Mon Sep 10 20:57:09 2001