Apple has awoken sleeping giant Nokia – now it gets nasty

15 Oct 2008

While Apple’s iconic iPhone has disrupted the mobile industry forever – and taught the industry a valuable lesson in the process – it should be fearful of sleeping giant Nokia’s response and its ability to reach mass markets. Nokia’s 5800 XpressMusic phone is just a warning shot.

In fact, according to analyst firm MultiMedia Intelligence, Apple awoke several sleeping giants.

“Apple did not copy the rest; it taught them a lesson,” said Mark Kirstein of MultiMedia Intelligence. “It made a sleek, sexy and cool phone that people wanted. 

“Motorola did this earlier with the Razr, but it did not sustain the effort. Apple went beyond simply replacing the keyboard with a huge touchscreen display, it created a fun yet effective user interface. It was different, it was cool, it was sexy, it was pure Apple. The Apple disciples came out in droves to get the first ones.”

However, Kirstein said, the market’s eyes have been opened and the traditional handset manufacturers Nokia, Sony Ericsson and Motorola now know there is a high-margin business if they create the right product.

The market for smart phones is growing – with some 125 million sold in 2007 alone – and it is the most lucrative handset market with the highest margins.

“One of the most interesting trends in handsets is that there is now a blurring of the lines between multimedia handsets and smart phones. Smart phones such as the Samsung’s Instinct, Nokia’s N70 and Apple’s iPhone are all loaded with multimedia feature such as high-resolution image sensors, compelling displays and superior music capabilities.

“A smart phone is commonly defined as being an open platform handset that allows access to the OS (operating system) for application development. Apple is there. However, the target market for these handsets has been business professionals. With smart phones adding a full complement of multimedia capabilities, the market has now split into two classes, with a new consumer-oriented segment emerging,” said Kirstein.

According to Kirstein, handset manufacturers have been taking conservative, methodical steps to incrementally enhance the phone. “However, Apple’s iPhone changed the nature of competition. Yet, the major handset manufacturers were sleeping … not dead.”

Now, he said, they are responding and applying their years of experience and manufacturing prowess that matches the billion unity annual shipments.

Enter the iPhone slayer. “The true powerhouse and No 1 market share-holder Nokia has taken its first shot with the 5800, aka ‘the Tube’.

“Nokia has the large touchscreen display. Its XpressMusic phone comes with music for the first year, challenging the iTunes á la carte model. In fact, the Tube surpasses the iPhone on a variety of usability features, including cut and paste, voice dialling, video dialling, MMS, instant messaging, an expansion MicroSD Memory Port and a higher-resolution, 3.2-megapixel image auto-focus sensor with dual LED flash.”

Kirstein said that Nokia’s phone is not even directly aimed at the iPhone market. It is being produced at a much lower price for mid-range customers looking for an alternative to the iPhone.

“It is about half the cost of Apple’s phone. More importantly, it is not locked into a particular service provider, featuring a SIM card in a convenient, easily accessed slot. 

“Nokia’s first pass is a nice shot across Apple’s bow. It is certainly the first of many shots to come. The giant has awoken,” Kirstein concluded.

By John Kennedy

Pictured: the Nokia 5800 XpressMusic phone sounds a warning shot across the Apple’s bow

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years