Comment: Nokia — master of the multimedia universe?

31 May 2005

The mobile phone market is littered with casualties, big-name players that saw their sun rise and fall in a relatively short period of time. Anyone remember how NEC ruled the roost among the first wave of handsets in the late Eighties? Or how Ericsson was up there with the best of them in the Nineties before its fortunes nosedived and it had to reinvent itself as one half of Sony Ericsson? More recently we have seen Siemens looking for a partner to help sustain its beleaguered handset division.

Since Nokia first came on the scene, displacing Motorola as the leading mobile manufacturer in the Nineties, the Finnish company has shown few signs of such a catastrophic turn of events. But it’s not all been plain sailing. In the past few years it has been asked much tougher questions from a market that moved from simple voice-only services to the more complex world of mobile data.

Nokia reached the top of its game through phones that epitomised ergonomic achievement with wonderfully intuitive design, stylish and robust build quality and excellent technical performance. The last thing it needed was a drive for functionality and features that were beyond its expertise.

To make matters worse, in 2002 Microsoft outlined its mobile plans pushing Window CE (now dubbed Windows Mobile) as the only mobile operating system (OS) that could work meaningfully alongside business applications, snubbing the dominance of the Symbian platform, co-developed by a number of mobile manufacturers including Nokia, which now has the biggest share.

Adding to the challenge, mobile operators had saturated the market for voice calls and were looking to introduce new sources of revenue from data services that could be carried on emerging GPRS and 3G networks. Where once a user-friendly interface and stylish design was enough to secure Nokia its market share, it now has to have a phone that carries more tools than Bob the Builder’s belt.

The bad news for its competitors is that Nokia looks like it has begun to negotiate the difficult transition from phone maker to multimedia device company. At a new product launch in Amsterdam last month it told us that it had been ploughing this particular furrow for some time with its smart phones, but the reality is that these products are only starting to come of age. Early sightings of the imminent N Series suggest a manufacturer back to top form with a series of 3G multimedia devices that might even make a case for the one-stop device market that Nokia believes consumers want.

First out will be the N90, a 2 megapixel camera phone featuring Carl Zeiss optics that pitch it against standalone digital cameras. Next will be the N91, a mobile with iPod attributes storing up to 3,000 songs on a 4GB hard disk. Out later in the autumn is the N70, billed as the world’s smallest multimedia 3G phone.

“You can’t call them phones any more,” said CEO Jorma Ollila (pictured). While he accepted that voice was the still the predominant service for consumers he talked of 3G going mainstream and how the N Series represents the beginning of mass-market multimedia.

Some of us still question Nokia’s evangelical pursuit of the converged device — surely if you’re “passionate” about music or digital photography, to use Nokia’s own phase, you’ll opt for a standalone device rather than a jack-of-all product — but it was hard not be impressed after a first encounter with the N Series.

What’s also swinging in favour of Nokia and the Symbian OS is Microsoft’s failure to make any significant dent in the mobile market. The rise of Canadian firm Research in Motion and its aims to make BlackBerry the standard for mobile email, has posed a much bigger challenge than anything Microsoft has thrown at the market.

Nokia has been hovering around a 33-35pc share of the global handset market for some years, always aspiring to hit the magic 40pc mark. Its new products, strong operator relationships and the predicament of many of its competitors suggest that this goal may actually be attainable.

By Ian Campbell