“It is going to be 2011 before they have the right software to make a really competitive product,” Richard Windsor, a London-based technology analyst for Nomura Securities, told AFP.
Its latest smartphone, the N97, has achieved modest sales so far compared to the iPhone.
Technology consultancy Gartner estimates Nokia has sold just 500,000 of them worldwide since its launch in June. Apple’s new third-generation iPhone sold one million units in its first weekend on sale.
Nokia needs its new models to be a success — smartphones, handsets with high-speed internet access, are the fastest growing segment in the mobile phone market and their higher price tags mean they carry higher profit margins than cheaper, more basic models.
The Finnish giant’s share of this lucrative segment has ebbed away in recent months. In the second quarter of 2009, it sold 45 percent of all 40 million smartphones sold worldwide.
That compares to 47.4 percent of 32 million handsets at the same time last year, according to Gartner data.
“The right high-end product and an increased focus on services and content are vital for Nokia if it wants to both revamp its brand and please investors,” wrote Gartner analyst Carolina Milanesi in a research note to clients.
In addition to its partnership with Microsoft, Nokia will also use Linuxsoftware and work with social networking site Facebook to develop new services.
“They have realised that for certain things it makes sense to partner,” Ben Wood, research director at CCS Insight, told AFP.
Apple also beat Nokia in drawing in additional revenue from the sale of online applications: ringtones, videos, games and other Internet gadgets.
Its App’Store went online in July 2008 while Nokia’s Ovi storelaunched in May this year.
“Nokia cannot create one killer product to beat Apple or Google. Nokia has to create an experience or a solution that is so compelling that a consumer says ‘I like the whole proposition’,” said Wood.
Nokia’s chief executive Olli-Pekka Kallasvuo told reporters on Wednesday that these add-on services were “critical to our future” and that his company wanted to make smartphones more affordable to a wider range of people.
But that will be a hard sell in the current economic climate.
The global financial crisis has weakened demand for mobile phone sales after six years of uninterrupted growth.
Nokia, which has 1.1 billion customers worldwide, posted a 66-percent drop in net profit in the second quarter of 2009 and a nearly 25-percent decline in revenues on a 12-month basis.
In a bid to restore the company to profitability, a cost-cutting programme was launched in January aimed at reducing Nokia’s workforce by some 4,000.

This suggestion is nothing new, but the need for multiple iPhone carriers in the U.S. is taking on greater urgency as frustration with AT&T grows. The same day that AT&T announced MMS availability, a story appeared in The New York Times , which was basically one big complaint-fest from AT&T iPhone customers. Dropped calls, spotty service, and slow data connections made up the majority of the complaints in the Times story, and comments from iPhone customers on blogs and other sites around the Web echoed theTimes report. Discussing the iPhone situation with the Times, AT&T’s chief technology officer, John Donovan said, “It’s been a challenging year for us.” Challenging? More like a “P.R. nightmare” as one analyst told the Times.

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With a second — or even third — carrier, iPhone customers would be able to choose their own network, and the current load on AT&T’s infrastructure would be reduced. This could improve service for iPhone customers who stick with AT&T, as well as those who migrate to other networks. Multiple carriers would not be an ideal situation for AT&T, of course, since the company could lose a big chunk of revenue if there was a mass exodus of iPhone customersto other carriers. But with a reportedly questionable service record and a little over two years of iPhone exclusivity, perhaps AT&T has had long enough to prove its worthiness as the only iPhone carrier in the U.S?

The problems with AT&T and the iPhone were apparent earlier this year during Apple’s Worldwide Developers Conference. There were howls of derision coming from the WWDC audience when it was revealed that many international carriers would support two new features in iPhone OS 3.0 — MMS and tethering — when the new operating system launched, but AT&T would not.

MMS will finally make an appearance later this month on AT&T, but the carrier is reportedly delaying support for the iPhone’s tethering feature even though other AT&T handsets have this capability already.

An Open Marriage Would Be Profitable…for Apple

Besides customer choice and potential service improvements, another incentive for Apple to go with multiple U.S. networks can be found in a recent research note from Piper Jaffray analyst Gene Munster, according to a Barron’s report. Munster says the iPhone enjoys a much higher market share in countries where the iPhone is available on multiple cellular networks. In other words, more carriers equal more iPhone owners. Since Apple knows exactly how manyiPhones the company has sold throughout the world, Munster’s conclusion likely doesn’t come as a shock to Cupertino. But if that’s the case, my only question is, “What’s the holdup, Apple?”

AT&T has spent years raking in huge customer fees from the iPhone, and according to a wide variety of reports, U.S. iPhone owners aren’t happy with the service they get in return. Apple needs to open the field up for the iPhone before angry customers march on — or send MMSes to — Washington asking for a government-style intervention to bring about iPhone carrier plurality for all.

The company has not divulged many details about the devices, but it has discussed a model called the GW 550. The handset has a BlackBerry-like form factor with a full QWERTY keyboard on the front, and it will likely have Wi-Fi, 3G, Bluetooth, and GPS. LG is also expected to have a touch-screen smartphone, and a device with both a touch screen and a slide-out QWERTY keyboard. All of LG’s smartphones will have the company’s S Class user interface, which aims to make Windows Mobile more finger-friendly by adding 3-D icons and various animations.

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One of the appealing factors of the latest version of Windows Mobile will be the access to Microsoft’s mobile application store. Windows Marketplace for Mobile is Microsoft’s response to Apple’s App Store, and it enables Windows Mobile users to browse, buy, download, and install new programs over the air. Windows Mobile 6.5 will also come with the My Phone feature, which enables customers to wirelessly back up and sync their photos, contacts, text messages, and other data.

The move is part of LG’s larger strategy to place a heavier emphasis on smartphones as part of its efforts to overtake Samsung to become the second-largest handset maker in the world. The company recently launched its first U.S. smartphone, the Incite, and it plans to have at least 13 Windows phones by the end of 2010.

LG will not be the only company offering Windows Mobile 6.5 devices, as Acer, HTC, Samsung, Sony Ericsson, and Toshiba have committed to offering smartphones with Microsoft’s mobile operating system.

Consumers perceive e-books as too expensive, although they’re actually reasonably priced given the cost of components.

September 5, 2009 09:00 AM

For electronic-book readers to reach the widest range of U.S. consumers, the devices would have to be priced at $50, which is less than the price of the screen on today’s e-readers, a study found.
Consumers are used to paying less for multi-purpose devices, such as smartphones and netbooks, which leads them to place a low value on e-book readers. While e-readers’ high-resolution screens are easier on the eyes for reading, the devices have only one purpose, which is reading e-books.

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Find out how to increase availability while reducing data center energy consumption”For many, the superior functionality of dedicated e-readers simply isn’t seen as making them sufficiently more convenient than cheaper multifunction devices to justify the additional cost,” the Forrester Research study released this week said.
In addition, consumers are used to seeing the price of electronics drop dramatically in a short time. Consumers believe the high price tag for e-readers today will also eventually go down, Forrester said. For example, the 8 GB iPhone cost $599 in January 2007. Nine months later the same smartphone cost $399.

E-readers from Sony and Amazon, which sell the majority of the devices today, range in price from $200 to $489. The prices are not unreasonable, given the cost of components.

For example, the E Ink display used in all the devices costs an estimated $60 today for a six-inch screen. Sony (NYSE: SNE) sells the least expensive e-reader at $200, but to get the price down that low, it has opted for a five-inch screen, and no wireless connectivity.

Based on a survey of 4,706 U.S. online consumers, the Forrester study extrapolated that 14% of the 181 million consumers who are online, or 25 million, would consider buying an e-reader at today’s price range. If the price dropped to $149, then the potential number of customers rose to 22%, or 40 million consumers.

To reach a mass market, however, manufacturers would have to sell the devices at a price in which an equal number of people find the product too cheap as find it too expensive. That price point is $50, Forrester found.

“With an optimal price point below the cost of the components, e-readers will require some form of price subsidy to attain more mass-market reach,” the study, authored by Forrester analyst Sarah Rotman Epps, said.

Forrester estimates that U.S. consumers will buy 2 million e-readers this year, in addition to the 1 million purchased last year. Even with lower prices, the devices will not reach the sales levels of such mass-market consumer electronics as portable music players. In 2009, 110 million U.S. consumers, or 61% of the online population, owned an MP3 player.

“The majority of consumers don’t care enough about reading or technology to invest in this type of single-purpose device at anything close to realistic prices,” the study said.

Nevertheless, while sales will be at a smaller scale than MP3 players, e-readers will have “phenomenal economic and social impact as they prove to consumers that digital reading can be a pleasurable experience,” Forrester said.

For example, digital cameras, which took more than 10 years to reach 50 million U.S. consumers, eventually revolutionized consumer behavior around taking, editing, storing and printing photos. As a result, older photography companies such as Eastman Kodak (NYSE: EK) had to drastically shift business models, while new opportunities opened up for Hewlett-Packard (NYSE: HPQ)’s printing business.

“Similarly, e-Readers will catalyze a revolution in digital reading,” Forrester said. “Whether it takes place on a dedicated or multifunctional device, digital reading will destroy some companies and forge new paths for others.”

InformationWeek has published an in-depth report on smartphone security

For year s, AT&T’s iPhone customers have endured dropped calls, slow connections, and crippled service, especially in crowded areas such as New York and San Francisco. And for this, customers pay a higher rate than most other phone users. If you own the iPhone, hating AT&T is practically written into the two-year service contract.
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I think AT&T’s getting a raw deal. The company has to shoulder the complaints of people who use their data plans way more than anyone else, sucking up bad blood while other carriers are viewed as knights in shining armor. Oh sure, let’s fantasize about a Verizon Wireless iPhone, but are we sure that Verizon can handle iPhone users, and the ten times more traffic they consume than other smartphone owners?

When PC World looked at customer service complaints for wireless carriers in pre-iPhone 2007, network and service issues weren’t even on the radar. It would’ve been hard for any carrier to predict the issues that a wildly popular smartphone would cause, and the negativity those issues would create.

The problem is that customers want more network-choking services, such MMS and tethering, and the c apability to use apps like Slingplayer to their full 3G potential, even though service can barely keep up as is. This would be the epitome of having your cake and eating it, too.

Then, there’s the issue of Google Voice and the user of VoIP applications. Yes, AT&T blocks VoIP over 3G on the iPhone, but it’d be foolish to think that any other carrier would behave differently.

To a certain extent, it’s fair to blame AT&T for dropping the ball, as the company is just now getting to the network upgrades that make the iPhone more reliable. But it’s hard to blame the company for wanting to see how the iPhone panned out before committing to expensive infrastructure changes. In any case, AT&T is spending $18 billion this year to expand and improve its 3G network.

When all is said and done, iPhone users are still in love with their phones, to the point that Apple ranked highest in customer satisfaction on smartphones this year, according to J.D. Power and Associates.

So maybe it’s time we gave AT&T a little positive reinforcement. Yes, it’s great that the carrier is finally adding MMS, and that improvements to the network are on the way. Keep it up.

After losing market share for years, Motorola has made what is viewed as a make-or-break bet on Google Inc’s Android mobile software, hoping the partnership with the giant Web company can help it win back customers.

Shares of the one-time market leader, now ranked fourth in global handset sales, jumped 11 percent earlier this week on investor hopes that the new phones could generate enough excitement to make Motorola’s bat-wing logo famous again.
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But while no one is expecting an iPhone-killer at the San Francisco unveiling on September 10, analysts say the risk is still that the new phones will not be unique enough to wow consumers, especially when other vendors also sell Android phones.

“Early devices will not be significantly differentiated and could disappoint those playing the 9/10 launch,” said Macquarie Research analyst Phil Cusick, who expects Motorola to display two new Android phones that day.

Motorola has given few details about the announcement, which will come during Co-Chief Executive Sanjay Jha’s keynote at GigaOm’s mobile conference. Jha first revealed his plans for creating Android phones in October.

He has said the new phones will be integrated with popular online social networks; but rivals such as Apple Inc, Research in Motion Ltd, HTC Corp and Palm Inc already have features for services like Facebook.

Shareholders have been impressed enough with Jha that they have more than doubled Motorola’s share price since May. Still, the stock is down 70 percent from its 2006 peak of $26 and has been trading below $8 per share.

“It’s going to be extremely significant to the company’s future,” said Current Analysis analyst Avi Greengart. “If the phone does well, they live to fight another day.”

Comparisons will inevitably be drawn to Palm’s Pre phone unveiling, which was also seen as a last chance for that company. Pre reception was good and caused Palm’s share price to quadruple, in part on the perception that the company has become a more attractive takeover target.

Should the initial reaction to Motorola’s devices be as strong, the company could have a good chance of luring back consumers, investors and mobile service providers, analysts say.

PRETTY HARDWARE

Motorola turned to Google for phone software because its own strength has been in hardware. This was demonstrated by the Razr, whose slim form inspired imitations for two years before it started to fall out of favor in late 2006.

Analysts expect Motorola’s new phones to have stylish enough hardware to secure distribution by mobile carriers, but the question is whether the software will be different enough to spur holiday season sales — especially when the bar has been set very high by Apple’s iPhone and the thousands of apps available for download from Apple’s online store.

“Short-term, Motorola needs to win the purchase decision of specific carriers,” Greengart said. “Long-term, they’re going to need to do something more than selling pretty hardware running an operating system other competitors have access to.”

Motorola’s Jha has said several times that carriers were impressed with the Android phones. He told Reuters in a recent interview that he was encouraged when one operator executive told him “bat-wings are back.”

Analysts expect Motorola Android phones to be sold by Verizon Wireless, owned by Verizon Communications Inc and Vodafone Group Plc, and by T-Mobile USA, owned by Deutsche Telekom AG.

But Verizon said it is not involved in Motorola’s announcement next week. T-Mobile said it will launch new Android phones this year but declined to give details.

Even if carriers did back the phone, some of Motorola’s former shareholders say they would be wary of betting on the company unless it started to show sustainable improvements.

“I wouldn’t touch the stock until they’ve launched three, four or five phones and they’ve gained market share for at least a year,” said Jane Snorek, an analyst for First American Funds, which manages $35 billion in equities that used to include Motorola shares.

Deutsche Bank analyst Brian Modoff said he is impressed by Jha but agreed that investors should look beyond September 10.

“If you get to several phones and they’re all disappointing, then you have to start writing the obituary. I don’t see that,” said Modoff. He said he will focus on the reaction from young consumers who crave cool gadgets: “We’ll see what the 20-year-olds think. That’s what really matters.”