Nokia Pleases Operators with Midrange Handsets

According to a story published today on tech Web site The Register, Nokia is in the middle of an 18-24 month transition to offer customised mobile phone designs and software that will make it easier for network operators to differentiate their offerings. In a move that looks like submission for the world’s largest mobile phone manufacturer, almost 90 per cent of the company’s 2005 phone line-up will support software customisation and 25 per cent will have exclusive operator designs.

Nokia has also indicated that handset margins would stay under pressure, forecasting a 17-18 per cent operating margin in two to three years’ time – well down from 25 per cent in its heyday a few years ago and reflecting tougher competition from the likes of Samsung Electronics. Whilst going through a turbulent year, plugging gaping holes in its product portfolio and fighting off competition by cutting prices, Nokia’s turnaround has already helped it to deliver results, driving forth its goal of eventually grabbing 40 per cent market share – up from a current share of around 30 per cent (Source: IDC).

Since April, Nokia has launched a number of new phones, including clamshells, and said half of its handset sales would come from new and foldaway designs by the fourth quarter of next year, up from some 19 per cent expected late this year and virtually zero at the beginning of 2004 when all designs had the shape of a candybar, according to Yahoo! India. Of the 40 new handsets Nokia plans to launch in 2005, more than half will be clamshell, slider or other factors, compared to just three at the start of this year.

We can expect to see more high-end multimedia devices and enterprise solutions, as well as Nokia driving the software standards agenda with platforms such as Series 60 and the new content framework, Preminet. High-end phones will offer full Internet browsers, integrated stereo music players, video playback and recording features, FM radio, and megapixel digital cameras. In 2006, the company will announce its first mobile phone with a built-in television receiver, which is being tested in the UK and Finland now.

Nokia Integrate with Ford & Nissan

In many countries, particularly the UK, it is an offence to use a handheld phone or similar device when driving. Most of us know that if caught you get a £30 fixed penalty or up to £1,000 on conviction in court (£2,500 for drivers of goods vehicles, buses or coaches). As a result, mobile phone companies have been revelling in the opportunity for up-selling handset customers. This additional sales opportunity has now been extended to car manufactures, with a recent announcement that Nokia has devised a hands-free communications solution with Bluetooth connectivity for automobiles.

In the first mobile-OEM auto manufacturer partnership of its type to date, except for the CDMA-based ONStar system (but in this case the whole system was branded GM and not co-branded with the GSM radio provider), Nokia’s latest communications device is an integrated vehicle solution that will first appear in Nissan’s Primera. Ford has also announced that it plans to support the system in some of its Focus models. Long overdue, the system integrates into a vehicle’s central console and offers hands-free operation using an N-FORM control system with a large colour display. The system also features a baseplate onto which various mobile holders can be mounted, which should make it compatible with a wide range of mobile phones from different manufacturers.

The mobile phone is operated using the Primera’s N-FORM controls and 7-inch colour display, where you can also browse the built-in phonebook downloaded from your mobile phone, scroll through saved numbers either alphabetically or by speed dialling, initiate and take calls, as well as put a call on hold in order to answer a second call. Other phone functions can be voice activated, using various speaker-dependent or speaker-independent commands. An external GSM antenna should improve sound quality in hands-free operation.

“We are pleased that our co-operation with Nissan has brought such successful results. Together, we have found a perfect solution to completely satisfy even the more demanding users of automotive communications systems”, says Marcus Stahl, General Manager Automotive Accounts, Nokia Automotive. The integrated communication system is already available in Europe although it’s not clear at this stage if the device comes as standard with the cars, whether you have to change the base plate in order for it to work with other phone manufacturers’ products, or whether there will be a ‘standard’ interface devised at a later date for all car makers.

It’s also interesting that Nokia is now shifting from the handset production side to the hands-free kit side, if indeed the system supports all hands-free capable mobiles – including competitors. Bizarrely, this puts the company amongst competitors such as JCI, Lear and other third-party ‘integration’ companies who already do this for aftermarket install systems.

Nokia to Buy Psion Out of Symbian

Nokia has announced its intention to try and nearly double its shareholding in Symbian by buying Psion shares in the venture, taking them to a 63.3% holding. Symbian, created arguably the most successful rich media Operating System (OS) which is primarily used on mobile phones and portable devices. Almost 2.7m units were shipped with their OS in the first six months of 2003 and it is currently owned by seven partners; Ericsson, Panasonic, Nokia, Psion, Samsung, Siemens and Sony Ericsson.

Nokia propose to pay Psion in two ways; £93.5 million (~$173.8m, ~€137.1m) as a fixed payment, plus £0.84 (~$1.56, ~€1.23) for every Symbian OS equipped phone Nokia sells during 2004 and 2005. Psion are currently estimating the deal will be worth around £135.7m (~$252.1m, ~€198.4m).

This is not the first time there has been a significant shift in the Symbian ownership. Back in August 2003, co-incidentally Symbian’s fifth anniversary, Motorola announced it would exit Symbian, selling its 19% holding. The two partners picking it the holding were Psion who increased its holding from 25.3% to 31.1% and Nokia bought the rest of the Motorola shares, increasing its holding from 19% to 32.2%. Psion paid Motorola £17m (~$31.5m, ~€24.8m) cash, valuing Symbian at that time at £300m (~$557.4m, ~€438.4m). The current Nokia/Psion deal values Symbian at £430m (~$798.9m, ~€628.4m).

At that time David Potter, Chairman of Psion gave hints at their possible exit from Symbian, “Psion will continue to play its role in driving Symbian towards the successful exploitation of its market. At the same time, realising the value of out investment in Symbian for the optimal benefit of Psion shareholders is a key strategic goal”

This leaves two questions hanging in the air. What will happen to Symbian’s other minority shareholders now Nokia is far and away the largest shareholder? Where are Psion going now?

The other owners, lead by Ericsson, the next largest owner (17.5%), may feel shouldered out of Symbian or indeed be uneasy providing income to their largest competitor. Currently the only other option they would have is to go the Microsoft route with their less than perfect offering.

A few years ago Psion got out of the consumer hardware business and they also sold Psion Software to Visto in February for an undisclosed amount. They are now placing their bets on wireless applications in the enterprise. Initially growing Teklogix, which manufactures rugged, wireless devices to help companies streamline their logistics. They also plan to move into providing support to mobile workers in the field, such as medical staff who are visiting patients in their home.

Teklogix is an area they feel they have a strong footing in this business already, making it is a defendable area with potential for great expansion. The CEO, Alistair Crawford says they plan to focus on RFID and Voice. The benefits of RFID in the warehousing business are well known. Psion also feel there is benefits in using voice input there, as the operators quite often need to have both hands free, or their not able to use their hands, for example in a refrigerator unit.

Psion is a company that has changed considerably over its 25 years from its start writing software, in particular Chess for Sinclair computers, through single handedly pioneered the handheld computer market back in the 1980’s., to defending themselves against the onslaught from Microsoft. We’ll watch this space with interest.

Nokia to purchase Psion shareholding in Symbian – Press release

Interviews with Chair and CEO of Psion

Visto Corporation Purchases Psion Software – Press release