The handset maker introduces phones designed to do everything your video camera, computer, and iPod do. And they're always nearby
Marko Ahtisaari, Nokia's director of design strategy, sometimes begins the day by diving into a Finnish lake still partly covered in ice. He calls that a disruptive experience, and it's a metaphor for what Nokia (NOK) is trying to do in the consumer electronics business. On Apr. 25, Nokia introduced new versions of its N series handsets, which mark the company's latest encroachment onto turf now occupied by outfits such as Sony (SNE), Canon (CAJ), and Apple (AAPL).
If you are old fashioned enough to call these devices "phones," Nokia people will politely correct you. They are multimedia computers, which offer features and picture quality to rival digital cameras or camcorders, and music quality to challenge an iPod. And because they can connect to the Internet you can check e-mail, download songs, or even update your blog while on the go. (Thought the world already had enough blogs? Think again.)
The high-end N93 will hit stores in July and retail for $660. (Wireless service providers may offer deals to get that price down.) An upgrade of the existing N90, it moves Nokia further into camcorder territory. The new version can record 90 minutes of video and adds features such as the ability to connect directly to a TV for full-screen viewing.
SPECIAL FOCUS. Purchasers will also get a free copy of Adobe (ADBE) Premier Elements 2.0 video editing software. Along with Carl Zeiss optics, image stabilization, and DVD-quality pictures, the software could encourage many casual users, at least, to use the N93 as their primary video camera. "It's a disruption of existing industries," says Anssi Vanjoki, a member of Nokia's executive board who is responsible for multimedia products.
Makers of digital cameras and MP3 players should also take note. All three new devices introduced at a Berlin press conference play music, take pictures, and browse the Internet. But Nokia gives each one a specialty, which it calls a "lead experience." The new $480 N73, with Zeiss optics and 3.2-megapixel resolution, is focused on amateur photographers, while the sleek-looking $380 N72 is aimed at the music and fashion crowd, particularly in Asia.
Should anyone miss the point, Nokia's press extravaganza in a spiffed-up Berlin warehouse ended with a video in which the camera slowly panned across a tableau of dusty, discarded electronic equipment -- including digital cameras and a cobweb-covered iPod. The message: Nokia plans to make these products obsolete.
EASE OF OWNERSHIP. But will people really forsake their specialized cameras and music players for a device that, deep down, is still a telephone? Maybe. Nokia devices have a couple of important advantages. One is their omnipresence. People always have their phones with them. "When you need your video camera, it's never with you. It's in a box under your bed," says Vanjoki. Camcorders have been around for years, but amateur news video has exploded in the few years since video-recording phones hit the market.
Most important may be the devices' connectivity, including a browser that can handle normal Web sites. In Berlin, Nokia also announced a partnership with Yahoo's (YHOO) Flickr photo-sharing site. Built-in software will make it easy for owners of N series devices to upload photos to Flickr, where they will be accessible to friends and family. The new devices are also designed to connect to online music sites, PCs, and printers via wireless connections. Nokia is trying to ride along with the Internet's evolution into a space where people conduct their lives, letting them do so on the go.
Another element that justifies calling the N series phones "computers," is that users can add their own software programs. Given Nokia's marketing power, outside software developers have plenty of incentive to develop specialized applications, including custom spreadsheets that people in emerging countries are already using to keep track of street-market transactions.
GLOBAL CONVERGENCE. Design Director Ahtisaari has even heard of people in tropical climates modifying their phones so that they emit an insect-repelling tone. "People using multimedia will continue to surprise us," says Ahtisaari.
Nokia has shipped 5 million N series phones since their introduction last year, a fraction of the 100 million camera-equipped phones the company sold last year. But it predicts the market for "converged devices" will reach 250 million in 2008.
Naturally, Nokia is already thinking about the next features to add, such as global positioning and search capability, so people can find restaurants or other services close to wherever they happen to be. Small mobile tablets, which connect via the user's standard mobile handset, could challenge laptop makers.
WATCH YOUR BACK. The new devices also threaten telcos. Devices that can connect to the Internet via Wi-Fi networks can bypass the traditional voice infrastructure altogether. Vanjoki sees opportunities for telcos that offer the right content, such as video programs that can be viewed on mobile devices. And he points out, people who use their phones as computers are less likely to switch operators since they will also have to transfer all their stored personal data.
That's one positive thing for companies such as Vodafone (VDO), Deutsche Telekom (DTE), and France Telecom (FTE). But given Nokia's global marketing might, the telcos as well as makers of consumer electronics should prepare themselves for some tough going ahead.
http://www.businessweek.com/globalbiz/content/apr2006/gb20060425_598756.htm
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