Nokia will not supply any GPRS handsets to Orange until 2002.
Investment bank CSFB has said that mobile operator Orange does not expect to sell any Nokia GPRS mobile handsets until 2002. The bank was unclear whether this represents a delay in Nokia’s production of GPRS phones, or just in its delivery to Orange.
Orange claims it will launch GPRS services before Christmas. Nokia claims it will start selling GPRS handsets within Q3 2001 and will have sold millions by the end of Q4. But the two companies are closely linked, with Orange UK handing Nokia an E800 million contract last week to build its 3G infrastructure. It’s hard to understand why they would choose not to partner for GPRS handsets if they could.
Whatever the reason, it’s not good news for the Finnish mobile giant. Its closest rival, Motorola, has had a GPRS phone on the market for some time. It claims to have sold 250,000 by the end of July, with another 2.1 million on order. As a result, it has started to gain market share for the first time in years. Other manufacturers are also beginning to get their acts together in GPRS.
Nokia’s reluctance to repeat the mistake it made with WAP (being first to market with an inferior phone, thus damaging its reputation for quality) is understandable. But the company will need strong products to resist the challenge, first from Motorola and then from the Asian manufacturers who will move into Europe as 3G launches.
It would be foolish to disparage Nokia too much. The company’s handset margins (at 15-20%) are substantially better than anyone else in the industry. It’s still the market leader, with the strongest brand name – and it has repeatedly shown a far greater ability than its rivals to design phones that people want to own.
But if the delay in Nokia’s launch of GPRS handsets is more than just a one-off problem, it risks losing its reputation as a technical innovator. This could cause serious problems in an increasingly competitive marketplace.
