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Nokia: Hurry Up and Wait

It's unlikely that you'll be able to buy a dual-mode (UMTS/GSM) 3G mobile phone from Nokia Corp. (NYSE: NOK) much before Christmas 2003.

That's the message that Unstrung took home from today's launch of the Nokia 6650. Nokia demonstrated its new baby on "a live WCDMA network environment" provided by local operator Sonera Corp. (Nasdaq: SNRA), before an audience of assorted scribblers in Helsinki (see Nokia and Sonera Demo '3G').

Dualmode handsets will be a crucial element for operators looking to provide subscribers with complete coverage, as most are expected to initially roll out UMTS in big cities, meaning that subscribers will need to be able to roam on GSM if they are outside a major population center.

However, it'll be a while before the 6550 arrives in stores. Nokia says it is now sending out the handsets to carriers for testing. In the first quarter of 2003, they will send out another tranche for "friendly users" to test. By the first half of the year, there will be small numbers of the phones in the shops, according to David Watson, head of the imaging products division at Nokia. The phones are not expected to hit stores in volume before the second half of 2003.

Let's take a breath and try to translate a little industry-speak, here, shall we? When a handset vendor says that its product will be available in the second half of the year, that means it has only one thing on its mind -- the holiday season. Which is why we expect a Christmas 2003 push for the Nokia 6650.

However, some analysts are already saying that the 6650 looks like the ugly duckling of 3G. "Clearly an early-stage handset," says Richard Windsor, communications equipment analyst with Nomura Holdings Inc. in a research note, noting the "old form factor" and "external aerials."

The main selling point, Windsor reckons, is the ability to make calls on the phone while using it as a modem to link a laptop to the internet. "[This is] easily replicated with a 2G phone and a WLAN card, which makes us feel that this is going to be a tough sell in the early stages," says Windsor. Of course, a price tag of €700+ per handset won't help it fly off the shelves either.

The phone is "unlikely ever to impact Nokia's financials," Windsor says, adding that he doesn't expect Nokia to sell more than a million units in 2003.

Even Nokia seems to be tacitly acknowledging that its 3G launch is a bit of a damp squib. On Monday, Nokia Mobile Phones executive vice president Anssi Vanjoki told Reuters that operators do not yet need 3G networks to be able to offer services such as picture, sound, and text messaging [ed. note: how convenient for them!]. This statement echoes Sonera's pseudo-next-generation launch last month, when the operator claimed that it was now offering 3G services on a GPRS network! (See Sonera Confuses 3G With 2G).

Nokia is now looking to the launch of true 3G services in the second half of 2003, according to Nomura's Windsor. This should give operators time to iron out the kinks and get their hands on more phones.

"Judging by the difficulties the industry has had so far, this target could easily be missed," says Windsor, circling 'round to put the boot in one more time. "Technological shortcomings and a lack of services are likely to prevent 3G from having any real impact this side of 2005."

— Dan Jones, Senior Editor, Unstrung
http://www.unstrung.com
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