FOCUS: Nokia's N90 Isn't Ticket To High-End Success
STOCKHOLM -(Dow Jones)- Nokia Corp.'s (NOK) N90 is the first in a new range of phones boasting music, video and much more, aimed at attacking the high end of the market. But the picture isn't so good.
Heavily promoted and dubbed "an advanced and inspirational multimedia device," the N90 boasts as its key feature a camera with a lens from 159-year-old optical equipment specialist Carl Zeiss AG, with high picture resolution for a phone.
But rival handset makers have cameras nearly as good, some of which are cheaper, while some are half the weight.
And a delayed launch - the N90 was meant to hit the shops in mid-June but is only becoming available in small quantities now - means it has a shorter headstart over similar high-end camera phones being planned by main rivals Motorola Inc. (MOT) and Samsung Electronics Co. Ltd. (005930.SE).
"We have seen no demand for the product in our stores," said Daniel Lindholm, marketing director at phone retailer Carphone Warehouse Group PLC's (CPW.LN) Swedish unit. The phone could sell well as a niche product, he added.
While king of the entry-level and mid-tier segments, Nokia, the world's biggest cellphone maker, has found it tougher at the high end of the market. The N90 is the first in a triplet of feature-rich handsets aimed at addressing this weakness, but analysts say it isn't the ticket.
Consumers expect more and more features for their money, making it increasingly difficult for handset makers to differentiate themselves. Some analysts say the N90 relies too much on the cachet of the Nokia name.
"The N-series is just a slight improvement in design and style," said Neil Mawston, an analyst at research firm Strategy Analytics. The N90 is a technical advance for Nokia but still fails to set it apart, he said.
Unveiled in April, the N90 is praised by analysts for its topnotch camera features, including high resolution, built-in flash and zoom. The picture resolution of two megapixels is high for a camera phone, although short of current digital cameras which usually have four megapixels or more.
And it does look different. Although it's a flip-open "clamshell" design, the two parts of the phone can be twisted and flipped in a way that makes it easier to shoot photos and videos one-handed. Plus it uses the third-generation wireless technology, making it possible to send and receive live video or e-mail high-quality still images without long delays.
But competitors haven't stood still.
The U.S.' Motorola and South Korea's Samsung plan to launch phones with two megapixel cameras, the same resolution, in Europe later this year, in time for the key Christmas period.
Sony Ericsson, a joint venture of Sony Corp. (SNE) and Telefon AB LM Ericsson (ERICY), already offers a cheaper mid-range model with a two megapixel camera, the K750i. Although it's not a 3G phone, that's not a problem for the many users who offload the big pictures onto their personal computer via a cable instead of using the mobile networks.
Japan's Sharp Co. (6753.TO), which sells a high-end camera phone in Europe, will unveil a 3G phone with an even higher resolution than the N90 later this month, according to wireless operator Vodafone Group PLC's (VOD) Web site.
And analysts say there's another big drawback of the N90 - weight. It's a hefty 173 grams, almost twice as much as some of Nokia's popular mid-range models.
Both Samsung's D600, which is due in the fourth quarter and features a sliding keypad and two megapixel camera and Sony Ericsson's K750i weigh less than 100 grams.
Twist And Fold
Nokia spokesman Kari Tuutti said the key differentiation of the N90 against the competition is its superior video quality and twist-and-fold design.
"Most observers don't consider segmentation enough," he said, implying too many of the rivals' phones look similar to each other and have the same features. Some consumers are willing to buy a heavier phone if it has more functions, he said.
"We believe there's a market among enthusiasts," he said, adding the addressable market is more than one million subscribers.
Nokia is seeing shortages of the N90 due to strong initial demand, though it doesn't want to draw conclusions from this. "We're still in the early days of selling the product," he said.
The ramp-up of production is on schedule but is slower than for lower-priced phones as the company wants to gauge demand before stepping up volumes, he added.
Strategy Analytics' Mawston said he would expect Nokia to sell "a few hundred thousand" N90 phones a quarter. Tuutti wouldn't disclose Nokia's expectations.
The N90 went on sale in selected markets July 20, and the few phones that have found their way to stores have sold immediately, according to anecdotal evidence from retailers and distributors around Europe.
The phone is only available in limited supply, with some retailers and operators saying they have not received any.
Carphone Warehouse's Swedish unit, The Phone House, said the delivery date has been put back but expects the N90 in September. Meanwhile, the Sony Ericsson K750i - a small candy-bar style phone - was the top seller in July at The Phone House.
Vodafone Sweden sells Sony Ericsson's K750i and Sharp's 902 model and plans to extend the portfolio of megapixel camera phones during the year. It hasn't decided whether to stock the N90, said spokesman Hans-Olof Johansson.
He added the K750i is currently popular, and Sharp's 902 model has gained some traction with those who want a feature-rich phone, despite its high price.
The N90 retails in Europe at around EUR600 compared with EUR350 for the Sony Ericsson K750i and EUR900 for the Sharp 902. Sharp's 903 model will cost around EUR800 when it debuts in September, and it also sells a clamshell phone with two megapixel camera for around EUR450 in some markets.
In practice, most users in Europe never know how much their phone cost because operators subsidize the handset from call revenues.
The next phone in Nokia's N-Series, the N91, has a high-capacity music player and is due to start selling in the fourth quarter.
"For the third quarter we don't see the N-Series having any significant impact on Nokia's overall sales. Later it could become an important contribution to the multimedia division's sales and earnings," said Greger Johansson, an analyst at Redeye in Stockholm.
Company Web site: http://www.nokia.com
-By Magnus Hansson, Dow Jones Newswires;+46 8 545 130 91, magnus.hansson@dowjones.com
(Joon Knapen in Frankfurt, Stefan Simons in Amsterdam, David Roman in Madrid and Nic Fildes in London contributed to this story)
(END) Dow Jones Newswires"
Posted to the site on 19th August 2005