Nokia Conjecture

Nokia seems to be winning the cell phone wars with Motorola on the ropes so much so that Carl Icahn is stepping in.

Last month, the company posted its first quarterly loss since 2004 and
Motorola has lost about one-third of its market value since October.
The company said last month that its dismal sales likely would continue to vex
profits at least through the second quarter.

And Nokia is not wasting a moment to jump in and get some market share gains.

Cell phone maker Nokia Corp. said Monday its share of the global
handset market will grow during the second quarter to more than 36 percent.
The company had previously said it expected its market share to hold steady
with the 36 percent share reached in the first quarter.

That is all well and good but this little tidbit from an article on how cell phone companies lock their phones so they can't have as many features and how consumers are fed up with it had me thinking about Nokia's long term plans.

Nokia, for one, is looking for a way out of this vise. The cell phone
maker has begun opening "flagship stores," where it sells unlocked mobile
devices ranging from full-featured business smartphones to consumer cell phones.
The first two, in Chicago and New York, opened last year, and Nokia plans to
open additional stores around the world.

I was thinking about what Nokia could do to break this stranglehold on their phone business. One way they could do it is to buy out one of the main European carriers like Deutsche Telekom and then proceed to turn T-Mobile into a force in the US market.

They could compete by providing a better service then the other mobile players in the US. What they would do is make the American cellular experience more like the European/Asian one. The features on a Japanese phone are 100x better then an American phone and the US carriers dominance is part of the reason.

The whole idea behind crippling features in a phone is a bad for the consumer since it slows technological advancement. Maybe Nokia with its massive cash hoard could go the vertical integration route and provide the phone and the service all in one seamless package.

The big drawback to this is that the other US phone carriers will probably try to freeze Nokia out of their own stores. So it will probably be a bad idea for the most part since they might lose a bundle of market share in the short term and one slip-up and it will be a disaster. However, it would certainly be a cool thing to have a company come out with a top of the line phone that doesn't have everything locked down on it. Also I would love a carrier that doesn't charge you for every feature and nickle and dime you to death. Finally it would be nice of a carrier to compete on how they aren't as crappy as the others (ie Cingular with its "not as many dropped calls as the other guys" crap.) In any case Nokia is now the proven leader in the space until Motorola can get its act together. And that is no conjecture.