Nokia Fights Notion It's Losing Ground

In its most concerted effort to date to recapture what some have perceived as waning brand interest, Nokia kicked off a four-city worldwide tour today with a gala event in New York City, where five new handset models took center stage. At the high end is the innovative N95, with a two-way sliding keypad that flips its mode between media player and cell phone, a built-in 5-megapixel camera, and speakers Nokia says will produce a "3D stereo effect."

The fact that the N95 is an HSDPA device will likely mean that Cingular will be the first, if not the only, major US carrier to offer the phone to its customers. Competitors Sprint and Verizon are still heavily entrenched in EV-DO -- the other "third-generation" (3G) wireless data technology -- while T-Mobile, which supports HSDPA in Europe, has yet to announce a 3G strategy for North America.

HSDPA is one high-speed extension of W-CDMA cellular technology, in which Nokia remains firmly positioned.

Three weeks ago, Nokia demonstrated in Hong Kong an upgrade to W-CDMA networks there that enabled a 3.6 megabits per-second (Mbps) data-driven phone call, using the company's new 16QAM modulation scheme. Nokia believes it can implement similar "simple upgrades" to existing CDMA and EDGE cellular networks worldwide, to achieve a possible tenfold increase in data throughput speeds.

The key to staying on top of the CDMA evolutionary juggernaut may be deciding in a flash which evolutionary path to follow - and there are several. Earlier this month, wireless analyst firm ABI Research predicted overall 3G cellular subscriptions worldwide to top 285 million before the end of this year.

In addition, W-CDMA -- the evolutionary path from which both HSDPA and EV-DO sprout forth -- may represent a larger share of 3G subscriptions than CDMA2000, the evolutionary trend from a few years back. That changing of the guard, however, ABI believes, could take place in 2012.

There's been considerable confusion of late with regard to what "side" these new 3G technologies are truly on. While the UMTS Forum -- which represents technology partners in the 3G space -- openly tout HSDPA, both in its native Europe and worldwide, as "the successor to GSM," technologically, it is actually an upgrade to GSM's cellular technology rival, CDMA.

In fact, proponents of both EV-DO and HSDPA technologies position them as upgrades to the existing CDMA cellular infrastructure (the "EV" in EV-DO stands for "evolutionary"). Communications technology giant Qualcomm has stakes in both technologies, and has even advanced them both on parallel courses.

Yesterday, Reuters cited a Strategy Analytics report stating that Nokia's US market share had slipped to just 13%, behind Samsung with 16% and #1 Motorola with a remarkable 44%. To show just how much of a disconnect there is between the US market and the worldwide cellular market, iSuppli's global numbers for Q2 of this year still show Nokia on top worldwide with 35% market share -- actually gaining 1% from the prior quarter -- shipping an estimated 78.4 million units during the quarter.

Motorola, however, did gain 2% over the prior quarter, closing the gap against Nokia a bit, with 23% share; Samsung had a 12% share in Q2.

In turn, the N95 could represent Nokia's best opportunity to date to close the loop, and bring North American performance back in line with the rest of the world. With US regulators giving the final nods to the merger of AT&T Inc. and BellSouth, Cingular now has one owner, and may feel more empowered to make a name for itself as the continent's only HSDPA provider.

Europe will probably be the first major market to see the N95, per usual, with Nokia estimating prices for its Q1 2007 launch at about 550 euros (just under USD$700).