Nokia says mobile web to take off next year

Nokia, the world's largest mobile phone maker, said a market for high-speed mobile internet phones may exist by Christmas, but a full range of applications will not be available until early next year.

The industry hopes GPRS (general packet radio service)-based services will be a lucrative business that reignites consumer interest ahead of the launch of even more powerful and expensive third-generation (3G) mobile services in coming years.

"GPRS will start during the second half of the year and I think that by Christmas time it will be a true market, but that's more for the phones than for the services," Anssi Vanjoki, executive vice president of Nokia Mobile Phones, told Reuters in a recent interview.

His comments suggested that the GPRS mobile internet in Europe and Asia - excluding Japan - may need even longer to take off than earlier expected, preventing carriers from generating revenues from the services any time soon.

Nokia decided to start selling GPRS phones, also known as 2.5-generation, in Europe only from the third quarter of this year, later than its nearest rival Motorola, because it felt the market was not yet ready.

Nokia has said that from the fourth quarter it will be selling millions of GPRS-enabled phones.
Because of Nokia's huge global mobile phone market share of over 35 per cent, the decision by the Finnish company to wait on the launch has slowed the take-up of wireless internet services in Europe and some parts of Asia, say industry experts.

GPRS phones can maintain a constant connection to the internet, which means users will be notified when emails arrive, but only use network capacity when they are downloading.

"GPRS as such offers nothing, it is just the packetising of the radio space," said Vanjoki, who is also a member of Nokia's executive board.

He said technology that would make it possible to offer attractive services like music, video and picture messaging, was not yet ready.

"You need some efficient applications platforms like multi-media messaging to do it and that is only going to be (available) in the first half of 2002 and that's when we will see the consumer excitement for the services start to happen," Vanjoki added.

He said the mobile phone industry had learned that you should not build up high expectations for new technologies because they take time to mature.

"So you are better off if you introduce that (new technology) as a sideline to the main thing," Vanjoki said.

Europe's first flirtation with internet mobiles using wireless application protocol (WAP) technology over slower 2G networks disillusioned customers because handsets were in short supply and web access was limited, slow and sometimes impossible.

Vanjoki said consumers would not buy Nokia's first GPRS phone, the 8310, for its mobile internet technology but rather because of its fashion appeal and range of features.

"The motivation to buy it is the 169 (changeable) covers, the in-built radio or that it is the smallest possible phone around. So the justification to buy it is not GPRS, that's an additional reason to buy it," he said.

This suggests that Nokia is banking on handset designs to boost phone sales in the third and fourth quarter, and its competitors will be under pressure to follow suit.

Motorola also has started to put more focus on the design and user-friendliness of its range of six GPRS phones, which are being launched this year in Europe.

Vanjoki shrugged off skepticism about chief executive Jorma Ollila's comments last month that Nokia could achieve a global mobile phone market share of over 40 per cent in the long-term.

"We are not taking any dramatic conclusion that high market share cannot be sustained. Time will tell if it can be sustained," he said.

Nokia had a market share of over 35 per cent - possibly as high as 37 per cent - in the first quarter, and has said it was on target to reach its goal of a 40 per cent global market share.

Motorola also boosted its position in the first quarter of 2001 to over 13 per cent and told Reuters on Wednesday that it had raised it by a further one to two percentage points in the April to June period.