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No. of Recommendations: 4
I'd argue three things:

1. NOK does far more than phones and that, if you believe in wireless futures, phones will be more than just phones (tho perhaps still commoditized). So, things like wireless LAN and providingg the service equipment and s/w to wireless service providers are big areas of revenue.

2. a glimpse at NOK's financials show that they already manufacture very competitively with the Koreans and Japanese in terms of cost because....

3. Mobile phones and devices are a lot like computers. The parts that make them up: memory, LED's, embedded chips and some plastic are commoditized. It is the combination that makes the phone unique and that combination requires design ability/smarts and is cheap to assemble most anywhere typically. What I suspect you will see, and is already the case probably, is that NOK and competitors will design phones but outsource assembly locally to major sales areas (to save inventory and holding time and cost as well as shipping costs).

Finally, the sale of QCOM's handset arm to very small player Kyocera is IMO a good thing for NOK. Selling that group to ERICY would have hurt. But Kyocera has a very small penetration in the market and a reputation for labor difficulties and faulty execution. So, it is likely less a threat with Kyocera than it would have been with ERICY.

Bottom line is that NOK is far far far far far more than phones and a leader in the development of protocols and systems that drive wireless in much of the world. I am not too worried about commoditization in the next 10 years for them or their market.

Just my thoughts.. cheers,

jgc
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