Nokia pins high hopes on new game phone

HELSINKI: Nokia set out ambitious goals for its new combined cellphone and game console, throwing down the gauntlet on the eve of a worldwide launch as it seeks to wrest control of the market from Nintendo.

The world's leading mobile phone maker said that, as of Tuesday, its N-Gage portable gaming model would be on sale in over 30,000 stores globally in one of its largest ever product launches.

"We are targeting selling several million N-Gage units in 2004," Nokia Mobile Phones spokesman Kari Tuutti told Reuters.

When asked about N-Gage's prospects for the current quarter, which includes the key Christmas season, Tuutti added: "We have had a very promising order intake from the distribution and retail outlets in different countries. It indicates good momentum for N-Gage."

N-Gage is the first mobile phone with enough gaming power to compete with Nintendo's GameBoy Advance SP in terms of program complexity and image quality.

Users will be able to buy games separately and insert them into the handset. They also get an MP3 music player and an FM radio.

A successful launch would give the Finnish company a slice of the rapidly-expanding, multi-billion dollar electronic games market and help offset slowing sales of mobile phones.

Analyst Jussi Uskola at Nordea Securities estimated the overall cost of the launch at 150 million euros ($175.7 million). Tuutti declined to comment on how much it was costing Nokia, but did say the company was investing "significantly" in building the N-Gage brand.

Nokia shares pared an early loss following Tuutti's comments, but later fell back again and at 1546 GMT were down 1.7 percent at 14.33 euros, compared to a 0.5 percent drop by the DJ Stoxx European technology share index.

Analysts said a key sticking point with N-Gage remained the price.

EXPENSIVE?

When the device makes its debut, it will carry a suggested retail price of 220 to 230 pounds ($382.40) in the UK and 299 to 350 euros ($409.90) in continental Europe -- pricey by mobile phone, gaming device and MP3 player standards.

By contrast, the popular Nintendo GameBoy Advance SP, already on the market with hundreds of games, retails for 129 euros. N-Gage carries a suggested U.S. retail price of $299.

Some UK retailers said Nokia had offered to subsidise the phones. British mobile phone service provider mmO2 said it would sell the device for 99 pounds as long as the customer signed up for a monthly tariff of between 20 and 50 pounds.

"Those subsidies are coming direct from Nokia," an mmO2 spokesman told Reuters.

But Nokia, which has said 300 euros per unit is a "typical price" for N-Gage, denied it was offering any subsidies.

"We sell N-Gage at a certain price, and we will not offer any subsidies of any kind on top of that," Tuutti said.

He declined to comment at what price Nokia was selling the phone to retailers.

Nokia has surprised many in the gaming industry by gathering support from the top game developers including Electronic Arts, the maker of "Madden NFL" in the United States and "Fifa Soccer" in Europe.

Still, the majority of the games will not be on the market until after Christmas. Nokia said it would have 20 games by the end of 2003, including Eidos's "Tomb Raider" and Ubi Soft's "Splinter Cell".

"The (lack of) games will mean Nokia can only hope to do okay this Christmas, but this is a longer term strategy for them," said a London-based consumer electronics analyst.

Nokia said the games would be priced at between 20 and 40 pounds, making them some of the most expensive mobile games on the market.

Still, the device has attracted some positive buzz for its multi-player capability. Equipped with Bluetooth networking technology, gamers will be able to engage each other on separate consoles in the same room.

© Reuters