Nokia sees cheaper phones getting smarter in 2007

Tarmo Virki

HELSINKI: The world's top handset maker Nokia expects its sophisticated Series 60 software for smartphones to appear in more medium-priced phones in 2007 due to lower manufacturing costs, company officials said.

"Rising volumes open increasingly more opportunities as they are lowering component prices and the total bill-of-materials," Matti Vanska, vice president at Nokia's technology platforms business, told Reuters.

So far, high costs have limited the spread of the S60 operating system to pricey smartphones which run computer-like applications such as video, music, graphics, word processors, spreadsheets, email and mobile TV.

But the spread of such functions to cheaper phones could boost sales for the Finnish company, as customers looking for a good camera or music player, previously put off by prices of well over 500 euros ($634) for top models, could now be able to afford them.

Mauri Metsaranta, director for software platforms marketing, told journalists earlier this week: "Next year will be really the step on going to the midrange".

Midpriced phones cost about 200-250 euros.

Nokia has shipped more than 70 million S60-based phones so far but expects the market for smartphones to reach roughly 100 million in 2006 and to grow to 250 million by 2008.

MARKET LEADER

Nokia's S60 operating system, built on Symbian software, is used in 51 percent of smartphones, according to research firm Canalys. Other Symbian-based operating systems have 22 percent of the market, while Microsoft has 11 percent of the market, RIM 7 percent and Linux 6 percent.

Symbian is a UK-based mobile phone software venture in which Nokia, Ericsson and Sony Ericsson together hold 76.6 percent. Other shareholders are Panasonic, Samsung, Siemens.

"We want S60 to be the market leader also in 2008 and in 2010," Vanska said, though he acknowledged: "We have no illusion that our current market share of some 50-60 percent would automatically stay at that level in the future."

Nokia has signed licensing agreements for S60 with Samsung, Lenovo and LG Electronics.

Earlier this week Nokia said it has sealed a deal with operator Orange, part of France Telecom, on customising software for mobile phones, boosting the position of phones in Orange's line-up that use Nokia's S60 software.

"In a way co-operation with operators paves the way for the licensees," Vanska said.

"Vodafone's agreement at the start of the year showed the direction the industry is going. Instead of operators going through approving every single device, they approve the whole platform," he said.

The platform approach -- which means functionalities of different phone models are similar -- enable carriers to achieve significant savings as handset makers offer hundreds of new models each year.