Nokia to unveil new multimedia phones

By Tarmo Virki and Lucas van Grinsven

HELSINKI/AMSTERDAM - The world's largest cellphone maker Nokia will unveil new multimedia phone models, including an N73 camera phone, at an event in Berlin next week, sources close to the company told Reuters.

With its new N-series phones Nokia will take a step towards more stylish and lighter models, but it is still a long way from rival Samsung's and Motorola's thin models, sources said.

"With the current N-series models, we've done some back-to-back tests with models from competing vendors. Nokia's size, weight, bulk is significantly bigger, while the key features such as the camera match up," said one source at a large telecoms operators who declined to be named.

"The models they will announce on April 25th won't be there either. Towards the end of the year, the N-series will become more realistic in their form factor. They're heading in the right direction, but the competition will move too," she added.

Nokia reported January-March earnings and sales above all expectations earlier this week. The firm, which sells more than one in three of all mobiles, increased its share of the market, but arch rival Motorola reported even faster sales growth.

Nokia singled out the success of its N70 model, being its biggest revenue-generating handset in the quarter, but analysts say N70 sales are dwarfed by Motorola's slim RAZR phone.

Nokia said the N70 camera phone was the biggest-selling third-generation (3G) mobile in the world in the first quarter, accounting for about 10 percent of the third-generation market on its own.

Research firm Strategy Analytics estimates that 10 percent would total fewer than 2 million phones in the quarter. In the same period Motorola sold 18 million RAZRs, a second-generation phone that sells for roughly half the price of the N70.

MISSED THE NEW COOL

Created by a team of 40 industrial designers and mechanical engineers led by former Sony Corp. executive Jim Wicks, the RAZR surprised consumers with its ultra-thin looks, becoming an instant design icon when introduced at the end of 2004.

"Nokia missed the slim phones trend just as they missed clamshells a few years ago. But this is not that kind of a mega trend as clamshells were," said Nordea analyst Karri Rinta.

Samsung Electronics and LG Electronics rushed their own slim models to the market while Nokia was preparing its new N-Series phones.

"Just as they went to N-Series with lots of features and functionality, the market moved to thin and small and light. They went against the market," the operator source said.

"I would be shot by my bosses if I would try to bring out such bulky designs," said the head of a unit at one smaller Nokia rival.

Nokia nevertheless grew unit shipments in line with, or faster than all its top five rivals except Motorola.

And its handset profitability as a result of its massive scale based on entry-level handsets is unmatched at 17 percent, compared with 11 percent for Motorola and 10 percent for Samsung in the first quarter.

Nokia has revamped its product portfolio, adding more clamshells since 2004, when it lost market share to rivals with folding designs.

It has acknowledged consumer interest in thinner phone models, but so far has not come out with an ultra-thin design.

One of its most promising models, the new 6131 it launched in February at the 3GSM mobile trade show in Barcelona, is 20 millimetres thick, compared with RAZR's 14 millimetres.

Nokia built its brand in the 1990s on easy-to-use, small phones with long battery life, and in later years its designs included unorthodox and expressionist models its rivals have not dared to copy.

The N-Series phones, however, take a different route, stretching the technical limits of the traditional handset. The chief of the multimedia division, Anssi Vanjoki, won't call them mobile phones, preferring the phrase "small computers".

Some analysts think that is a mistake.

"It takes away the sexiness. If you make them computers, that makes them boring," said Gartner analyst Carolina Milanesi.

"Nokia is closer to the computer, but they need to make them more appealing from the design point of view."