Nokia: the phone that ate the iPod, and the video camera

Stuart Corner
Wednesday, 01 November 2006 01:09

Opinion and Analysis

Nokia has been bragging for months that it is the world's largest manufacturer of digital cameras. That was just the entrée. Next it plans to eat Apple's lunch by stealing dominance of the MP3 player market from the iPod, and for dessert chew up video camera sales.

Tommi Mustonen, director at Nokia's multimedia unit, has told Reuters in an interview that sales of mobile phones with built-in music players far outstrip shipments of dedicated MP3 music players.  said Nokia aimed to sell 80 million music devices this year, up from 46.5 million in 2005. And he claimed that two out of three consumers whose phones can play digital tracks already use them for that purpose. Apple, of course is widely expected to respond to these challenges with an 'iPhone'.

Back in March, Anssi Vanjoki, the then head of multimedia at Nokia, was bragging about cameraphone sales to the Financial Times, and said "In the next 6-12 months, there will be more of these announcements. The next to disappear will be the makers of music devices and then the manufacturers of video cameras."

The main argument against Nokia's aggressive stance is that there will always be a market for dedicated single function devices.   However that argument is far stronger in the case of still and video cameras than for MP3 players. Choice in digital cameras spans the gamut from cheap snapshot models costing less than a couple of hundred dollars to devices for professional photographers costing many thousands: and very need in between is well catered for.

Cameraphones are working their way up the functionality scale, lead by Nokia with the launch last October of its Carl Zeiss Tessar lens equipped N90 .

But so too camera makers are adding more functionality into their products. At worst the low end of the camera market might find itself seriously depleted by mobile phones but there will be plenty of scope at the higher end of the market.

Makers of MP3 players are much more vulnerable. There is really no such thing a 'professional' MP3 player. And even more than a camera, an MP3 player is something you carry with you everywhere so you can listen to music, or podcasts,  on the train, on the bus, while you are jogging. If anything it is perfect for incorporation into your mobile phone, which you have to carry anyway.

Still there is huge momentum behind the iPod and if Apple does come out with an iPhone even it if is no match for Nokia with its years of experience and massive R&D in cellphone technology, the reverse argument could apply. Why would I go for a fancy phone and compromise my music playing abilities if I can get the best music player and does the job of a basic cellphone.

Nokia is starting to sound very arrogant: never a good sign.