Cellphone giant Nokia showed off its first netbook on Tuesday and announced that it would go on sale at Best Buy and would connect to the Web using AT&T’s network.

John Hwang, general manger for Nokia’s brand new connected computers division was coy about discussing future plans for Nokia computing products except to say that “there are other products in the works.”

Hwang said he would look at all options for future products when asked whether Nokia, currently using the Microsoft Windows 7 operating system,  would consider making netbooks using other technologies such as systems from Google, a rival in the cellphone world.

“We certainly wouldn’t rule out other technologies,” the executive said. Unlike in the cellphone market where Nokia has to protect its leadership position, the Finnish giant will have to be more open-minded in computing, he said. “As a newcomer we’re trying to take a different attitude.”

Here are some short video demonstrations of the product. The company is betting that the device’s slim form and 12-hour battery life will give it a good start in the computing market.

Nokia has also set up the device to easily synch services such as texting and photos with its cellphones using its Ovi service.

BlackBerry-maker Research In Motion is a victim of its own success. Having dominated the market for corporate e-mail devices for years, it is being forced to seek out growth in consumer markets, where, so far, it has had trouble differentiating its products.

Going mainstream has helped vastly expand its consumer base -- which now represents half of all BlackBerry subscribers. Fully 80 percent of its new subscribers now come from outside its traditional corporate base.

But that success is coming at a growing cost to the once lofty average selling price of its phones, the latest quarterly results show. Profits for its second fiscal quarter dipped 3.5 percent, amid weak subscriber growth. Product prices appear under pressure at both ends of its business, both among corporate users and with consumers.

Fixing these issues will take time, several quarters at least, something which investors who have bid the stock up more than 100 percent in the past year were not prepared to hear: they sent RIM stock tumbling 17 percent, to below $70, on Friday.

The trouble is that RIM must develop and introduce new products that can recapture customer attention in increasingly crowded markets. Phone companies must be convinced to sell the new BlackBerrys in their stores. Consumers must get the message. Rivals have to be kept at bay.

And RIM no longer has the luxury of retreating to its corporate base. There has been a proliferation of rival devices from the Apple iPhone to newer phones from HTC and Motorola based on Google's Android operating system, all of which now offer customers secure access to Microsoft Exchange e-mail and contacts.

The company is desperate for a hot new product to replace its three-year-old Pearl phone, its first device to make a splash in consumer markets. Its standout keyboard for text input is less special than it once was. Rival mobile phone makers offer better cameras, more memory and a wider selection of zippy software for their devices.

But Research In Motion has a plan that involves more than just waiting for the global economy to recover.

A solid step in that direction is the new low-cost Curve, which offers many of the features found in pricier smartphones. It has seen early success in the United States and Europe convincing phone operators to market it to teenagers. This mass-market device is an example of RIM's land-grab strategy in action. It won't improve RIM's finances any time soon, but the goal here appears to be market share.

Rather than trying to always be first to lead with cool new features, RIM's contrarian theory is that by building products that handle data more efficiently, they are more likely to become the preferred devices sold by network operators. It's akin to the strategy that made BlackBerry so popular with corporate technology managers.

Another part of its strategy, no doubt egged on by the success of the iPhone, is to improve not just how its phones make use of the Web, but the basic software that defines what users see and do on BlackBerrys, says Ben Wood, a mobile device analyst with UK-based CCS Insight. Toward this end, RIM acquired Torch Mobile, the maker of an innovative Web browser for mobile phones, in August.

The problem is that -- in a bid to grab market share from rivals like Apple and Nokia -- RIM says it must accept far lower average selling prices on its phones than when it was known mainly as the preferred supplier of secure corporate email.

This strategy will take time -- not a few quarters, but years to play out. RIM effectively is asking investors to have faith that it can repeat its miraculous rise in the corporate e-mail market, only this time in fickle consumer ones.

You can read some of Eric's recent colums here. 

(Photo credit: Reuters/Mike Cassese)

If you want to take a bite out of Apple’s piece of the staggeringly huge (but difficult to quantify in $$$ terms) smartphone market pie, you’d better either have the magical new “thing” or be willing to spend to buy it.

As Anupreeta Das reports, Palm – one of the stalwart originals in the mobile handset space -- has remade itself into a terrific target with the success of its Pre. Palm’s stock got a jolt this week on talk that Nokia could be considering a bid. But as she explains, Palm may prove to be too pricey a purchase, even for those with deep pockets.

Since introducing the Pre, Dell, Microsoft, Nokia and Motorola have been mentioned as possible suitors. If one of these cash-rich companies was to bid for Palm today, it would be targeting a stock that has quadrupled this year. Complicating matters, “details on how many units it has sold are skimpy, making it difficult to value the success of Palm's turnaround story,” she reports.

Palm's market capitalization is $2.4 billion. Based on the average 34 percent premium that technology, media and telecommunications companies have been sold for this year, according to Thomson Reuters data, this means a price tag of about $3.2 billion.

Dell is already in the early stages of buying up Perot Systems, but will still have nearly $7 billion in cash on hand should it choose to go on a spree. Microsoft, while a cagey customer, as shown in its dealings with Yahoo, has buckets more. For big tech players, the price itself is not the problem.

“To them, Palm is a thousand-dollar used model locomotive. Now you have to buy the other cars, and the tracks, and fake trees, etc. You have enough to pay for it, but you don’t even know if it works properly,” said a guy here at Reuters when the subject was being kicked around.

Motorola launched its Hail Mary pass in the smartphone market and it goes by the name of Cliq, or Dext, depending on where you live. One would assume plenty of branding research went into the names (Cliq in the U.S. and Dext elsewhere), as this is the company that created such easy-to-remember names as Razr, Rokr and Rizr.

Motorola, once a cellphone leader producing iconic products, has fallen well behind the competition as the smartphone market continues to sizzle and consumers flock to devices like the iPhone (which, incidentally, goes by the name “iPhone” everywhere it sells).

With so many new smartphones coming to the market, analysts say the key to success is differentiation — which is often a software issue rather than a hardware one. Motorola hopes its MOTOBLUR software, based on Google’s Android platform, will help it carve out a niche.

The company calls the Cliq/Dext “the first phone with social skills.” It says MOTOBLUR integrates contacts, emails, texts, postings, photos and the like from sources like Facebook, Twitter and Gmail and makes them easier to manage.

Motorola has put all its eggs in Android’s basket, reorganizing its handset unit around the platform, but it faces quite a challenge. Many of its rivals have already integrated social-networking function into their phones.

“Not only do you have to design and build interesting phones and get them into carriers, but also can you make money on it?” said Macquarie Research analyst Phil Cusick. “The smartphone landscape is exploding and there is tons of opportunity here for somebody who can build a great device, but you also have a ton of competition. Not only the traditional smartphone guys like Apple, Palm, and HTC, but LG and Samsung - who are phenomenal executors - getting into the smartphone space as well with Android.”

LONDON, Aug 13 (Reuters) - Once they were warriors battling one another on the digital battlefield. Nowadays, Microsoft and Nokia are worriers, huddling together for comfort.

The world's top phone and software companies need each other to compete with Apple, Google and Blackberry-maker Research in Motion (RIM), whose products increasingly define what users expect from phones and charge premium prices in consequence.

In the market for so-called "smartphones", Deutsche Bank estimates Apple and RIM now take home more than half of all profits, despite producing less than a third of high-end mobile phones. Nokia held a 45 percent share of the smartphone market in June, according to Gartner Inc. (Table 2 in Gartner release)

The news this week that Nokia will feature Microsoft's office software -- features such as Word and Excel -- on phones aimed at business users is symbolic of what is possible rather than significant in itself. It fell short of predictions in the gadget trade press that Nokia might introduce phones running on Microsoft's own Windows Mobile software.

But that doesn't mean their collaboration should be dismissed. There's more to this budding relationship than meets the eye.

First and foremost, Microsoft and Nokia say they are taking on the Blackberry email-phone, a must have among corporate professionals. So far the they haven't done very much, for all the big talk. But they have pledged to make Microsoft Outlook work smoothly on Nokia phones.

This is crucial in overcoming Blackberry's key advantage -- the underlying software that companies rely on to securely manage corporate e-mail.

The opportunity here is that corporate technology managers are no longer content to supply only Blackberry devices but are gearing up to support a wider range of devices and software systems, reflecting shifting user tastes and demands.

Microsoft and Nokia need one another because despite being leaders in their respective fields -- computer software in Microsoft's case and phones for Nokia. But these powers have not translated into dominance in the era of converged devices.

To some extent, they have themselves to blame. The two giants spent the first half of the decade at war with one another over Microsoft's bid to enter the mobile phone business with its Windows Mobile software and Nokia's half-hearted attempts to do the reverse and expand its presence in computer
markets.

Years of legal and technology standards battles resulted in a stalemate. Windows-based phones number only a little over 20 million in a market of billions, and Nokia has made only tentative steps to enter computer tablet or netbook computer markets. Nimbler rivals have exploited these distractions.

Microsoft isn't the only technology giant Nokia is cuddling up to. In June, the Finnish company announced that it would team up with computer chip king Intel Corp on chips for future phones. Nokia was careful this week to underscore that the Intel deal is about future generations of Nokia products while the Microsoft ties are for phones in the here and now.

Whether or not Nokia sells some Windows-based phone models or Nokia eventually introduces a mini-netbook computer running Windows software is largely irrelevant to the central problem these two companies face.

Microsoft and Nokia must create differentiated products that help users do things Apple and Research in Motion cannot do. Otherwise these two giants face marginalization in the era when phones become computers.

You can read some of Eric's recent columns here.

(Photo: Reuters/Vivek Prakash, Singapore)

Is WiMax wireless technology headed for the same fate as Betamax, which lost the battle against VHS as the video cassette standard in 1980s? A senior Verizon executive thinks so.

Recall that WiMax and Long Term Evolution (LTE) are key technologies for operators to cope with surging data traffic from smartphones and laptops with mobile data cards. At the moment, it’s a heated fight to become the industry standard.

“It’s going to be like VHS-Betamax thing,” Stuart Curzon, vice president of Verizon Business unit, told a news conference in Helsinki, Finland. “WiMax has been around for a few years now. If it would’ve taken off, it would’ve done it by now.”

Verizon itself aims to be one of the first in the world to roll out LTE network starting next year.

Another industry executive, Nokia’s sales chief Anssi Vanjoki, also weighed in with a WiMax-Betamax comparison just last month.

“I don’t think the future is very promising [for WiMax]. This is a classic example of industry standards clashing, and somebody comes out as the winner and somebody has to lose. Betamax was there for a long time, but VHS dominated the market. I see exactly the same thing happening here,”  Vanjoki was quoted as saying by the Financial Times.

Earlier this year, Nokia pulled from market its only product using WiMax, an Internet tablet, which was sold only in a couple of places in the United States.

Intel, the father of WiMax, strongly disagrees with Verizon and Nokia — how about you?

(Photo: Reuters)

News from Helsinki:

In a spurt of generosity, the world’s top cellphone maker Nokia plans to pass on to smaller Finland-based firms some 100 ideas for which it has not found any use in its core business, figuring the move could lead to new business opportunities for others.

“The current economic climate is just right for a critical evaluation of intellectual property portfolios and the release of the innovations that are more suitable for others to exploit,” Esko Aho, Nokia’s Executive Vice President for Corporate Relations and Responsibility and Finland’s former prime minister, said.

Some expect Finland’s economy to sink about 5 percent this year due to its heavy reliance on exports, and the country is looking desperately for new ideas to boost its economy.

Nokia itself is expected to recover from the market slump faster than its rivals, but it reported its first-ever quarterly pretax loss for the January-March quarter.

The new public-private initiative includes opening access to Finnish state investments for companies involved in the program. So far, some 300 firms have said they are interested in participating. Most of these firms are outside the IT industry — even a concrete foundry from Tampere, Finland’s third largest city, has said it would like to get access to Nokia’s bag of ideas.

Nokia’s Aho said it would be easy to see additional value from mobile services for the concrete foundry.

“With location-based services they can make sure the concrete is poured down at the right plot,” he said, adding that if all goes well, some of the ideas could end up with Nokia in the end anyway.

“It would be easy to see this river flowing also in the other direction,” Aho said. “It could well be that some idea lead to the situation where the result can later be added to Nokia’s offering.”

Smart thinking, right?

The traditional art of drawing could see a renaissance helped by the boom in touch-screen mobile phones following the launch of Apple’s iPhone in 2007, says British artist Derrick Welsh.

“The touch has tipped, and drawing messaging is where touch leads,” said Welsh.

It could also create the next money-spinner for mobile operators, for whom text messages are still the key data revenue generator in 2009.

To promote drawing on phones, Welsh — whose mobile paintings have been downloaded some 500,000 times from Nokia’s mobile-sharing service Mosh — is planning a drawing tour across Britain, to visit art venues, universities, schools and nightclubs.

“Fine art drawing and painting are drenched in tradition, but all children draw — as with the transformation that is happening to the rules of photography, the overwhelming majority of people who now take photographs no longer consider themselves photographers,” Welsh said.

“One day maybe the use of drawing will change as children grow up with drawing as an instant communication option.”

So far there is little that’s “instant” in drawn messages — they have to be downloaded through an Internet browser on the phone or sent as multimedia messages (MMS) from one phone to another.

“Currently, nobody trusts the networks as everyone knows a horror story or two to put them off being adventurous on the web from a mobile, and parts of the world don’t have it,” Welsh said.

A few years ago MMSs were expected to be the next big thing for mobile operators, but they have gained only a limited following among consumers due to technical glitches and some phones like the iPhone do not even support them.

Welsh, who has used Nokia’s Mosh service to study people’s interest in drawings on cellphones, says a simplified way of communicating through drawings was needed, and the potential could be surprising.

“A favorite story I heard while talking to many people was of a grandmother in Japan, who had all the usual methods to communicate with her grandchildren and she chose fax, because she could draw and then receive pictures from them,” said Welsh.

In addition to touch screen devices Welsh himself uses different technologies for his drawing, pictures in the posting are made with a Nintendo’s Wii remote control, which has been linked with Nokia’s N95 8GB phone.

One billion makes for a catchy and memorable milestone. The world’s population passed the 1 billion mark in 1804. McDonald’s sold its 1 billionth hamburger in 1963. The 1billionth PC shipped in 2002.

Apple’s App Store hit that mark today, in just nine months, with much fanfare.

Granted, downloading a small program to your iPhone or iPod Touch is an entirely different sort of commerce than selling a burger or a PC, but Apple’s app universe has managed to acquire a remarkable amount of cultural currency in a short amount of time.  As evidence, look at the controversy over the “Baby Shaker” app, which Apple quickly removed and apologized for on Thursday (the company’s statement said in part “this application was deeply offensive and should not have been approved for distribution on the App Store”).

It goes without saying that apps have changed smartphones and mobile computing. They have also given rise to a lucrative cottage industry for developers and entrepreneurs, and made Apple a serious player in the mobile gaming space.

Such success invariably invites competition,  which is already here and promises to heat up further. Research in Motion recently opened its app store for the BlackBerry, Nokia will launch its Ovi store soon, and Palm will soon follow with a store for its forthcoming Pre smartphone.

The $15 billion valuation that Microsoft appeared to bestow on Facebook in 2007 provoked some scepticism – including within Facebook itself.

It turns out, the privately-held social networking firm has a much more conservative sense of self-worth, and puts its value at a one-fourth of the Microsoft figure.

According to redacted court documents obtained, and somehow decoded by the AP, Facebook valued itself at $3.7 billion in June, when it was in court over a dispute with a rival social networking site.

Sure, Microsoft invested $240 million for a 1.6 percent stake in Facebook in October 2007. But that was for Series D preferred stock. So the $35.90 price per Facebook share value implied by the deal does not apply to the rest of Facebook’s equity.

In fact, Facebook lawyers told the court, the company actually values its shares at $8.88 share, the AP says. What’s happened to the share price during the economic slowdown since that time is anybody’s guess.

The financial details come as a result of a squabble between Facebook and the three founders of ConnectU, who accused Facebook CEO Mark Zuckerberg of stealing ideas from their own social network site while they were all undergraduates at Harvard.

Facebook settled the case in June for an undisclosed sum (believed to be anywhere from $31 million to $65 million), and the ConnectU gang are now in arbitration with the lawyers that represented them in the case.

Meanwhile, Facebook appears to be eyeing the vast realm of cell phone handsets as its next big growth opportunity.

In September, Reuters reported that Nokia was talking to Facebook about ways to make it easier for people to connect to the site from their cell phones.

A Wall Street Journal article Thursday said Facebook is in talks with Nokia about forming a partnership that would allow Nokia to integrate Facebook features on its handsets. Among the potential areas of cooperation: a feature that integrates an individual’s Facebook Friends with the contacts list on their phone.

(Photo: Reuters)