Thursday, June 21, 2007

French paranoia

Two interesting tidbits of European mobile phone news in the International Herald Tribune this morning as I wend my way home.

First, the French government has banned use of Canadian-made BlackBerry devices.

“The risks of interception are real. It is economic war,” the newspaper Le Monde quoted Alain Juillet, in charge of economic intelligence for the government, as saying.
Since when did the French have any economic secrets worth stealing? About the only world-class products they are have are the TGV and the A380 superjumbo, both markets where US firms do not compete. It seems like they’re projecting their own spying habits onto their economic betters. (I wonder if they would be any happier if RIM moved its servers to the QubeƧois Republique).

As the follow-up story documents, crackberry-addicted French bureaucrats are in serious withdrawal without “Le BlackBerry.”

The second article brought news that next January, Nokia will combine all its mobile phone divisions into one. Right now they have three divisions: Mobile Phones (basic devices), Multimedia (phones featuring video and television) and Enterprise Solutions (for corporate use). The combination will not affect reporting on the Nokia Siemens Networks joint venture.

I don’t follow Nokia well enough to understand the history of the distinction, but it certainly seems artificial today. Business users want music and video to play in airports, while many of the thumb-keyboard users (at least in the US) are individuals or at least buying the device on their own.

The Bloomberg report in the IHT also played up that product and services revenue will be aggregated — the press release makes it clear that Nokia will not break down its revenues except to separate the Nokia Siemens JV. Certainly Nokia is trying to grow both its software and services revenues; software should have good margins (with sufficient scale) while services tend to have poor margins. Nokia may be able to get growth as a solutions company. However, I have to wonder if the real motivation is that that they expect weak growth in hardware sales, and so want to increase (but not report out) service revenues to disguise the maturation of their primary markets. Look for their gross margin (or return on sales) to decline if they make a big shift to services.

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