Former Handset Leaders Could Be Left Behind

But this leaves Nokia facing extremely difficult comps in the second and third quarters of 2008. That's the period when the N-95 was white-hot in 2007. Now the entire N-series range is wrestling with furious size and display-quality challenges from far dumber but much sleeker rival phones that offer the same dazzling 5-megapixel camera quality.

We know from past experience how quickly the handset upgraders can grow jaded with old feature sets when they sense something new and exciting arriving soon. In 2003, midpriced handsets with 128x128 pixel displays were all the rage. By spring of 2004, they were ice-cold as consumers switched to bigger screens. I would not underestimate the impact of a major display-quality transition on consumption patterns -- we saw astonishingly rapid rejection of old display classes in 1997 and 2004. Those are the years when industry market-share projections broke down entirely.

June Blizzard?

LG and Samsung are fanning out new selections of big-screen models at an astonishing speed. Right now, Samsung is ramping up the F490 with a 3.3-inch screen packed into a chassis that's just 11.8mm thick. LG's similar KF700 is edging close to launch. At the same time, it now looks as though Apple is preparing to abandon the revenue-sharing, one-operator-per-country model it insisted on last year. This could mean a far wider European launch pattern for the 3G iPhone, likely with multiple operators and subsidized pricing in countries such as Italy and Spain.

LG, Samsung and Apple (AAPL - commentary - Cramer's Take) are minor vendors in the phone market, but they are substantial players in the high-end segment with a very unusual edge this summer. Nokia, Sony Ericsson and Motorola have all refused to enter the 3-inch display arena seriously in 2008.

This pattern of old champions refusing to take feature leadership is as rare as a June blizzard, and it could have unpredictable repercussions. If demand for expensive handsets is softening at the same time that large touchscreens are capturing the imagination of consumers, it could mean a nasty double whammy for companies that bet on relatively pricey phones with relatively small displays this summer. That would include Nokia, Motorola, Sony Ericsson and Texas Instruments.

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At time of publication, Kuittinen had no positions in stocks mentioned, although holdings can change at any time.

Tero Kuittinen is managing director and senior analyst for Avian Securities, a brokerage firm specializing in technology companies. Although Kuittinen is an employee of Avian Securities the statements above are being made in Kuittinen's personal capacity and are in no way are the statements of Avian Securities, nor attributable to the company. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Kuittinen appreciates your feedback; click here to send an email.