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A striking feature of the mobile-phone story so far is that it is a rare triumph for European business. The information superhighway is littered with companies battered by the Microsoft juggernaut, from software pioneer Digital Research to Apple Computer, which has been reduced to single-digit market share and is struggling to survive. Similarly, European computer makers, from Britain's Amiga to France's Bull and Italy's Olivetti, have been crushed by American competition. The one bright spot that European companies can point to is the market for mobile phones, where manufacturers, led by Ericsson and Nokia, have taken a commanding lead in the transition from first-generation analog phones to cutting-edge digital devices in tiny packages.
What goes for companies also applies to people. While Americans lead Europeans by a wide margin in the use of personal computers at home and in the office, Europeans are becoming far more addicted than Americans to the mobile phone. One reason is Europe's more cooperative approach to the technical issues: in 1991 manufacturers, network operators and regulators all agreed on a single digital standard called GSM (for Global System for Mobile Communications). The European standard quickly spread to as far away as Hong Kong and Australia, while mobile-phone companies in the U.S. chose a variety of incompatible standards that made it hard to use a single phone when traveling from New York City to Los Angeles, much less from Boston to Bombay. That, Nokia CEO Jorma Ollila told TIME, gave the Europeans a huge competitive edge in the global marketplace. "With tremendously costly investments and the uncertainty of technology, the fact that you have the volume benefit of a standard applied in more than 100 countries gave a kick to the whole industry, lowered risk for key players and reduced the cost to the consumer."
Two other marketing innovations have helped boost demand in Europe. Phone companies there quickly realized that people would leave their cellular phones switched on longer if the cost of the phone call was paid by the caller, not the receiver of a mobile call--the opposite of the payment system still common in the U.S. Economists also began to realize that the U.S. business model--subsidizing the cost of the phone handset in order to lure customers to sign up for the service--is less appealing to consumers than an approach by which the customer pays full price for the phone but gets cheaper talk time. No matter the differences in approach, Europeans love their mobile phones. A telecommunications milestone was reached last month when Finland, home of Nokia, reported that more than half its population of 5.1 million had a mobile phone, the highest penetration in the world. "The mobile phone has become a personal device to help customers manage their daily lives," says Jari Jaakkola, senior vice president for Finnish mobile operator Sonera, who predicts that 100% market penetration, meaning more mobiles than people, will be achieved within five years.