That said, the job of the bear is to highlight any qualms he or she has about the company. You don't know if it's a solid investment until you've whacked it with a hammer a few times. There's a potential downside to investing in any company and in every company. That's why we generally have more than one stock in our portfolios.
Exchanging margins for volume is common to any maturing industry, and even though this is not necessarily a bad thing, the standard defenses against it are product improvement and marketing to build a brand name. Nokia is doing both. It has well-tested and established designs, and economies of scale younger competitors lack. Nokia's management is also free to place manufacturing plants in countries like Korea and China to have the same production cost advantages as potential competitors. And is Sprint going to offer a no-name phone with its brand-name wireless transmission service? If all else fails, Nokia can take Intel's Celeron approach and produce a stripped down, no-frills version to supply the low-end itself.
Remember, Nokia got its chance when the previous leader, Motorola, missed a technology transition in an industry that wasn't its core business but merely a sideline. If Nokia stays on top of its core business, competitors shouldn't have much of a chance to unseat it easily.
As for future digital standards, it's a bit early to get worried here. In the high-tech world, standards are what get implemented. Most of the standards to come out of the International Standards Organization that don't simply codify what's already in use get ignored. As you said, Nokia has pledged to support whatever becomes the standard, but currently there are several fighting it out.
Licensing issues like Nokia/Qualcomm are quite common in the high-tech world. Assuming the worst-case scenario, that Qualcomm's patents did turn out to be worth something (not proven) before they expire (not proven), and that Nokia and Qualcomm couldn't come to a licensing agreement (fantasy at this point), Nokia would still have plenty of options. Sublicensing someone else's license, buying a much smaller company with an existing license, challenging the patents in court with "prior art," reverse-engineering a compatible technology in a non-infringing way...
Also remember that the Internet is designed not to care how you connect to it. Ethernet, token ring, a dozen types of modems, networks that use your house's electrical wiring, infra-red, etc. Historically speaking, any standard you have to pay royalties for is at a big disadvantage compared to a standard you don't, no matter how technically superior, and Nokia knows this. And there will be a fresh set of standards in five years as speed needs increase, probably as technically different under the covers as gigabit ethernet is from 100baseT.
The answer to investing cash in bonds is simple: liquidity. Nokia's keeping cash on hand for emergencies, to fund from operations. If this cash were invested in stocks, the market might be down when it was needed. If it was already reinvested in the business, Nokia wouldn't have resources on hand to respond quickly to sudden dangers or sudden opportunities.
Most high-tech companies do this, ever since Hewlett-Packard set the pattern decades ago. In a fast-moving industry, cash is the best insurance policy. Microsoft alone had over $20 billion dollars in cash last time I checked. All this means for Nokia is that if it does hit bad times, it can start reinvesting more cash in its business to compensate.
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