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Devices/smartphones

App Insights: Nokia Ovi Store Professes Relevance

Before there was Apple Inc. (Nasdaq: AAPL), before there was Android, there was Nokia Corp. (NYSE: NOK). The global handset maker was among the first to try its hand at mobile services, but it hasn’t been the best. Now it's working to regain its top-dog status.

Nokia has spent the past year moving away from its top-down services approach and into the app store model, partnering for services it didn’t make sense to own and acquiring companies to fill in the gaps for those where it did. (See Is Nokia's Ovi Finnish'd?, Nokia Buys MetaCarta, Nokia Snaps Up Microbrowser Maven, and Nokia Acquires Novarra.) The Ovi Store has become central to its plans, but it hasn't all been smooth sailing.

“Ovi Store has been a bit of a mixed experience, to put it kindly,” says Heavy Reading senior analyst Gabriel Brown. When the store launched nearly a year ago, it was plagued with usability complaints, stability concerns, and criticisms over the number of apps, the process for downloading them, speed, search... just about everything, he says.

Nokia is, however, ironing out the kinks. Last week it hit the 1.6 million downloads-per-day mark with 9,500 content items available on its most popular devices. That’s impressive growth for Nokia, though not on par with Apple’s 6 million downloads per day. Nokia’s smartphone sales are also on the upswing, showing 50 percent year-over-year growth in the first quarter, driven in large part by what Brown says is its biggest strength -- a global customer base. (See Nokia Reports Q1.)

Nokia currently has more than 100 device models in use by consumers in more than 180 countries, with developers from more than 80 countries distributing its content. If the Ovi Store and device sales continue to improve, Nokia will have access to more and more users with capable devices, Brown believes.

Meanwhile, Apple’s iPhone will continue to flirt with saturation, making it harder for developers to make money in its crowded storefront. Even though Apple has the right target demographic, it is getting maxed out, says Brown. This is exactly what Nokia is hoping for.

“We’re a company that manufacturers and ships 1.2 million devices per day,” says Michael Bramlage, director of product management for the Ovi Store. “You get into interesting and attractive volumes when a majority of them will ship with Ovi stores embedded on the home screen.”

Nokia validates carrier billing
North America, where CDMA dominates and Nokia’s services often conflicted with carriers' own, has always been Nokia’s weakest market. That too appears to be changing, albeit slowly. Currently, 66 operators in 19 countries support the Ovi Store with integrated billing. That includes six AT&T Inc. (NYSE: T) handsets in the US where the store is available as a download and T-Mobile US Inc. ’s Neuron, the first Nokia phone in the US to be pre-loaded with the Ovi Store.

Nokia’s billing experiences to date validate what carriers have been saying all along -- that consumers want integrated mobile billing. Where Nokia makes it available, more than two-thirds of its customers choose that as their preferred payment method, according to Bramlage.

Nokia also customizes the Ovi Store experience for its range of feature- and smart-phones, aiming for a loosely consistent feel that is optimized for the particular device and location. By running the gamut of low-end to mobile computers, fragmentation may make life difficult for developers who have to choose between Web standards for ubiquity or to develop for each individual handset, but for Nokia, Bramlage says it’s an opportunity to become the “world’s local app store.” Angry Birds by Rovio had nearly as many downloads via Ovi Store in a week as in six on App Store, he says.

Prepping for the road ahead
Nokia is on the right path, but it won’t be a smooth one. It will continue to see competition from Apple, Android, and other handset makers, including Samsung Corp. , which will debut its Bada OS and accompanying app store later this year, and from operating systems like Microsoft Corp. (Nasdaq: MSFT)’s upcoming Windows Phone 7, which has many analysts drawing comparisons to Apple.

In Ovum Ltd. ’s survey of mobile app developers, Google (Nasdaq: GOOG) was the clear-cut winner in terms of network/server-side APIs that developers plan to support or already do. Surprisingly, with only 18 percent indicating plans for Ovi support, even the wireless operators beat Nokia by 7 percent in terms of the platforms developers were most likely to support.

Developers told Ovum that reach was the most important factor, followed by geographic and local presence, technical support, and, less so, issues related to business models. In those respects, Nokia appears to have a fighting chance. Ovum acknowledged that Nokia is a relative newcomer and the tide could be changing. For its part, Nokia at least appears intent on riding the waves.

“To the extent that we’re now seeing more than 1.6 million downloads per day and that upward trend continues, there’s a global appetite,” Bramlage says. “The pie is growing. This is anything but a zero-sum thing here.”

— Sarah Reedy, Senior Reporter, Light Reading Mobile

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