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Nokia Stakes Claim on Services

Michelle Donegan
News Analysis
Michelle Donegan
8/29/2007

Nokia Corp. (NYSE: NOK) today took a great leap into providing mobile Internet services with a new brand, new devices, and the handset vendor's first new services. (See Nokia Launches Internet Services.)

The world's largest handset maker will offer mobile Internet services under the brand, Ovi, which is Finnish for "door." With Ovi, Nokia means to provide access to users' existing social networks and Internet content as well as a gateway to Nokia's Internet services.

The first services within the Ovi brand are a mobile gaming service called N-Gage, the Nokia Music Store, and an updated version of Nokia Maps, which was launched earlier this year for the N95 handset. (See Nokia, Vivendi Partner and Nokia Buys gate5.)

"Today, we're constantly thinking beyond the device. The device itself is not enough," says Nokia president and CEO Olli-Pekka Kallasvuo. "By intergrating services tightly into our devices we bring simplicity and ease of use to users to take full advantage of the mobile Internet."

Some operators are likely to view Nokia's services as a threat to their own Internet services.

"Operators are quite likely to negotiate tough with Nokia for revenue share on such services," says Mark Burk, industry analyst at M:Metrics Inc. "And if that doesn't work, they'll ban the Nokia service and use their own." But as Unstrung Insider's chief analyst Gabriel Brown points out, operators have not done well with their own mobile Internet services so far.

"Operators have had their chance and largely failed to deliver mobile Web services," says Brown. "It's not surprising Nokia wants to forge its own initiatives now." Kallasvuo insists that Nokia's services strategy will help operators deliver services rather than compete with them directly on their patch.

"We're cooperating with operators on services... We're not in contradiction to what they're doing," says Kallasvuo. "This has not been happening in stealth mode. We announced our services strategy a year ago." (See Nokia Adds Skype to N800, Nokia, Microsoft Team, Nokia Invests in Kyte.tv, and Nokia Streamlines Structure.)

Indeed, Nokia will not want to damage its core handset business with operators.

According to M:Metrics' Burk, Nokia is in a good position to enable mobile Internet services, particularly over-the-air music downloads, because they determine the user interface and how easy it is to find a service. "They can make it a one-click business," he says.

In the U.K., 79 percent of mobile phone users have handsets that can play music. Of all the phone users in the U.K., on an average over a three-month period ending June 2007, 13.4 percent have listened to music that they sideloaded from a PC, and only 2.1 percent have downloaded songs from an operator, according to M:Metrics.

Burk says that with Nokia's services, more people will find it easy to download music over-the-air onto their phones, adding that users really need 3G phones to do it.

Among Nokia's new devices are an updated N95 and the new N81, which has 8 Gbytes of storage. Nokia's marketing for the N81 marketing comes complete its own music video and dedicated song with irresistible lyrics, such as, "N81, when I caress your sexy Navi Wheel..." (See Nokia Intros Multimedia Devices and Nokia Launches New N95.)

Nokia will also soon introduce touch-screen user interfaces on certain handsets, like Apple Inc. (Nasdaq: AAPL)'s iPhone. (See Report: Apple Picks Euro iPhone Partners.)

— Michelle Donegan, European Editor, Light Reading

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Michelle Donegan
Michelle Donegan
12/5/2012 | 3:03:24 PM
re: Nokia Stakes Claim on Services
There's a lot to digest in Nokia's announcements today. The Music Store and the new devices with extra storage and soon touch screens are Nokia's answer to Apple. Ovi seems a defensive move against the mobile ambitions of big Internet brands like Google and Yahoo. But how pleased are operators really going to be with Nokia's services play?
Gabriel Brown
Gabriel Brown
12/5/2012 | 3:03:24 PM
re: Nokia Stakes Claim on Services
Mobile Today (a UK site for mobile trade news) has a story about a clash between Nokia and Orange over the music download service. See:
http://www.mobiletoday.co.uk/c...

They reprint a leaked memo from Orange here:
http://www.mobiletoday.co.uk/c...


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