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European cellcos split on Nokia Ovi
Published: 7 March, 2008
Tags >> Nokia | Europe | App Store
All this shows that Nokia has a difficult balancing act to achieve as it pursues its strategy of turning itself into a mobile internet services company. Ovi, the portal that is the flagship for this strategy, has the potential to turn carriers into dumb bitpipes, or even to bypass them altogether with Nokia's direct-to-consumer moves. That means Nokia can either decide to go head-to-head with its largest handset customers, a move that would be high risk and would not bear fruit for many years; or find common ground with the operators, at least for the medium term, keeping Ovi away from stepping directly on their toes, and using it to expand into new businesses and channels, such as new entrants to the mobile world, or tier two or developing economy cellcos, which will not have the resources and brand power to create their own portals, but which will represent major growth opportunities for Nokia handsets.
Nokia appears to be dealing with the issues on a case-by-case basis. In the US, it is being aggressive about direct-to-consumer services plans because its relationships with the cellcos are shaky at best (and it is excluded from the CDMA base anyway). As countries where mobile internet services are in their infancy, but where pockets of usage are emerging, such as India, Nokia is sure to push Ovi as a platform that operators could leverage. In the most advanced mobile internet bases, Korea and Japan, Nokia either has little presence, or will downplay Ovi to keep a giant like DoCoMo onside. That leaves the really thorny problem - Western Europe, Nokia's heartland and the territory where it most needs to push high end media-phones in order to sustain any growth in a region where margins are under huge pressure. Though few European cellcos could afford to antagonize Nokia too far - given its market share, brand impact and marketing weight in the region - they are also further down the road than their US counterparts in trying to create their own mobile internet services businesses in order to avoid the dreaded fate of becoming bitpipes. First they did this with closed portals like Vodafone Live! and now are opening up to genuine web offerings like Web 'n' Walk or 3 UK's X-Series.
Hence the wariness that Orange, T-Mobile and others are demonstrating towards Ovi, perhaps heightened by their national deals to carry the Apple iPhone, which they will want to put at the heart of their mobile media marketing programmes, at least while it retains its current level of profile.
While the operators fight with Nokia over Ovi, they are still keen to work with the Finnish giant on other services. At the recent Mobile World Congress, Orange and Nokia announced a deal to co-market location-based services, maps, games and other offerings, largely geared around the Google engine, and not around Ovi. Similarly, at the CeBIT trade show in Germany, T-Mobile and Nokia jointly announced the 6650, an exclusive device equipped with integrated GPS and multimedia player capabilities.
