Google grabs Nokia's key Indian alliance

If one deal symbolizes the challenge Nokia faces in its crucial emerging markets, it is a new pact between Indian cellco Reliance Communications (RCom) and Google. RCom has been a very close ally of Nokia's launching its own version of the Finnish vendor's Ovi Store a year ago, but is now centering its smartphone and content strategy on Android.

Reliance has entered into a two-year agreement with Google, to drive the adoption of Android handsets in India. Uptake of services on the country's new 3G networks is being held back by low ARPUs and lack of handset subsidies, so affordable smartphones which nonetheless provide a full range of apps and services are essential. Until recently, Symbian was the natural platform to supply that need, and Nokia made much of the longevity of its legacy OS, especially in India, as an important revenue stream to tide it over the transition to WP7. However, the vendor's recent Q1 profit warning showed that it was under intense pressure in emerging economies, partly because of the swifter than expected loss of Symbian markets to low cost Android handset makers, many from China or from India itself.

Google is clearly seeking to accelerate that trend further by forging personal relationships with key carriers. Some see this as another sign that the search giant will set up a direct hardware business and channels once it completes its acquisition of Motorola, itself a big (though fading) brand in India and China. However, whatever the fate of the Motorola smartphones, Google clearly wants to leverage its brand to boost the whole Android platform, and to influence the operators' choice of mobile web services. The company has suffered, especially in China, from carriers' decisions to create their own app stores and user experiences on top of Android, often featuring rival search engines and other non-Google offerings. This makes it important to cultivate direct ties with large emerging market cellcos, especially those which want to save on the cost of investing in their own content platforms.

That was the thinking behind RCom's agreement in February 2011 to offer an own-branded version of Ovi Store, but now that Nokia has pulled back on Ovi in order to focus its apps efforts on WP7, Google is stepping into the breach. The terms are unclear but it may tempt cellcos with revenue shares or even, Microsoft-style, contributions towards handset costs. In return, RCom intends to unveil exclusive data plans for Android customers, including a free 1Gbyte-per-month 3G tariff. It will also boost the attractiveness of Android with exclusive content, carrier billing and new customer support centers within its retail outlets, where users can test out Android devices and apps.

Google has similar deals in other countries - for instance, in Australia it opened an Android physical store jointly with Telstra, while it has always worked very closely with Verizon Wireless in the US. It has also talked of plans to invest in local developers in various markets to increase availability of localized content, a major Nokia strength.