A new door opens

Nokia's lead in the global handset business appears unassailable with the company registering a US$2.2 billion net profit and 39% market share as of 3Q07. The company's renewed push into internet services is the subject of much speculation. Ronan Shields explores the issues.

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By  Ronan Shields Published  November 3, 2007

I n late August the Finnish company announced its realignment in the telco industry at a press event hosted in London's Old Billingsgate where it unveiled its internet services umbrella brand Ovi to the world's press.

As part of Ovi, which means ‘door' in Finnish, Nokia announced the Nokia Music Store and N-Gage, two services that enable users to access music and games, including exclusive content only available through Nokia, via the online site.

The industry is converging towards internet driven experiences and Ovi represents Nokia’s vision in combining the internet and mobility - Olli-Pekka Kallasvuo, Nokia CEO.

Also under the Ovi umbrella is Nokia Maps, a navigation service that offers maps, city guides and more directly to compatible mobile devices. The company also revealed that it aims to bring more internet based services to Ovi in the coming months.

Speaking at the London event, Nokia president and CEO Olli-Pekka Kallasvuo spoke about the company's future plans as an internet company.

"The industry is converging towards internet driven experiences and Ovi represents Nokia's vision in combining the internet and mobility.

"Looking to the future, we'll deliver great devices, combined with compelling experiences making it easy for people to unlock the potential of the internet."

He also stated that the company will integrate new user interface elements, service suites and web communities to Ovi during the next 12 months including social networking sites such as Facebook, Flickr and YouTube.

Anssi Vanjoki, executive vice president and general manager, Multimedia, Nokia, says: "We know that people want integrated access to great content without the constraints of having to sit behind a computer or in front of a TV.

"With the Nokia Music Store and N-Gage services, you can access the best in music and games directly from your Nokia Nseries multimedia computer."

Nokia executives also report that the rationale for introducing the services was to complement its handhelds business as it expects the mobile devices unit to become the most commonly used portal for such services.

The company decided to make this move after a considered observation of consumer behaviour, according to Nigel Rundstrom, VP Nokia Nseries Connect new Multimedia. "Mobile handsets are by the side of the consumer at just about every point in the day and are an integral part of how people conduct their lives," he says.

"The increasing convergence of technology has also seen an escalating empowerment of end-users who are less passive in how they consume digital content," he adds.

However, industry pundits have noted how the shift towards becoming a services-orientated business could potentially cause a rift between the Finnish vendor and its network operators, especially those that offer similar web-based services.

Kallasvuo denies this push into services will damage relations with operators, saying that Nokia is finding ways to work with them. However, Hilal Halaoui, a senior associate at US-based industry research firm Booz Allen Hamilton acknowledges the potential for conflict adding that the likelihood and severity of it depends largely on the services each company offers in a given market.

"In general terms, the operator benefits from increased traffic over its network when a customer downloads content from Nokia, or others, and this service should entice subscribers to access their content services through their mobile handsets," he says.

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