It appears Nokia Corp. has learned a few lessons from its doomed Club Nokia mobile content business. But that doesn’t mean the direct-to-consumer waters are getting any easier to navigate.
The world’s No. 1 handset manufacturer last week scored a huge win, inking a deal with Vodafone Group plc-one of the world’s largest mobile operators-to offer its data services directly to Vodafone users. The operator said it will support Ovi, Nokia’s wide-ranging umbrella brand that comprises a digital music store, the new N-Gage gaming platform, mapping offerings and social networking services.
The services will be available through “a range of premium handsets” on Vodafone’s 3G networks beginning next year; some of the phones will be exclusive to Vodafone. And Ovi’s services will complement the carrier’s own services, which include a Vodafone-branded music offering.
The deal comes on the heels of a similar pact Nokia reached with Spain’s Telefonica last month. More importantly, though, it underscores how aggressively Nokia is looking to strike carrier relationships for its Ovi service-and how carriers that once looked to “own the customer” are warming to the idea of teaming with high-profile content partners.
Vodafone’s Ovi offerings will be offered outside its branded live! portal, jeopardizing the company’s face time with its subscribers. Unlike its live! offerings, though, Ovi will be available only to users with expensive, N-Series devices. So Vodafone is giving its high-end users an incentive to subscribe to lucrative data plans, Ovum analyst John Delaney noted, as it keeps the bulk of its subscribers attached to its branded entertainment offering.
The Vodafone announcement contrasts starkly with the fate of Club Nokia, a direct-to-consumer play that was shuttered two years ago after carriers objected to being left out of the revenue chain.
“This is a positive surprise for Nokia,” American Technology Research said in a note following the news. “The Street was initially skeptical of Nokia’s Ovi strategy as it felt it threatened large carriers and would thus be relegated to smaller players only. . Vodafone is clearly a large carrier, which confirms Nokia’s strategy.”
SE joins push
It’s a strategy that Sony Ericsson hopes to tap into, also. The phone maker last week said it will expand its PlayNow business, adding a song-identification application and “millions of music tracks and thousands of mastertones from both major and independent labels.” Sony Ericsson also plans to broaden its mobile game and wallpaper portfolios and closely integrate what it calls “the arena” between mobile phones and PCs.
PlayNow was launched nearly four years ago as a storefront for ringtones, and the service is now offered in 32 countries. Sony Ericsson said the expanded business will “embrace openness” by offering DRM-free music files; PlayNow will also support devices running Microsoft Corp.’s Windows Media DRM.
Like Nokia, Sony Ericsson seems to have the hardware to support the effort. Its music-friendly mobile phones have drawn rave reviews from industry enthusiasts, and the company unveiled two new Walkman phones last week. And, like Nokia, Sony Ericsson executives have publicly stressed their desire to work with carriers and share revenues from its mobile multimedia business.
Challenges abound
But Nokia’s recent troubles with Ovi have illustrated how difficult the direct-to-consumer business is in wireless-even with carrier allies. Nokia was forced to postpone the launch of its N-Gage service, pushing the release of the long-awaited platform back to December. And Warner Music Group has withheld its content from Nokia’s music storefront-which launched in Europe earlier this month-over file-sharing concerns. The world’s third-largest music company pointed to Mosh, Nokia’s social-networking offering, claiming that members are using the site to exchange copyrighted songs and other material.
It’s not just logistical issues that Nokia and other direct-to-consumer players must address, Ovum’s Delaney noted. Content providers have to establish relationships with customers at the retail level-and will need allies to do so.
“In order for Ovi to succeed, Nokia needs to begin promoting it to consumers at the point of sale, and introducing them to the content and services on offer,” Delaney said. “Nokia has enormous brand strength, but it has little direct contact with its customers at retail-it will need the help of operators and other retailers to help promote the Ovi concept.”
Then it must make sure it has the operational savvy to come through on the promise.
