Nokia’s coopetition with carriers

I noticed today that Nokia released a free mapping program called Smart2Go which can easily be downloaded over the air to cell phones.  In and of itself, I did not find the news terribly interesting as Google Maps is a great app which is also free and there are countless others going after the space.  However what is interesting is that Nokia is offering this service through an acquisition they recently made.  In addition, for users with GPS chips in their phones, Nokia is offering a premium turn-by-turn service which will be paid for on a monthly basis.  In other words, from a business model perspective, Nokia is going directly after the end consumer and encroaching on precious data and subscription revenue of their carrier partners.  Take this thought further and ask yourself why Nokia is offering phones with dual-mode chips (wifi and cellular) and even offering VOIP services?  I wonder where this ends up in the long run but what is clear is that smart handset manufacturers understand that there may be potentially more revenue in the monthly subscription fee than one-time sale of hardware.  We should certainly keep an eye out for Nokia and every new app they launch in the future.  We also need to figure out if they are doing it with partners or doing it themselves either from an internally built application or through an acquisition.  For me, it is pretty clear where Nokia is trying to go.  By the way, combine this new map application with their purchase of Loudeye last summer and you can start to put the pieces in place.  As it says from the press release in August:

Loudeye operates 60 live services in over 20 countries and multiple languages across Europe and South Africa, Australia and New Zealand. Loudeye aggregates rights and content from all the major labels and hundreds of independents and currently offers licensed catalog and complete media for over 1.6 million tracks.

Why would Nokia need Loudeye if it wasn't planning to offer its own music service direct to consumers.  Once again, for Nokia, recurring monthly revenue from every new cell phone buyer is a wonderful thing.  Everyone knows that margins on hardware are declining quickly, carriers are increasingly looking to Taiwan to private-label handsets to consumer to drive margins down even faster, and that ultimately cell phone manufacturers need to find alternative revenue streams.  The only question is when will this happen, not if.  So going after their wireless carrier partners' data revenue may be controversial but in the end could be a must have for survival.

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This post was written by who has written 358 posts on BeyondVC.

5 Responses to “Nokia’s coopetition with carriers”

  1. Peter Cranstone Feb 8, 2007 at 7:36 pm #

    Interesting post. We have a technology that extracts information from an Image (EXIF). What makes this valuable is when the image has GPS data inside it. The GPS data is then extracted and used to generate a map of the location. The next step was to tie this to local search. We have a mashup that shows this running live.

    Go to this link…(link to 5o9.net and select the third option “Choose one of our sample images” – select any picture, I suggest starting with the Westin Hotel just north of Sheridan CO. What you will see is pretty amazing. First you will see a picture, then the information inside the picture, then a mobile map of the location of the picture, then satellite images showing the location of the picture and then finally you will see the location of the nearest Pizza and Hotels within the vicinity of the GPS coordinates. The actual search query is live – so if you type in say “grocery stores” it will find all the grocery stores nearest to the pictures GPS location.

    The GPS can also be streamed live to our server from the mobile phone. This can then be used to generate live moving maps.

    Cheers,

    Peter

  2. Lokesh Kumar Feb 11, 2007 at 11:43 am #

    You have an interesting observation, that Nokia is gearing up to compete with its most valuable channel – carriers. Nokia could not just be doing this because carriers are going to Taiwan to get private-labeled phones, and thus put pressure on Nokia’s device margins. There is something larger at play here. Certainly carriers have a lot of muscle, and they control the wide area wireless networks. However, municipal WiFi and mesh networks (even though very small and spotty for the moment) are disruptive technologies for Internet access and voice (VOIP) and these technologies could cause problems for carriers in the future. Subscribers will be able to buy devices like Skype phone and connect to these networks for voice and data. Carriers will have less influence on the subscribers, but device makers will still be in the business of making devices for access. Device makers will certainly be able to offer direct services through their portals, other than vocie and data. Is that what Nokia and other device makers are preparing for?

  3. Greg Feb 12, 2007 at 5:25 pm #

    All the handset manufacturers chafe at the level of control that the operators have over them–Nokia more than most, as the largest (and arguably most arrogant) of the manufacturers. In addition, we currently have a world where infrastructure is paid for and deployed by the operators, who need substantial fees to repay their hardware investments–a big contrast to the Internet, where everybody pays for his own infrastructure. You can imagine a future in which WiFi and its successors pretty much replace the cellular networks, with individuals and business paying for each access point… And at that point, the operators are disintermediated.

    Which I’m sure Nokia would love; people will still need to buy phones, but the operators cease to be a gatekeeper, and Nokia can market direct to consumers–and possibly deploy for-fee additional services that in an operator-controlled world they’d be locked out of.

  4. Lokesh Kumar Feb 15, 2007 at 11:35 pm #

    Boingo has teamed up with Nokia for WiFi configuration settings for WiFi roaming capabilities on dual-mode handsets. This is another indication that Nokia is gearing up for the competition that you are talking about.

  5. kbr88 Apr 30, 2007 at 10:33 am #

    The key word here is brand and that is what Nokia has vs all other handset manufacturers and even the operators. the operators abdicated responsibility to the handset makers a long time ago. now nokia is no longer as concerned about developing products that might conflict with their operator customers–after all not having nokia branded handsets in one’s portfolio is a sure loser. nokia has always been smart about changing its strategies–it was onlu 15 yrs ago that noka was making cables and television sets!

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