Nokia Opens the “Door” to a Developer Audience, but Will Anyone Notice?

| Apr 28, 2009 | Wireless Services - U.S. | Competitive Intelligence Report

| Analyst: Eddie Hold

Current Perspective: Moderate/Positive
Vendor Importance: High
Market Impact: Low

Event Summary

April 28, 2009 - Nokia plans to focus the strategy of its Services unit to create a better, more simplified user experience across its services and to open up deeper and greater opportunities for third parties. Further, Nokia will focus investments on fewer initiatives and increase the use of common enablers across certain services. In addition, Nokia will add a variety of third-party partners, such as other image and social networking sites, to the image capture and sharing features on its devices. This move is aimed at enhancing the Nokia device experience for those customers who actively use third-party services.

Analytical Summary

• Current Perspective: Slightly positive on Nokia’s refocus of the Services unit, which includes a consolidation of services into Ovi, as well as a greater emphasis on third-party content. Unity under the Ovi brand will reduce customer confusion and help drive the willingness of developers to build innovative applications. However, the changes are not enough to drive the much-needed U.S. carrier participation, and that remains Nokia’s fundamental challenge.

• Vendor Importance: High to Nokia, which needs greater third-party developer participation in Ovi – and in creating downloadable applications – in order to further drive Nokia customer demand for the associated services. Greater demand (and reliance) on the Ovi service by consumers should lead to increased loyalty to Nokia devices overall and this will help Nokia to defend against Apple, and alternative application stores that are emerging (e.g., from Microsoft, RIM and even Palm).

• Market Impact: Low on the U.S. market, because Ovi has failed to make a significant impact at this time. While the increased focus on a single “door”/portal (Ovi) to all services content is a clear improvement, U.S. carriers have yet to allow direct access to the Ovi content.

Recommended Competitor Actions

• Nokia’s announcement will not have a major impact on the devices market at this time and is a logical strategic step forward for the company. As such, device manufacturers will not need to react directly at this time.

• To an extent, rival handset manufacturers can point to the “re-focus” and opening up of Ovi to third-party developers as a sign that Nokia got it wrong. And they can highlight their own plans to simply work with third-party content – such as social networking sites –as a clear example of how their more frugal partnership-driven behavior has paid off.

• U.S. carriers have not embraced the Ovi service (and indeed could be said to have repelled it so far). As such, any changes to Ovi represent little to no impact to their existing strategies. However, smaller carriers – and T-Mobile – should take a close look at the Ovi solution and consider effective ways that they could leverage this solution under a white (or shared) label solution. Further, a “Comes With Music” strategy could be a strong addition to make the overall solution even more compelling and kick-start Nokia’s reputation (again) in the U.S.

Recommended End User / Customer Actions

• Current Nokia customers in the U.S. should certainly investigate the Ovi service (www.ovi.com) which provides key functionality such as contacts and calendar synchronization, as well as photo sharing facilities and even file sharing. The contacts and calendar syncing alone is a value back-up tool, as well as providing an easier way to enter contacts in the first place.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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