November 8, 2007
Into the mobile mosh pit
Nokia is engaged in close combat with the internet’s leading companies as their incursions increase into its domain of the cellphone.
It gave a frosty reception on Monday to Google’s Android mobile phone software platform, which will rival the Nokia-backed Symbian operating system.
Then there was a strong riposte on Wednesday with the announcement that its internet portal Ovi will be included by Vodafone on its high-end handsets.
The deal with the world’s biggest mobile operator by revenue is a tangible win for the company compared to the vague promise of the Open Handset Alliance to Google.
Following on from a similar deal with Telefonica last month, it shows operators are willing to give a place to the handset maker’s internet services alongside their own content and services.
Smaller battles are also being won and lost.
Google acquired a company from under Nokia’s nose last month when it bought Jaiku, an Helsinki-based rival to the Twitter mobile microblogging service.
Jaiku was founded by ex-Nokia employees and the leading handset maker had adopted its technology, so it would have made a natural acquisition for a company looking for Web 2.0 smarts.
It already has Mosh, of course – a three-month-old service developed in-house that allows its members to upload and share content such as photos, videos, ringtones and games.
Mosh, short for mobilise and share, is proof that Nokia can think outside the box, or handset. It was thought up a year ago by Americans and Finns locked up in a hotel outside Helsinki for a month. “We were told to come up with something game-changing,” says George Linardos, Director of Experience, Forum Nokia.
So far, it has attracted more than 6m downloads of applications and content since its launch on August 9 and works on all Web-enabled devices.
The service will launch Seek next month, allowing users to request customised content such as a specific video or detailed map of an area for their phone.
With Mosh, Nokia beat another internet company, at least to the name. Legal letters were exchanged when Yahoo’s new social network Mash was under development with the title Mosh.
Nokia pointed out it got there first, and a mishmash over Mosh was avoided.
Nokia with its more than 38% market share worldwide can help make the mobile internet a reality and widely improve adoption. Their appeal to most segment of end users and their service on the ‘Ovi’ platform are available now – as opposed to Google Alliances, the offering would be available on new handsets and will be made available mid 2008 make the Nokia offer more attractive to the service providers. And the endorsement of Vodafone is surely a great win for Nokia.
Also It is interesting that Google is getting so much of coverage as they unfold their mobile marketplace strategy – similar capable phones have already been announced by Nokia, Microsoft and Apple. Difference being - Google calls is open technology standard and for other vendors it is ‘closed technology’. Wonder how the likes of Apple, Nokia and Microsoft deal with this – will they too may give their software away for free and call it ‘open technology’ to instill greater collaboration leading to more innovation.
To understand the implications for each – let’s look at what constitutes the biggest source of revenue and their current position of strength.
Apple: The real incentive is to push more gadgets like iPod, IPhones etc. They would build software to make their devices more user-friendly. But the goal remains to sell more devices.
Nokia: They are market leaders in providing handsets for GSM services worldwide with market share of over 36% worldwide. Their motivation is to make money on device and will give away software if it can help them sell more mobile phones. They of late have introduced a new platform for services ‘Ovi’ to benefit from the revenue sources from applications and services.
Microsoft: Makes a big chunk of their revenue from providing software and are focusing on the web 2.0 technologies to improve their earnings potential from internet based advertising.
Google: Makes a big chunk of their revenue from Internet advertising and wants to aggressively defend this position of strength. Their goal is leverage this strength to enter the wireless marketplace and this is the reason for their intentions to create an eco-system for the mobile market place - ‘Android’.
It is in Google’s interest to protect their turf and look for additional revenue sources that leverages their core strength – Internet advertising and not get locked out of the mobile advertising market. So it should come as no surprise of their intentions to enter the mobile marketplace. This is a novel market entry tactics. They could not go to the market and create another ‘closed system’ and ask their alliance partners to pay for the software they build. Rather they want to give this away for free so that they can make money on the advertising – which is their strength. The software developed would potentially be paid by these alliance partners to get real-estate space on a mobile phone. This Google tactics would surely hurt Microsoft.
It is interesting to see players like Motorola, Samsung, LG and HTC in the alliance – together these vendors have a market share of over 50% globally. But then the Google software will be available on new handsets only – makes one wonder of the real motivation for these vendors.
However, it appears Google’s real motivation could be to reduce cost of handsets which in turn would reduce the barrier to adoption of cellular services. Also given that huge market opportunity exist in Africa, East Europe and other emerging countries in Asia, thought that service providers in those economies would be more willing to take the subsidy to improve market adoption as a benefit to be part of the alliance. It was surprising that those providers have not been included or maybe the list is still growing. Also not sure the real motivation for the likes of Motorola - Motorola has a good penetration in North America and a relatively ok position in Europe. What is their expectation from the alliance? Maybe they are targeting the Japanese operators or trying to further improve their market position in North America and Western Europe.
Other thoughts/opinions?
Posted by: Himanshu Sahu | November 9th, 2007 at 4:01 pm | Report this comment