Orange Takes Nokia Services - But Not the Ovi Brand

• Posted: Saturday, May 31, 2008
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• Author: pradhana
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• Filed under: Business Analysis, Nokia

By Michele MacKenzie and Eden Zoller, analysts at Ovum

Last week Nokia announced that it had formed a strategic alliance with Orange that will see the operator offer a range of the device vendor’s content services and applications, including its music store, maps and N-Gage games.

“The Orange deal presents Orange’s content suite alongside Nokia’s Ovi services, widening the choice for consumers and providing a more ‘open’ Internet environment. But Orange has stopped short of embracing Nokia’s Ovi mobile Internet brand, even though many of the services it will be offering are included under the Ovi umbrella. This is interesting, as Orange was one of the operators that initially showed the most resistance to Ovi. Perhaps it still has some reservations and also wants to appear consistent and show some caution by ‘cherry picking’ the key services. Other major operators have been quicker to collaborate with Nokia – Telefonica, Vodafone, TIM and T-Mobile are all offering Ovi.”

“Until recently operators have fiercely defended their turf, controlling the mobile Internet value chain, providing bundled access and content to the end user as a fait accompli. But the gradual encroachment of the Internet players in the mobile space, with their ad-funded business models and powerful consumer brands, has led the operators to rethink their strategies in the face of such powerful contenders and opt for partnerships and an increasingly more open approach. And then, if the Internet players were not enough to contend with, Nokia launched Ovi and began its transformation into a consumer Internet company, seemingly threatening to tread all over the operator turf along the way.”

“The launch of Ovi concerned some operators because Nokia’s portal would compete head on with their own offerings, and it felt very wrong coming from one of their major mobile phone suppliers. But operators have weighed up the pros and cons of partnering with Nokia and come to the conclusion that they could lose out by rejecting Ovi on principal, just as they have come to realise that opening up mobile Internet access to outside players such as Google is beneficial. Given Nokia’s powerful consumer brand (in our recent consumer survey some respondents still highlighted Nokia as their network supplier!), significant market share and considerable know how in the mobile content area, they would be foolish not to sign up with them.”

“While operators will remain wary and naturally resistant to becoming a bit pipe, it is inevitable that many of them will become just that. But on the way they will benefit from flat-rate data and mobile broadband revenues, and increased usage of the network. And the operator has every opportunity to remain prominent in the value chain through its retail outlets, customer service, billing and data strategies.”

“Some will also benefit from a strong wholesale and B2B model. And a few will even make it as a content player!”/PR

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