NOKIA's main announcement

Thomas Husson | August 29, 2007, 12:26 PM

Like several dozens of industry analysts, I had a pre-briefing with Nokia yesterday about the new phones and services to be launched. There was nothing really unexpected or really disruptive, except the OVI announcement kept secret until this morning. This is clearly the key takeaway of today's Nokia Go Play event in London:

- 3 new phones: N81 (WLAN, A-GPS, 2.8"" screen, 2Megapixel camera, dedicated music and gaming keys) available from Oct 07 between 360 (SD card version) euros and 430 euros (8GB internal memory) and 2 mass-market devices (Nokia 5310 XpressMusic and Nokia 5610 XpressMusic)
- 1 revamped phone: N95 with 8GB memory and 2.8'' screen (introduced at a cheaper price point than the initial N95, at 560 euros, available from Oct 07)
- a new multimedia menu
- a music store. See my colleague Mark Mulligan's first take here. This seems to me a logical first step but not a strong way to differentiate in a crowded digital music market place.
- the launch of the N-Gage platform. This is to me a very interesting approach since Nokia is trying to remove the barriers for the uptake in this niche market. It will allow "a try and buy experience" when operators tend to do it in the reverse way. Nokia will promote an on-device integrated discovery mechanism with a good merchandising and great games (at least the demos I had access to). The store offer various pricing (daily andd weekly rentals) and payments methods. It will be launched with roughly 15 games from all the major publishers in November 07. Interesting community features are on the roadmap. The shift from a dedicated device targeted "hard-core gamers" to a platform also adressing "casual players" makes a lot of sense, even though the adressable market still needs to be built (few owners of backward compatible devices will effectively download the software; it needs to be pre-loaded to really gain traction). Reactions from operators is likely to be a "wait and see" approach but some of them are interested in promoting the store (at least 02 according to a recent interview from the game manager). Most downloads are likely to use WAP billing in the early days so carriers will get an outstanding 30% of the rev share without not doing much to say the least...

The latter point highlights the key takeway from this event: Nokia is moving from being a pure handset manufacturer to being a service provider. Nokia simply wants to deliver a more integrated experience and make sure consumers are ready to pay a premium for their devices.
As such they are increasingly going to compete with operators. . See my previous post on Nokia's paradox here. Nokia will thus increasingly use the online as well as alternative channels to sell not only devices but also digital goods. The likely decrease of handset subsidies, raise of new payments methods and non-cellular networks (WIFI, DVB-H,...) will be of great help, even though it will take some time before Nokia manages to move away from the subsidy model...

There used to be some doubts about this strategy following the Club Nokia initiative a few years ago. The launch of OVI, an umbrella brand for Nokia's new Internet services, is a clear signal to the market. Nokia has many assets to be succesful in this strategic shift, but it will be an internal cultural change. Not the first one for a company that started to sell mobile phones roughly two decades ago.