Why Ovi will not be dead by Christmas
By Stefan Constantinescu on Monday, September 3rd, 2007 at 5:40 PM PST In Nokia, Ovi
When it comes to writing about Nokia (NYSE: NOK) I’m practically a corporate cheerleader, hell I even moved to Helsinki to see if I can join the borg. On the other end of that spectrum there is Andrew Orlowski who seems to enjoy slamming everything Nokia has done recently. In the world of telecom it is absolutely critical to have such polar opposites and I look forward to buying him a round at the Smartphone Show.
Recently he asked the question “Where’s Nokia going?” and even says “Mobile operators will strangle Ovi, just as they strangled Club Nokia, by choosing their handsets from other manufacturers.”
To tell you the truth, I actually think he is right to some degree. Ovi is Nokia’s first step into getting more money from the consumer. It used to be that you purchased a device and that was it, the transaction was over. With Ovi Nokia is creating that ongoing revenue stream post purchase and making operators get their panties in a bunch. It starts with music and games, but what happens when Nokia starts offering ringtones, shows and even movies? I actually think Sony Ericsson (NYSE: SNE) will have tremendous growth in 2008 due to Ovi, but to say Ovi will die would be a mistake.
Nokia is going to restructure on January 1, 2008. This current matrix of platforms, enterprise, multimedia, mobile phones, etc. will turn into 3 pillars: Devices, Services and Software and finally Markets. In other words, Nokia is in this for the long haul. Ovi will be in the services and software pillar and they will make it work even if it means loosing a few market share percentage points. If Sony Ericsson tried to pull this off everyone would laugh at them and their single digit slice of the handset market, but you don’t mess with the Finnish giant. Besides, when Club Nokia was around the internet and more importantly data plans looked nothing like they do now.
The latest incarnation of the internet, Web 2.0 if you will, changed how people consumed information and actually enabled them to publish content as well. Nokia is prepared for that.
To be honest it is anyones guess at this moment, neither Andrew nor I are correct, but we sure do enjoying talking smack.
Ovi is like useless for now.
@will – ovi will be like useless until it goes live, which i hope is by the end of the year. or at least in some form, to get us going (could you imagine announcing something and then waiting for ever for it to come out. heck, i’m not that patient.)
but i want to stress how things are different – it’s not about a walled garden, but about connections to all services out there.
people already have the places they do stuff – with media and with people. ovi just ties that together, with a dab of our own deeper services.
if we go out there and try to build everything ourselves inside a walled world, then we deserve to dies a miserable death.
but, if we go out there and help folks bring their people and media together, tying in some device savvyness, and so on, then we stand a chance.
ja?
You loveable submarine, you.
“Andrew Orlowski who seems to enjoy slamming everything Nokia has done recently.”
Stefan – it sounds like you’re experiencing cognitive dissonance.
What I’ve done is to start a vigorous debate within Nokia about the company’s competitiveness, strategy, and enterprise business. This is a market Nokia should “own” by now, given their investment over the past decade.
Sometimes it takes an outsider to spark conversations like these. It was clear to me that Nokia wasn’t getting this kind of constructive input on the web.
(And you need to read more investment analysis: you’ll see that the sub-E50 segment is where the growth actually is. Sales of phones above E50 are flat. That’s not my invention – that’s Deutsche Kleinwort, and that’s based on empirical analysis, on hard numbers http://www.theregister.com/2007/06/05/nokia_budget_growth_reliance/ )
So what sounds to you like “noise” is actually a conversation about the future of Nokia – that’s taking place inside Nokia.
If you’re not part of this debate, you should be, for it will pass you by.
Perhaps you are identifying too emotionally – too tribally – with your employer?
I enjoy the debate as much as anyone Andrew. I’ve had my fair share of slamming Nokia devices and have also shunned the Widgets concept as well.
As for Nokia being an employer, I wish. I’m not at that stage just yet, but I’m here in Finland to try and make that happen. Corporate loyalty only goes so far, when I start defending projects that are absolutely worthless than I know I need to be put out to pasture.
As for the numbers game, I’ll just have to quote the second quarter conference call:
“As Olli-Pekka mentioned, the products that had the biggest impact were the Nokia 6300, the Nokia N95, and the Nokia E65. Hit products certainly are important. These three alone represented 20% of Nokia’s device revenues and almost 30% of device profits in Q2, but we have to remember that they must also be supported by a wide range of solid products and with regular renewal in the product portfolio.”
http://seekingalpha.com/article/43386-nokia-q2-2007-earnings-call-transcript
And again an interview with Business Week from less than a week ago:
“The Nokia N-series and E-series generate 25% of our sales in India, and those are the mid-tier and high-end devices. So you can’t say that it’s an entry market where just low-end phones are sold.”
http://www.businessweek.com/print/globalbiz/content/aug2007/gb20070831_914354.htm
Were it another handset manufacture do you think they could pull off this services push? I think Nokia sees the commoditization of handsets beginning to occur and they need to prepare for generating revenue streams in another fashion.