Nokia looks to services for future revenues

Having presented a satisfactory set of quarterly results, of perhaps more interest was the growth in the company's services revenues. Buried deep within the results, Nokia confirmed that revenues from the services and software division reached €119 million in 2Q08, up from €84 million in the previous quarter. While these numbers are miniscule when measured against Nokia's handset business--sales rose four per cent to €13.2 billion in the quarter, it is clear that the company's services strategy is beginning to pay off. Products falling under Nokia's Ovi software and services umbrella brand include the Nokia Music Store, Nokia Maps, N-Gage and the Comes With Music initiative. The latter, which is supported by Sony BMG, Universal Music and Warner Music, will offer owners of selected Nseries handsets free and unlimited music downloads for a year.

However, the much hyped Comes With Music service has no launch date other than late 2008. Nokia Maps, meanwhile, was downloaded 406,000 times during the quarter. Geoff Blaber, an analyst with CCS Insight, said Nokia's presence in emerging markets meant it was well insulated from any European economic downturn. "But the margins on hardware are declining. It will be hard to gain more handset market share, so the move into services will be key."

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