Can Nokia make a direct-to-consumer play work?



Can Nokia make a direct-to-consumer play work?
So Nokia is again attempting to reach the consumer directly with mobile content. The world's largest mobile-phone maker last week introduced Ovi, a new brand developed to expand the company's focus beyond mobile devices and platforms to embrace a range of web services.

Ovi--"door" in Nokia's native Finnish--is a portal that will serve as a gateway to Nokia services as well as a storefront for full-track music downloads, online communities, games and maps from the revamped N-Gage platform.

The question is: Can Nokia make a direct-to-consumer play work this time? Club Nokia was the handset maker's last direct-to-consumer mobile content initiative that shut down about three years ago. Club Nokia ended up morphing from an initiative that enabled users to get exclusive content for their handsets to more of a perks website that let users sign up for membership rewards such as discounts on phones and software.

Operators' buying power and their deep dislike for any service that competes with their own initiatives have largely kept Nokia and many vendors from offering their own content services in the past. What does Nokia believe has changed? I suspect Nokia feels embolden by the shift in power Apple's iPhone is creating for handsets. Apple reportedly gets a 10-percent cut of the revenues from AT&T, and Nokia has to believe it has similar brand power given its top position in the market. According to a report from PMN, Nokia sold 100.8 million phones during the second quarter, and that figure is more than what Samsung, Motorola and Sony Ericsson sold combined. ABI Research says Nokia leads the global smartphone market, enjoying a market share of more than 56 percent in 2006.

As margins in the device business are continually squeezed, Nokia has a vested interest in finding revenues from alternate sources. That's why it has been chomping at the bit for open access in the mobile world so it can go directly to the consumer without the interference from operators. It recently heralded the FCC's decision for open access rules in the 700 MHz band, and also sees some significant opportunities in working with Sprint's WiMAX initiative.

But open access is still nascent, which means Nokia in the meantime must do some heavy placating to the operators that still wield significant power over the vendor. That likely means giving operators a larger cut of the revenues or doing some heavy lifting on the back end until the vendor is free from their stranglehold.-Lynnette

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