Nokia N97 lost in the smartphone hype

Lost in the hype surrounding Sprint's Palm Pre and the new iPhone 3G S last week was the commercial launch of Nokia's long-awaited N97 device.

Folks have been talking about its release since December, yet it was ushered in with little fanfare in the U.S. Word is that the handset maker, though desperately trying to improve its market share in the U.S., wanted to keep a lower profile launching the N97. (I couldn't even find a copy of the release on the company's website in the newsroom section over the weekend.) Many cool applications come bundled with the N97, but mention of them were buried in the release, such as video streaming software from Qik, a variety of widgets and a free 90-day trial to Boingo Wireless' WiFi service.

Maybe it's because the device came to the U.S. market at $700 with no carrier partner and a strategy carriers don't exactly approve of--the perception is that Nokia aims to build an ecosystem that benefits Nokia and relegates operators to more of a dumb-pipe status. While Skype isn't embedded on the N97 yet, Nokia's deal with the VoIP provider back in February to embed Skype on its N-Series phones reportedly made operators angry as VoIP threatens to erode their valuable voice business. 

Of course, it's not like operators are totally opposed to relinquishing control to device makers. After all, the makers of the iPhone, G1 and Palm Pre are controlling things on the application side (AT&T does quash and limit applications it doesn't approve of such as relegating Skype to WiFi only on the iPhone). They are content to give up control on these phones in return for higher revenues coming from selling more data plans.

What makes Nokia different? For one, Nokia's brand is weak in the U.S. and analysts note the N97 is comparatively more expensive on a wholesale basis than competitors. Perhaps equally important is the fact that the handset vendor has a mixed track record when it comes to its ability to attract consumers to its own services and applications. Operator interest in the vendor's new Ovi Store service was limited even before Nokia stumbled in launching the store last month. Nokia has also failed to attract consumers to its dedicated gaming phones or online games service. Then there is the poor market reaction to the Nokia Comes with Music concept. Moreover, operators are beginning to deal with a plethora of handset-powered applications stores from the likes of Apple, BlackBerry, Google and Palm.

How does Nokia resonate with U.S. operators? It is on the right track in promising to work more closely with operators in the U.S. to customize offerings. And I can see the N97, which has received positive reviews, morphed into an offering that will be more palatable to operators if Nokia itself is willing to give up some control. --Lynnette