Win-win Proposition

It is no secret that the handset industry is likely to face the worst year of

its existence. Research firm, Strategy Analytics, forecasts a 9% decline in

handsets shipped from 1.18 bn worldwide in 2008 to 1.08 bn in 2009. The company

has recently closed its R&D center and cut its production to match weakening

demand from the market. It is thus no wonder that the global market leader,

Nokia is slowly but steadily moving from being a purely product-centric company

to having a mix of both products as well as services.

Nokia, last year had announced the launch of Ovi brand to offer mobile value

added services and entertainment content directly to end consumers. Nokia

recently followed up this announcement by forming a joint venture with HCL

Infosystems to sell the content. Both the companies refused to give additional

information about the JV.

Ovi, which means door in Finnish, will be focusing on specialized offerings

in music, navigation, games and livelihood. In India, the company would be

focusing on content offerings around Bollywood, cricket and astrology. The

company has already tied-up with Infomedia India (for yellow page services), the

South India Music Companies Association (for music content) and with other

popular music labels. It will also create a local search option. The company

would be using inhouse resources to develop a bulk of its services.

Gaming, music and maps would be an integral part of Ovi's offerings in the

country. Gaming is an intrinsic offering under the Ovi brand, and users would be

able to share games with this. With Ovi, users would be able to access around 2

mn songs via PC or mobile. Nokia Maps would be another offering under Ovi, which

would be covering major countries as well as cities within India.

The Game Plan



Having a retail presence for its mobile VAS offerings is a clever move and will
help the company address the users of other handset players as well. The company

is eying both Nokia Priority stores as well as multi-brand outlets. However,

Nokia is also considering offers bundled with its own products, as well as

bundling options with other service providers. It is also planning sustained

brand building activities for Ovi.

Clearly, Ovi is a win-win situation for Nokia. Strategically, Ovi will allow

Nokia to address not just mobile users but also PC and online users. So the

company would be dramatically increasing its customer base. And once the mobile

consumer base is ready, the action will obviously be on the applications and

services side and it is this market that the company seeks to address.

The business model of Ovi will be a combination of subscription and

advertising, and Nokia plans to make the services available to any

Internet-capable device.

The distribution model of Ovi is interesting but a lot depends on the cost

structure and whether the public would be ready to experiment in the current

recessionary environment. It is believed that initially, it would be focused in

the metros but later depending on the success or failure of the project, it

might be pushed in the tier 2 and tier 3 cities. It will definitely enable the

company to focus on a wider customer base. However, the services are likely to

be popular only if they meet the specific requirements and tastes of the Indian

public.

It is not just in India that Nokia is making a foray in the services segment,

but in other geographies as well. Nokia had to exit Japan in November last year,

but the company continues to be present through its super-luxury brand, Vertu.

In keeping with its newly-acquired focus on the services segment, the company

recently launched an exclusive club in Japan that will allow its subscribers to

a host of exclusive mobile services including 'Club Vertu', which includes a

special members-only concierge. Vertu aligned with its sister concern, Nokia

Siemens Networks with this landmark managed services deal for the roll-out of

the hosted MVNO solution.

The business model of Ovi is interesting but it remains to be seen whether

the public will lap it up or not. If they are able to come out with applications

like `battery-enabled phone' that fueled the handset market in the rural arena

some time back, Ovi will definitely open the services `door' for Nokia.

Gagandeep Kaur



gagandeepk@cybermedia.co.in