Nokia makes the headlines today with the introduction of its services and software strategy. The company recently announced a major reorganisation, splitting its devices group from services and software. While the company is introducing new phones today, the key development relates to its new approach to the web. This is epitomised by the introduction of Ovi, a portal that will encompass its music, navigation, games, communities and other internet services. Also newly announced is the Nokia Music Store, which besides offering millions of songs, will integrate music buying and playback across both PC and mobile devices.
It may be surprising that Nokia, the world's most successful mobile phone manufacturer, has set itself the challenge of transforming itself at a time when it is once again dominating the industry. The strategy of the last few years, built on different groups of phones carefully targeted at different user segments, appears to have served the company well as it approaches a 40% share of the 1 billion global market. But Nokia appears to be humble enough to recognise that this approach may not be appropriate for the demands of the next era in mobile devices.
In particular, the company believes that software and related services will be just as important as the devices themselves as they evolve from standalone phones to what Nokia likes to call "multimedia computers". It sees the advanced internet, media and navigation capabilities of today's N series devices migrating steadily to all handsets over the coming years, putting web functionality into the hands of billions of users around the world.
Many at yesterday's press event will have been comparing Nokia's approach to Apple's dominant iPod and much-hyped iPhone devices. The fundamental difference between the two is that Apple's success has been built on a closely controlled, vertical platform, whereas Nokia believes it can create an open solution that invites unrestricted competition to create the best consumer experiences. Nokia would appear to stand a reasonable chance of leveraging its dominance of the handset business into a leading position in internet services, but this is a long-term play, and devices will remain the core of the company's business for some years to come.
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