Vodafone embraces Nokia's push into services

John Delaney
08 Nov 2007

Vodafone announced this morning an agreement with Nokia, to launch an integrated suite of Vodafone services combined with Nokia Ovi Services on a range of Nokia handsets, some of which will be exclusive to Vodafone. The companies aim to make it easier for users to access the Internet quickly, and to offer them a full suite of seamlessly integrated communications, content and Internet services on Nokia handsets. Vodafone also intends to make both the Vodafone music service and the Nokia Music Store available on Nokia's 2008 handsets. As part of the agreement with Nokia, Vodafone will get first sight of substantial new services and go-to-market propositions developed within Ovi.

"When Nokia announced its 'Ovi' line of services business a few months ago, we commented on the difficult balancing act it would need to pull off. How to raise the profile of Nokia as a service provider, without alienating the operators upon whom Nokia relies to distribute its products‾"

"Today's announcement from Vodafone shows how seriously Nokia is taking this issue, and is a striking indication of how successfully it is being handled. The world's biggest mobile operator, by revenue, is to endorse the Ovi brand by exposing it to its own customers. A slightly more cynical take on this deal might also refer to Lyndon Johnson's famous dictum about having J Edgar Hoover inside his tent, instead of outside (Google it!)."

"For Nokia, this builds nicely on the October announcement that Telefonica is to integrate its mobile services with Ovi. We believe that this is a clear endorsement by two leading operators of Nokia's view: that its push into providing services need not be seen by the mobile operators as a direct threat to their own services strategies. Regarding its apparently preferential treatment regarding early information on Ovi developments, and its exclusivity on handsets, Vodafone sees these as benefits of being Nokia's biggest customer."

"Of all the European operators, Vodafone is in the best position to be able to embrace the Ovi brand without damaging its own. Vodafone has invested heavily in building and marketing itself as a content-services brand, since launching Vodafone live! in late 2002. Of all the operator portal brands launched around that time Vodafone live! is now clearly the strongest. As a result, Vodafone is able to encompass other strong brands without the risk of putting its own brand in the shade. Earlier this year, for instance, Vodafone launched co-branded services from Google, MySpace and YouTube."

"In that sense, putting Ovi onto its phones can be seen as an extension of Vodafone's strategy of co-branding services. This time, however, it's happening outside the live! portal. That's an important difference. Ovi is currently limited to the high-end N-Series devices, whereas Vodafone live! is for all market segments. As such, this partnership allows Vodafone to encourage its high-end subscribers to use (and pay for) mobile data, while retaining full control over a large percentage of its customer base."

"Unlike Google, etc, the Ovi brand does not yet have strong recognition among consumers. In order for Ovi to succeed, Nokia needs to begin promoting it to consumers at the point of sale, and introducing them to the content and services on offer.

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