The Battle of the Portals—Nokia's Deal with Orange Guarantees a Future with Ovi

France Telecom's Orange has finally signed up to the full suite of services available on Nokia's Ovi platform, becoming the latest in a growing list of the big mobile operators to have warmed to Nokia's partner in a market which they exclusively controlled. Nokia and Orange today announced a three-year strategic international partnership under which Orange will add 10 new Nokia handsets to its Orange Signature range and incorporate other services from Nokia's Ovi platform, including music, games, advertising, maps, and location-based services. In a statement, Orange said both parties have agreed to launch a suite of integrated multimedia services on the new Nokia handsets that will be available from the second half of the year. The deal covers nine major markets and is designed to boost the adoption of mobile digital entertainment.

The deal extends an earlier one signed by both parties in February 2008. Then, heightened concern among mobile operators about Nokia cannibalising their revenue dissuaded Orange from committing to the full partnership with Nokia. However, since then, things have moved on, with T-Mobile, the most vocal opponent of Nokia, finally succumbing to Nokia's Ovi. Commenting on today's deal, Olaf Swantee, Executive Vice-President of Orange’s Personal Communications Services, said: "This collaboration underlines Orange’s drive to create strategic partnerships which will give customers the best possible mobile multimedia experience in the simplest way." Nokia's Executive Vice-President, Devices, Kai Öistämö said he expects their close collaboration to extend beyond the initial focus areas of music, games, maps, and advertising to include other services over time. "We are pleased to create this strategic partnership with Orange and believe that the combination of Signature and Ovi services will extend and enrich consumer choice," he said. The companies plan to create 10 million active Mobile Maps users on Nokia devices within the Orange footprint by 2010 (see World: 2 May 2008: Nokia, T-Mobile Unveil New Era in Mobile Services Partnership, 12 February 2008: Nokia Signs Deal with Google, Orange and 11 February 2008: T-Mobile Wary of Nokia's Entry into Mobile Data Services Market).

Outlook and Implications

• Nokia Conquers them All: The deal with Orange means Nokia has now entered into partnership with the leading mobile players in the European scene. After unveiling its Ovi suite of services in August 2007, the company moved swiftly, signing up Telefónica in October 2007, Vodafone in November 2007, and Telecom Italia in December 2007. Despite a vocal opposition to Nokia's encroachment by T-Mobile in February 2008, Orange signed an initial deal with Nokia in the same month. However, Nokia persisted and managed to win over T-Mobile in May 2008. "What changed my mind was six months of negotiations ... it was a significant negotiation process," T-Mobile Chief Executive, Hamid Akhavan, told Reuters, adding that Nokia's Ovi products can actually help operators to drive data subscriptions. With the major players all on board, Nokia has finally managed to establish its Ovi platform as an integral part of the mobile internet experience (see World: 4 December 2007: Nokia Unveils New Partnerships and Acquisitions; Outlines Plans for the Future, 7 November 2007: Nokia, Vodafone in Mobile Services Partnership, 10 October 2007: Telefónica Selects Nokia for Mobile Internet Platform and 30 August 2007: Nokia Boosts Platforms for Music and Games).

• Nokia's Game Plan: Nokia's relentless push of its Ovi platform is part of a conscious push to muscle into the mobile internet space, leveraging its dominance in the mobile handset market. And who can blame them? Nokia controls almost 40% of the global handset market but has largely remained just a handset supplier. Perhaps, either for fear of hurting its handset distribution channel or an apparent gentility, Nokia, and its handset manufacturer peers avoided encroaching into the turf of the mobile operators. Surprisingly, smaller handset suppliers—Apple and RIM—ignored those rules, and managed to strike deals with operators which gave them a share of the revenue and allowed the vendors services to run on the handset. Emboldened by them, Nokia now wants to flex its muscles. The company's chief executive made it clear in 2006 that the focus will be on playing a bigger part in mobile internet services. Accordingly, the company is investing billions in developing new services, whether in-house, or by acquisitions—such as that of NavTeq and Avennu. Indeed, other handset makers such as Sony Ericsson, Motorola, Samsung, and LG would now be plotting their own mobile internet strategy in order not to be left behind (see World: 20 June 2007: Nokia Plans Restructuring In Anticipation of Mobile Internet Boomand 2 June 2006: New CEO Set to Expand Nokia Further).

• Can this Symbiotic Relationship Last?: Although both Nokia and the mobile operators are keen to project the deals as a symbiotic partnership where both parties gain equally, Global Insight worries about the impact on the strategies of the mobile operators. Despite moving away from their "walled garden" approach, operators still have a vested interest in keeping their own web portal as the default pages on mobile handsets. That way, they guarantee traffic to their choice sites, garnering advertising revenue and using it as a promotional front. While Ovi may not change that immediately—especially in markets where operators provide handsets to subscribers—it begins the process of chipping away focus from operators' portals onto the portals of third-party providers. Operators still insist that their services would be prominently displayed, used, and presented in a way which would not limit sales. However, given that more and more people using fixed broadband internet hardly see the web portal of their broadband providers, Ovi and the growth in flat-rate data pricing could well convert mobile operators into bit carriers faster than they have planned. And as T-Mobile's Akhavan said: "My life would be simpler if they [Nokia] would have not come to my space … It is still not the happiest thing to have someone try and take your cheese away."