September 9, 2008

Nokia Looking To Beef Up Internet Services

Niklas Savander, the head of Nokia's new software and Services unit, said that their internet offering is far from ready and the world's top mobile phone maker is seeking further acquisitions to speed up the roll out of new services.

As the growth in the mobile phone market is set to stall, Nokia bought U.S. digital maps firm Navteq for $8.1 billion in July and has acquired ten smaller firms to jump-start its Internet services business.

When asked about further acquisition plans, Savander said, "We're not done."

He said the likely targets could be small companies that develop services Nokia itself plans to offer in the future -- enabling the Finnish firm to roll those services out faster.

Nokia will introduce the Files on Ovi service during a media event on Tuesday, based on the acquisition of Avvenu last year, which allows users to store files on the Web so that they are always accessible, an increasingly common service offered by Internet firms like Google and Yahoo.

Similar to Apple and Microsoft offerings, Nokia introduced a new personal information management synchronization service for calendar, contacts, notes and tasks between Nokia phones and its Internet services site.

"We obviously think there is genuine consumer demand. Information that is contained on device is becoming more and more critical to people," Savander said.

"We are incrementally, step-by-step, building up the offering that has to be matched with demand."

The company has yet to reveal user numbers for its Internet services, but it created April-June revenues of 119 million euros ($170.7 million), up 42 percent from the previous quarter.

Nokia's core handset business has seen a much more subdued growth, and the company warned last week it would lose mobile phone market share in July-September as it aims to stay away from heated pricing battle.

Nokia has opened up its media sharing site and games offering on Facebook and is looking to broaden ties with the social-networking site.

The handset maker was talking to many large social-networking firms, including Facebook, to ease access to their sites from Nokia phones, Savander said.

The company is planning to combine its Internet services -- such as gaming service N-Gage, its navigation service and digital music stores -- into one user-friendly system, but so far all services have separate sign-on systems and no links between them.

Nokia has built its success on the easy-to-use phones in the handset industry.

"Our target is to make it more seamless, more and more integrated. We are absolutely not yet where we need to be," said Savander.

"When will it be perfect? Never. When will it be better? Very soon. So it is an incremental thing, in six months it will be dramatically better than it is today and in 12 months it will be more improved," he said.

The firm has put a priority on getting new services to the market fast and testing consumers response, rather than fully integrating the service offering from the start, Savander said.

"We are realizing of course that as a consequence of this we are making it a little bit more complicated to the user than is the ideal situation," he said.

The company's move to services has raised fears among operators that the mobile phone vendor would steal their growth business, but Savander said the dialogue with operators was very pragmatic, as both look for more users and profits.

"In the end we have the same goal: we need to find ways to convince the consumer to incrementally spend on their phone."

So far, Nokia has signed Internet services deals with Vodafone, Orange, Telefonica, T-Mobile, Telenor and TIM.

Savander expects Nokia's phones with free access to music also to be sold by telecom operators, with the timing now up to the carriers.

He said the issue with music is a special one as many operators already have their own music offering.

Deals with operators are usually more beneficial to phone makers as operators subsidizes phones to boost demand and win new clients, hoping to win the subsidy back in monthly bills.


Image Caption: Niklas Savander at the Nokia at the February 2008 Mobile World Congress


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