The Real Nokia Ovi Story / Posted by Ari 24.06.2009 04:45

I was invited to give a talk at the MobileMonday Helsinki event on June 8th, 2009. Here is a summary of my speech (as I recall it) titled "The Real Nokia Ovi Story".

Ovi Internet services and the Ovi Store are news even for many industry-followers. 10 years is a long time, especially in high-tech business, but that's how long Nokia has been developing online services for consumers. That's not all. The world's largest mobile phone company opened its first online application store back in 2003. Haven't heard of them? Yes, I thought so. These projects were created by visionary teams that lacked top management support and sufficient resources.

When Club Nokia service was launched in 2000, it caused an international incident. The online service marketed ringtones and wallpapers directly to Nokia phone owners – without involving the operators in the business. At the time, ringtones were a quickly growing and a fairly easy way to generate revenue for operators. Nokia's biggest customers told the top management to stick to the company's core business; mobile phone hardware. Soon, Club Nokia was repositioned as a customer loyalty program and the company's first, rather bold, entry began to fade away.

N-Gage mobile phone game device was introduced in 2003. Gamers love to interact with other players, but Nokia didn't own or operate any community services. The company quickly acquired Sega.com but pushed it aside before anything was achieved with it. After N-Gage as a hardware brand had already been killed, Nokia opened Arena community for gamers in 2006.

Ovi was launched in 2007. It was mostly made of components sourced from companies Nokia had recently acquired. Acquisitions like Twango, Avvenu, Enpocket and others had found their mission within the large corporate organization. The development of Ovi into a suite of online services that can be accessed both from mobile phones and from PCs had started. Today, Ovi consists of nine services: Calendar, Contacts, File Sync, Games, Mail & Messaging, Maps / navigation, Music Store, Share (photos & videos), and Store.

Nokia's top management had learned its lesson, too. Executives carefully approached major operator customers, seeking partnership with them rather than conflict. CEO Olli-Pekka Kallasvuo , Anssi Vanjoki and their teams negotiated deals with major operators like Vodafone, Orange and T-Mobile. The agreements allowed Nokia to include access to Ovi services into new phone models in return for customizing products to operators.

Still, Nokia has a huge challenge in integrating the services into a coherent experience for phone users. Marketing will be another major hurdle; how to get the word to consumers that an exciting world of online services is waiting for them on new Nokia phone models.

The competition didn't wait for Nokia. Apple opened the iPhone App Store in 2008, generating massive interest in downloadable applications and content for smartphones. Nokia rushed a bit too much and opened the Ovi Store in 2009, only to find out that the service was underperforming and the selection of downloadable items wasn't as exciting as in the iPhone Store.

Nokia management could have learned from earlier online store concepts that are still operational, like Softwaremarket.com or Download! (preinstalled in many N-series smartphones), but chose to leave them as they were.

Nokia has invested billions of dollars and euros in Ovi. Navteq acquisition alone, map information provider for Ovi Maps, cost 8 billion dollars. Nokia's spending in internal resources and contractors who are developing the services must be worth millions of dollars each month. Not to mention marketing budgets required to make Ovi a global brand.

The key question is: Why Ovi is so important for Nokia?


Ovi is important because Nokia gets lower price than many competitors for its hardware products. Nokia's success is largely built on cost-efficient manufacturing capability. Nothing wrong with that, because the company can make a decent profit out of low-cost products. But for how long? Wouldn't it make sense to increase value in products as well?

Nokia maybe the Toyota of the electronics industry, but it doesn't want to become the Philips of the electronics industry whose products, such as light bulbs, carry very little value.

Despite its relatively poor track record in online services, initial hick-ups with the services and the Store, Nokia will continue investing in Ovi. In fact, Nokia's management doesn't have any other alternatives anymore. It can't turn back – the point of no return has been passed. Nokia board and management have decided that Ovi is Nokia's door to the future where mobile communication meets Internet services.

So much money and future expectations has been poured into Ovi that Nokia's top management can't fail with it. The management doesn't have any excuses. The company has all the resources money can buy. Business is profitable, there's cash in the bank and the products are selling well.

No excuses. Ovi has to succeed, with or without the current management.


Nokia Ovi slides presented at the MobileMonday event can be viewed here.