“Cell phones are offering more and more Internet facilities and possibilities, and have become a gateway to the net – here and now. We can see that people are changing their habits and using the mobile Internet to structure their decisions and social life,” says Ruhne Fiala, Global Marketing Activation Director at Nokia. Advertisers will gain access to more and more mobile services – providing content, of course.
Eyebrows were raised among major telecom providers and former state-owned telephone monopolies in 2007 when Nokia launched Ovi, which, together with Nokia Music, propelled the world’s leading cell phone producer straight to the content side of the mobile universe.
That was nothing compared with the hype that “Nokia Comes With Music” created when the concept was aired at the end of 2007. Launched on the UK market in September 2008, the new phones come with unlimited access to more than two million music tracks. The business model breaks with the principle of buying music one track at a time: instead, freely downloadable music is included in the price of the cell phone.
This initiative takes Nokia yet another step towards tying its products to customers through secondary content offers. Many people see this as a direct offensive against Apple’s success with a similar strategy and a defense against the imperial expansion of iPhones.
This business model based on bundling music and entertainment services and products has come to stay, a phenomenon demonstrated by Nokia’s bid – as truly one of the last, but also one of the largest modern media players – to exploit its reputation to buy free access to content for its customers.
Strike up the music!
A number of subscription-based services such as Napster and MusicStation are already offering unlimited music access, and rumor has it that Apple is also toying with the idea of releasing music tracks on iTunes.
In the telecom sector, the Danish company TDC launched its unlimited music service “Play” in 2008, and the UK BskyB recently signed an agreement with Universal which may lead to a similar service. In France, Orange launched “MusiqueMax” offering 500 downloadable tracks for about €20 a month.
All these services tie the music to the device or the company selling the device. However, in Nokia’s case, users can keep the music on their computer and cell phone even if they choose not to extend the “Comes With Music” contract.
For the music industry, these services are a way of distributing music and, not least, an opportunity to recoup some of the money lost via illegal file sharing. On the face of it a win-win situation for both worlds.
Cross-branding in action
When news of the merger between Swedish cell phone producer Ericsson and the electronics giant Sony broke in 2001, it was a sensation. With its reputation as the Volvo of the cell phone world – a reliable but also slightly dull technical solution – Ericsson seemed a perfect match for Sony, which, although determined to enter the mobile market, lacked Ericsson’s in-depth expertise.
The surprising marriage had an extra dimension holding far more perspective than the mere synergy generated by two technology-intensive development companies. Although the combination of Ericsson’s dependable mobile tractor and Sony’s mega consumer technology brand was intrinsically capable of creating powerful mobile solutions, Sony’s vast catalogue of content was the true trump card.
Access to world-class music and movies paved the way for bundling a mobile unit with content – a Walkman-style cell phone. Competition between phones and telecom companies for customer favor gained a new dimension. Neither could do without the other, but the balance of power was decisive for dividing the pie – the money that consumers devote to their darling cell phones.
Five years later the stage was set for the entry of yet another brand into the mobile market when rumors about Apple’s transformation of iPod into a cell phone proved true. Steve Jobs and Co. had already capitalized on one of the consumer industry’s biggest strategic errors when Apple stepped into the void left by Walkman after Sony failed to take its megahit into the MP3 universe. In 2007 Apple went a step further with iPhone, introducing consumers to an array of other mobile Internet facilities in addition to mobile telephony.
The content-platform hybrid itself is not news, but nor was iPod in its time, and yet again the strategy paid off for Apple, even though the number of units sold to date is still only a blip on the screen compared with the old cell phone companies.
Nokia goes content
The counter-move from the largest mobile supplier of them all has long been awaited with great anticipation. The most popular cell phone may have made Nokia the undisputed king, but a whole new generation of mobile super-users has long since departed from the notion that a cell phone is nothing more than a phone.
Cell phones have become a multimedia channel that can receive, record, edit and broadcast. This presents a huge challenge for dedicated producers of digital cameras, MP3 players and, paradoxically, also for cell phone manufacturers, because most users by far are not content to walk around with uni-dimensional media platforms capable of only one function.
“We’ve looked into how our customers use cell phones, and it appears that only 12% of those using our leading multi-media range, the N series, use their phones purely for conversation. The rest use them equally for all sorts of other purposes,” explains Ruhne Fiala, Global Marketing Activation Director at Nokia.
“Cell phones are offering more and more Internet facilities and possibilities, and have become a gateway to the net – here and now. We can see that people are changing their habits and using the mobile Internet to structure their decisions and social life.”
The master key
Navigation is an example of Nokia’s focus on the here-and-now potential of mobile phones. A single button press is all it takes to transform the phone into a fully fledged navigation system regardless of whether the user is a car driver or a pedestrian, and Nokia has acquired several manufacturers in the past few years.
“We supply maps to over 150 countries all over the world,” says Fiala, “and we produce 10 models with GPS. This is one of the best examples of where it’s all headed. If you’re in a town and need to find a good Italian restaurant, you key in what you’re looking for. The system locates the various options in the neighborhood and gives you directions from where you are right now.”
“This is also where we can open up the other side of the market. As an advertiser you gain access to mobile services such as the digital maps, and we work with a large number of companies that write applications for our various services, giving us another way to profile ourselves vis-à-vis our users.”
Nokia has grouped its mobile services under the Ovi brand, which, like Microsoft’s Live Workspace and Apple’s mobileMe, is a community dedicated to its users, creating a sense of affinity by offering a platform for digital socializing at a highly individual level.
Ovi is based on fundamental services such as contacts, files, calendars, photos – especially photo-sharing, games, music, and navigation maps. Right at your fingertips, all these functions are combined with basic mobile functions like text messaging and phone calls.
For Nokia, it is a question of being a channel for personal and especially business interaction, services provided in competition with other media players whose operations are based on hardware platforms, transmission rights or services and communities like Google and Facebook.
Everyone wants a bite of the global media cherry that has become an integral part of daily social interaction and business in the new millennium.
“Over time we have sold more than a billion mobile units, and as one of the world’s strongest brands, we believe we are in a pretty good position to assume the role of content provider for the mobile Internet,” explains Fiala.
Friends are the engine of the mobile Internet
Although Nokia’s “Comes With Music” initiative has generated a lot of interest, according to Fiala, the cell phone’s predominance as a social device is the prime driver of development on the mobile Internet. Its capacity as a contact-creating and inventive broadcasting tool has made it indispensable to the social Web 2.0 culture.
“You can film or photograph whatever you’re doing right now, and publish it directly on your social web platform in real time. These are the type of here-and-now possibilities that drive development in the mobile world and help to tie Nokia and the net together,” says Fiala.
The battle for mobile customer loyalty and the enormous sums invested are a small indicator of where users are and where a major area of the media market is heading.
So when will “Nokia Comes With Music” hit the Nordic market?
“Unfortunately I can’t disclose that now,” concludes Fiala.
There are many signs that the order of roll-out in 2009 will be as follows: Asia, Australia and Singapore and in Europe: France, Germany, Italy, the Netherlands and Spain. But first the system is being pilot-tested on the tough UK market, where the Christmas sales will provide an interesting benchmark. None of the five UK telecom operators was interested in partnering with Nokia on the project.
However, for the media market as a whole, this build-up is yet another indication that investments are shifting towards content. And this is even before any mention of Google, which is working on its new mobile platform Android and will thus open up yet another front in the battle for consumer loyalty.