Nokia wants to re-take its lead in the US market, and mobile telephone services are at the heart of its strategy to boost its share.
As recently as 2004, Nokia was the leader in the US cell phone market, with a share as high as 28 percent. But it stubbornly refused to adapt its handsets to the US, with its patchwork of network technologies and consumer taste for clamshell phones. Nokia’s US sales plummeted, and three short years later, it ranks fourth with a share as low as 10 percent.
But Nokia, supported by its success in the global handset market where it increased its share to 39 percent in the third quarter of 2007, and the weakened position of Motorola, is ready to play to the American market.
As it sets out to regain it’s footing in the United States, Apple and Google are going after Nokia’s franchise on two fronts: Apple as a trendsetter, redefining the look and feel of a cellphone; and Google as an Internet engine, seeking to develop a new software standard for cellphones as they become the principal portal to a mobile Web.
Though Apple’s shipment of 1.4 million iPhones since June is less than half of the N95’s Nokia shipped, the Finnish handset maker considers it a very strong threat.
"It's very clear that Apple, Google, and other players are bringing in a lot of new directions," said Nokia's chief executive, Olli-Pekka Kallasvuo. "Convergence is a nice, dandy word, but it means industries colliding."
Nokia's chief said he regarded Apple as the first credible new entrant into this market in years. As for Google, he said he would wait for more details before deciding whether it was a threat or an opportunity. But Google did not invite Nokia to join its Open Handset Alliance, a consortium of 34 companies that includes Motorola, Samsung, and other phone makers.
Nokia has been busy this fall, furthering its own Internet strategy. In October, it bought digital mapping and navigation software provider Navteq for USD 8.1 billion to eventually offer customers location-based services, which it has high hopes for as a unique selling point for mobiles.
A week ago, it announced a deal to give customers a year’s free access to Universal’s music catalogue. The service isn’t without its snags--the music isn’t DRM free and customers will have to upgrade to a new Nokia phone if they want to continue the service beyond the year’s access.
It has also struck deals with Vodafone and TIM, to carry Ovi, its mobile web portal. A previous attempt, called Club Nokia, saw Nokia butting heads with operators, who didn’t want the handset maker undermining their relationship with subscribers.
Nokia is also taking on Apple's franchise in music. A new service, Nokia Music Store, allows subscribers to download two million songs on a pay-per-song basis. Next year, the company will offer the 5310 XpressMusic, an ultra-thin phone that holds 3,000 songs and will cost less than USD 100.
With Apple and Google being the messengers of a new cellular landscape, Nokia finally stands to win a halfway decent chunk of the U.S. market without all that bothersome 'adapting.'