Nokia re-evaluating Ovi services strategy

After three years of acquisitions and product launches all geared at reshaping Nokia as an Internet services company, the handset vendor is toning down its services strategy, announcing today 450 layoffs and a new focus on third-party partners rather than on internal development of its own applications.

Nokia said these efforts would streamline its Ovi services business, allowing it to focus on fewer service initiatives as well as cut down on its growing number of investments in software and application developers. “The planned changes are aimed at improving and simplifying the user experience of Nokia services, increasing opportunities for third-party developers and other partners to create compelling services and accelerating the development of a common platform for Nokia’s different service offerings,” Nokia services executive vice president Niklas Savander said in a statement.

Ovi services span a range of applications and content that have traditionally been sold and managed by operators. Nokia Maps drives its location-based services efforts, providing navigation and mapping services on both the phone and PC. The launch of Ovi Music spearheaded Nokia’s entertainment service, including its Comes With Music offer, which gives customers unlimited song downloads for an entire year. On the gaming front, Nokia revamped its N-Gage platform, turning it into a gaming portal and community that functioned across a range of devices, not just its now-defunct gaming phone. Over the last year, Nokia had been expanding into mobile payment, mobile advertising and even location-based social networking.

Nokia didn’t say how each of those individual initiatives would be affected--the only specific it offered was the incorporation of N-Gage games into the recently launched Ovi store. In general, though, Nokia will seek third-party partners to build applications and services for the Ovi store and portal rather than develop them in-house. For example, Nokia said it would partner with image and social-networking sites to create image-capture and sharing features across its devices. The aim, Nokia said, is not only to broaden its reach into services already popularized on the Internet but eliminate the costs it would take to develop those services on its own.

The concept of handset maker as service provider was a fairly unique one when Nokia first launched its Ovi portal in 2007. Vendors like Research In Motion were providing e-mail services, but services were primarily the domain of the operator. That all changed with the launch of the Apple App Store, which achieved its 1 billionth download last week after just 10 months of operation. Instead of bringing application development in-house, Apple created a feature-rich content distribution portal and opened up the iPhone’s features to the broader development community, in the process attracting thousands of developers big and small. While Apple worked closely with some of its developers to offer directly a few key applications such as Google Maps and YouTube, the vast majority of content comes from independents working off of the iPhone software developer’s kit.