Nokia scores big with first Ovi customer

Nokia’s Ovi content portal may not be the operator bane industry experts first predicted. In fact, the world’s largest operator, Vodafone, may consider it a balm.

Vodafone said today it will not only support the Ovi music, content and web services portal on its network, it will integrate its own wireless content deck Vodafone Live with Ovi on Nokia handsets. Vodafone now joins Telefonica O2 as an Ovi backer, greatly raising the profile of Nokia’s new content platform and feeding its ambitions of not only being the world’s largest handset maker but a substantial Internet services company as well.

The deal shows Nokia is taking its content strategy very seriously, according to Ovum principal analyst John Delaney. The manufacturer has invested billions of euros in buying Internet and applications companies in recent years, culminating with its mammoth $8.1 billion acquisition of map data provider Navteq last month. With that kind of money invested, Nokia has every intention of keeping the carriers on its side, but Vodafone may have its own ulterior interest in keeping Nokia happy, Delaney said in a research note today.

“A slightly more cynical take on this deal might also refer to Lyndon Johnson's famous dictum about having J. Edgar Hoover inside his tent, instead of outside,” Delaney said, meaning its better to partner with Nokia than compete with it. Vodafone stands to gain substantially from the resources Nokia puts in Ovi, just as Nokia stands to gain from Ovi’s exposure to Vodafone’s 232 million proportionate customers around the world.

“Nokia has big ambitions for Ovi,” Delaney said. “By associating itself with Ovi at this stage, therefore, Vodafone is taking an early opportunity to benefit collaterally from the substantial investments that Nokia is likely to make in developing and marketing the Ovi brand and line of services.”


Of those 232 million customers, though, roughly 30 million are on Verizon Wireless’s networks, which probably won’t be pushing the Ovi portal any time soon. Vodafone owns a minority stake in VZW, which has taken a distinctly different path than its U.K. parent. Beyond the basic difference in network technologies—CDMA vs. GSM—Verizon Wireless has traditionally followed a walled garden approach to mobile content, though recently it has begun opening up more. Vodafone meanwhile has effectively opened its network completely and derives the majority of its traffic and a significant portion of its revenue from off-deck content downloads.

For instance, Vodafone will be selling music from both the Vodafone Live and Ovi music portals on the new Nokia devices, some of which will be exclusive to the operator. In turn, however, Vodafone allows other service providers to sell music to its customers in third-party transactions through portals powered by Groove Mobile. Verizon Wireless, meanwhile, drives all downloadable music transactions through its V Cast Music store.