Here is some news that may have flown under your radar, Nokia is supposedly launching a MVNO in Japan in 2009 (http://www.fiercewireless.com/story/nokia-launch-its-own-mvno-japan/2008-11-24). This received considerably less press than Google looking to buy spectrum in the US, but has similar ramifications as it gives the handset giant an ability to test the waters as a service provider (obviously not owning network assets) in an eastern market targeting high end phone users. The significance here is the evolution from handset provider to creating direct to consumer relationships via retail stores (online and offline) to owning content with Nokia Live venues to providing content platforms for mobile service providers to now being the mobile service provider. Assumedly, Nokia should understand phone distribution, content retailing, provisioning and billing enough to be successful if their service is attractive to their target niche.
Will Nokia ever become more than a MVNO and expand into multiple geographies? Maybe they find other MVNO successes, but I don’t see them owning spectrum and a network anytime soon. Traditional incumbents, such as the current mobile service providers, have invested considerable resources in their business models which does not allow for entry of a Google or a Nokia. Incumbent service providers are already battling to avoid being commoditized into the “dumb pipe” and will continue to try to own the customer relationship. That means keeping handset manufacturers and platform providers in a secondary role. Nokia’s Ovi content distribution platform (forward integration) has received limited uptake by western service providers, whom some see as a Trojan horse for other Nokia direct to the customer services. The most recent enhancements include mail, maps and messaging (http://www.rcrwireless.com/article/20081202/WIRELESS/812029995/1084/newsletter31). Google has been initially successful in deploying their Android platform (again forward integration), but I wonder if it is more to do with having a lower price point device and service provider fear of the iPhone that is boosting ATT. Google is not one to sit idle, so I am sure they will be making other moves to expand their role in the value chain.
The issue is not so much that mobile carriers are doing anything insidious, it is about protecting your future viability as a company with an exercise with Porter’s Five Forces Strategy (http://www.quickmba.com/strategy/porter.shtml). You also see with Telecoms battling Cable companies for video subscribers, Telecoms and Cable companies battling Over the Top (OTT) providers of similar services (who run on the former’s networks), or content owners battling certain online distributors just to name some examples. The real issue is that not everyone can provide the same service to the end customer since that creates commoditization and ultimately impacts profits which make participants to leave markets. That scenario does not work well for participants that have high capital investments in those markets. The fight revolves around ownership of the customer and the resultant revenue streams from that relationship. However, inefficient incumbents cannot maintain those customer relationships through blockage alone (as discovered by the music industry), but though continual innovation. At Infosys, we guide customers through continual re-invention and business transformation to ensure competitive advantage is maintained, because if you are not getting better, you are getting worse. Do you have any thoughts on the topics above? I would be interested in hearing them.
