This year has been the time for the big guys to pull out their big guns and proclaim to the world that they will be making a dent in the world of cellphones. Google, Verizon, and Apple have all been apart of the movement and with the year almost up we figured that they would be the only ones we would hear from. But Nokia’s turn to make a big announcement.
Nokia announced its innovative free-DRMed-music-for-one-year program, Comes With Music. Now it’s back with a new goal: the company wants a percentage of contract revenues when its phones are sold. Obviously inspired by Apple’s ability to seduce wireless carriers into sharing iPhone contract revenues, Nokia now has its own intentions to bring in the same deals.
Nokia’s chief Olli-Pekka Kallasvuo announced the move in an interview with Frankfurter Allgemeine Sonntagszeitung, which also highlighted the company’s efforts to position itself as a provider of entertainment services, such as Comes With Music, in addition to its mainstay of mobile phones and other devices. How much Nokia wants out of each contract and what happens when wireless carriers don’t play along is unclear.
Part of the leverage Apple surely uses to score its deal is the iPhone’s buzz-worthy appeal, as up to 50 percent of iPhone buyers in the US, UK, France, and Germany are new contracts. That translates into a massive boost to wireless carrier revenues, out of which they can afford a percentage to scratch Apple’s back with. Nokia, however, makes both high-end phones that are on par with the iPhone’s profit margins, as well as bargain-bin or “free with contract” phones that might not rake in as many customers or offer as much negotiating headroom for the wireless carriers.
Meanwhile, the greater damage—or breakthrough—has been made: contract revenue sharing is here thanks to the iPhone. Now Nokia—the world’s leading provider of mobile phones with nearly 40 percent of the market—wants a piece of the pie. It’s only a matter of time until more manufacturers and wireless carriers begin making deals like this, bringing more change and innovation to the market. The real question will be whether these deals will benefit the customers and not just the wireless carriers and device manufacturers.
Innovation like the iPhone’s Visual Voicemail feature is good, but two-year contracts that remove competition and choice aren’t exactly winning any awards from consumer rights groups. Still, in a not-too-distant world of Google’s open-source Android mobile phone OS, Verizon’s open network, and wireless carriers that need to rethink the way they do business, the future is looking bright.
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