Oh dear Nokia..

[Chrisp7]

We could all see this happening... Maybe Nokia assumed that as apple were doing the same they could get away with it - the problem is they dont have the same hype as apple products do:

Exclusive Nokia is being handed a sharp lesson in business basics: don't compete with your biggest customers.

In August, the Finnish phone giant announced it was going "beyond the phone" and creating an online portal called Ovi in a bid to become a major service company. This would offer music, maps and games - bringing it into competition with its biggest channel: the network operators.

Revenge has been swift.

Now T-Mobile has become the third UK operator to snub Nokia's flagship music phone for the Christmas season, the N81. The full range will be formally announced in the next fortnight, but a spokesperson confirmed the N81 isn't part of it.

As we reported recently, Orange's autumn range shuns Nokia completely. 3 UK has already declined the N81.

The other two UK operators will ensure the device languishes in obscurity. Officially, you'll be able to get it from Vodafone - pre-register here - but it won't be heavily promoted, we understand. When Vodafone unveiled its MusicStation handsets last month, the N81 was absent from the roster.

Meanwhile, O2 is carrying Apple's iPhone. And O2, having agreed to hand over a spare kidney to secure the rights to the "Jesus Phone", can't afford to dilute its music promo budget.

Mobile operators are essentially hire purchase companies. Heavy subsidies and promotion mean the punter gets a phone for basically nothing up front and pays for it over the length of the contract. You can still get an unlocked device from the likes of Expansys, but this is relegated to the niche market of gadget fans. Without an operator subsidy, the mass market for a device just isn't there.

So, farewell the Nokia N81 - we hardly knew you. Operators have sunk the music flagship before it's even left port.

Is this legal, you may ask? Nokia has been instrumental in persuading the European Commission to investigate Microsoft and Qualcomm, for example, but proving anti-competitive behaviour in this instance is difficult. It needs to prove they've closed the market, and acted in concert doing so. Operators will point out that when it comes to music phones, there's plenty of choice - and Sony has a winning brand. So Nokia will just have to take this one on the chin, we reckon.

One dead flagship doesn't mean the end for Ovi - but it does remind Nokia it has to pursue the strategy relentlessly, embedding it deeply in a wide range of phones. ®

*Bootnote - Finnish for trousers, obviously.



http://www.theregister.co.uk/2007/10/08/nokia_n81_snub/

[drwalker]

Good find, Chrisp7.
This is getting silly. The N81 is, in a lot of ways, a more appealing phone than either the N95 or the W960, in that the Sony will cost a bomb (most likely) and the N95 will strike many as being something that costs money because it includes things that they won't need.
The networks are failing, it would seem, to appreciate the fact that people have their own digital music library (I only used 3's music store because I didn't have access to a pc at the time), or once they get their hands on something like the N81, have plenty of discs that they can run through their computer to fill the memory up.
O2 couldn't care less about the iPhone, since it will most likely be a pain in the backside with anything but wifi iTunes (it is a glorified iPod after all), so whilst they won't get any money out of iPhones owners with their own music site (do they have one?), users will be accessing Cloud to get to tracks.
For T-Mobile to act this way is not something that I'm thrilled about. I have not bought a track off of them yet (just have no need to) and fail to see what the problem is: So what if Nokia want to run their own music service, don't the networks realise that, using their mobile data packages, any phone user can head off to a search engine, locate, download, save and regularly listen to a track that has cost them nothing? There is no way that they can be that naive.
It's bizarre that we have to put up with complaints about competition, when piracy is rife (there is a very interesting conversation to be had between FACT and Google, surely) and the networks don't seem to want to take a position on it.
But after all that, could it be possible that T-Mobile and 3 have bought a boat load of N95s that they might not be able to shift if they take on the N81? Look at the pricing of the N95 on 3, they would have to put the N81 on a level pricing for their price list to make sense. (£100 for the W950 when they had it? Joke of the year, that one.)