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However, the company was tight-lipped about its plans for North America. Some analysts remained skeptical regarding the prospects of Ovi. They pointed out that purchase of a song from the NMS would cost more to the customer than the iTunes rate of US$0.79 per song.
Moreover, Nokia was entering into a highly competitive (and crowded) market where other major internet players like Orange SA, Google, Inc. and Yahoo might enter. They believed that it was a high risk strategy.
"We believe this is a major new and bold strategic shift, especially into internet services, and the first major attempt to diversify away from being a focused telecoms equipment player in recent years,"1 said Credit Suisse analyst Kulbinder Garchai.
Some felt that Nokia would face stiff resistance from the network operators as they might not be willing to go along with the idea of a third party selling services over their networks. They pointed out that a few years ago, when Nokia launched a portal called 'Club Nokia' network operators saw to it that it wasn't a success.
Ovi too would share a similar fate, they predicted. But there were others who felt that Nokia had a very good chance of success. They noted that this was the first such attempt at diversification by a major mobile handset manufacturer and believed that Nokia had the brand presence and required competence to make it a huge success.
Though the NMS's content itself didn't give Nokia any significant advantage over iTunes, analysts felt that the way in which the content would be delivered gave it a huge advantage. The key strategic advantage of NMS was that no computer interface was required to purchase and download the songs as they could be directly downloaded on to the cell phones.
This was a giant leap when compared to iTunes. Moreover, analysts felt that Nokia's foray into internet service was well timed to meet the competition from iPhone, the much-hyped cellular phone from Apple.
The launch of Ovi coincided with the launch of Nokia's new mobile devices in its N-series range, the N95-8GB and the N81-8GB.
These models came with a huge memory capacity of 8GB and had the capability to directly download songs from NMS.
Digital media analyst at Pike & Fischer, Tim Deal, said, "Nokia's over-the-air downloads model is compelling. iTunes, AT&T, and the iPhone cannot do this, and it's something they are going to do."2
In addition to this, Ovi's impressive user interface and endorsement from major music labels and games developers provided it with a better chance of success, they said. With market share of 36.9 percent in mobile handsets in 2007 (according to Gartner), Nokia was a market leader.
Analysts felt that its new products and foray into services would lead to a future that would witness the seamless convergence of various technologies like mobile, PC and television. This would go a long way in helping Nokia maintain its lead over its competitors.
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1] Lionel Laurent ,"Nokia Stalks Apple Share Rises", www.forbes.com, August,30,2007
2] Jennifer Le Claire, "Nokia Readies to Challenge iTunes", www.toptechnews.com, August30, 2007. |