Nokia's Tero Ojanperä on Solutions and strategy

Published by Rafe Blandford at 0:02 UTC, March 11th 2010

Nokia is currently transforming itself from a hardware company to a hardware+services (solutions) company. At MWC 2010, we spoke to Tero Ojanperä, EVP of Services, in order to get an insight into current progress. Over a wide-ranging interview we cover a number of topics around Nokia's service strategy including how Ovi fits into Nokia's software platform strategy, the thought processes that led to free navigation, the importance of services compared to phone hardware, getting content onto the Ovi Store, the importance of partners and much more.

Keypoints

  • Nokia is currently focused on delivering Ovi services on Nokia platforms (i.e. Nokia devices running MeeGo, Symbian and Series 40). However it is worth noting that the underlying assets (e.g. Navteq) are being used on other platforms; indeed, the free navigation offering is expected to drive demand for Navteq products.
      
  • The thought process behind the decision to move to free navigation with Ovi Maps has three key areas: consumer demand, technology situation and business model. "Putting all of this together, we realised there was an opportunity and with our scale we could take it to the next level. Rather than selling premium navigation licenses, let's move to the next phase, scale it across the device range and then get the benefits out of the increased device sales for Nokia, creating advertising based monetisation and also by opening the APIs we encourage third parties to build on top of the offering."
     
  • The point at which services become more important that phone hardware is already here. "So I see it is already a criteria. It does not take away that it still needs to come in an attractive package. So I think it has already happened."
     
  • Nokia services /  solution business has good momentum. Nokia Messaging and Nokia Music are growing quickly, Ovi Store is getting established and Ovi Maps has increased momentum. "We will continue to concentrate on those four areas - we will drive it harder - more countries, more content, more localised services."
     
  • There are "more sophisticated tools for media companies to bring their content more easily to Ovi Store" in incubation (on the way soon) and ongoing initiatives to bring content into the Ovi Store with an emphasis on the local. "But we can always do more and we need to do much more."
     
  • Nokia's software platform strategy has three tiers: "MeeGo - push the envelope as much as possible, Symbian - push it downstream as much as possible and Series 40 - low cost. This segmentation will evolve, but I do not see it changing in the next 12 -24 months."
     
  • For Nokia, especially in solutions, it is an ecosystem game - "If our partners cannot succeed, we cannot succeed in services".
     

Tero Ojanperä (EVP Solutions, Nokia) on solutions and strategy

Transcript (approximate):

Tero Ojanperä [Nokia] on how Ovi integrates with the MeeGo and Symbian strategy:

We have Symbian, we have Maemo, which is now evolving to MeeGo together with Moblin. But the key thing is we have Qt as an application development environment common to both. We are trying, even though the two operating systems and their stores serve two different categories: smartphones and computer, to unify as much as possible the platform and the tools for developers. So Ovi is the platform and we want to drive both quality and quantity.

It is not only about only about application developers; there are a lot of content providers who don't want to develop apps, they just want to get their content to be discovered through apps and we will pride more sophisticated tools going forward in that direction.

Tero Ojanperä on whether applications and services will launch simultaneously on MeeGo and Symbian (continuing from above):

Of course, because the focus is different [there will be some differences]. With the computer category we expect to see more powerful hardware, more capabilities, so of course went to take advantage of those and our partner will want to take advantage of those to develop something that.. it might not be available for Symbian in the same form because the capabilities are different. So it will depend, a bit, on the type of application and how much computing power they require.

Tero Ojanperä on whether we see Ovi on other platforms or other MeeGo hardware:

We are currently focused on getting the scale and getting the offering ready on the Nokia platforms. On the other hand if you take, not as such Ovi, but if you take our offering in location - the location and the free turn by turn navigation - it is driving demand from other vendors into the underlying assets, which in this case are in Navteq, so in that sense there is already a horizontal offering, but it is not under the Ovi brand. But Ovi - currently our strategy is to focus on Nokia.

Tero Ojanperä on the thought process that led to making Navigation free:

That is a very good questions - because there was a thought process - and it was actually quite long. What we have observed - for me and for us it is always a question - what is the consumer demand, what is the technology situation and what is the business model. And in this one we saw that - OK technology - GPS chipsets are penetrating a very large number of smartphones so there is an underlying technology that is almost like 'what are we going to do with this one'. Then on the other hand, in the turn by run navigation was there, but when we look at what consumers actually want from [the] mapping application - it is not only navigation - they wanted more. And if you look at the current Ovi Maps client you'll see the Facebook integration, the local content and so on. Then we look at why hasn't anyone got into real scale with the navigation offering. We felt that the market was fragmented, there were too many - buy this license for 10 days, for a month, for two years - it was just too complicated.

And so then the business model - is this going to be monetised through transactional navigation licenses or is it going to be something else. Putting all of this together, we realised there was an opportunity and with our scale we could take it to the next level. Rather than selling premium navigation licenses, let's move to the next phase, scale it across the device range and then get the benefits out of the increased device sales for Nokia, creating advertising based monetisation and also by opening the APIs we encourage third parties to build on top of the offering. So that was the thought process that we went through.

I'm quite happy - we have just updated today that, in the few weeks since the launch, we have gone through 3 million downloads and we haven't even started the pre-loads yet - we start to pre-load next month. So people are downloading it now, so of course they will get the benefit and I believe that has some impact. But I believe when we pre-load including the map content for your specific area we will start to get more uplift.

Tero Ojanperä on when will services offered become more important than phone hardware:

I think we are already at that point now, in my opinion. Because I see the fact that people [ask] ‘where do I get the apps' - in Nokia case you go to Ovi Store. So I see it is already a criteria. It does not take away that it still needs to come in an attractive package. So I think it has already happened.

Tero Ojanperä on where is Nokia's market (given Nokia's strength in the emerging markets):

If I look at our situation it is not just about the emerging markets, we compete on a global scale. If I look to Western Europe I think we are getting traction, whether is is mapping, messaging, Comes with Music, Ovi Store. It depends of course on the specific market how we are doing. But I do not see this as an emerging market play - it is a global play.

Let's talk about Ovi Store - so we launched in May - there was a fair amount of coverage... and what I have seen now happening, if you look at November, December, January coverage it is turning. It is not about us telling the story - actually it is the developers - Nimbuzz, Polarbit - 1 million downloads - and those downloads are happening everywhere. I feel the story is starting to coming out and we are focused to make it come out. The Valley will be shown - if our partners will be successful - then will be successful. A store without great content and great success for those who provide content is nothing. So I don't want to talk about Ovi Store, I want to talk about what is in Ovi Store.

Rafe Blandford [All About Symbian]

Do you not feel you might need to provide incentives to get people into Ovi Store, to kick start the process if you will?

Tero Ojanperä:

There are a number of initiatives in that respect. Locally - we are localised in 30 languages, and Forum Nokia is providing [local] developer support. And as I mentioned [earlier], but still in incubation, more sophisticated tools for media companies to bring their content more easily to Ovi Store. So absolutely we need to develop the ways we work with developers and publishers to make it easier to bring content. But I feel in the last months we have good momentum and there is more interest - companies like Greystripe announced the advertising game offering - there are a lot of good developments. But we can always do more and we need to do much more.

Tero Ojanperä on platform strategy:

There are three tiers here. MeeGo - push the envelope as much as possible, Symbian - push it downstream as much as possible and Series 40 - low cost. This segmentation will evolve, but I do not see it changing in the next 12 -24 months.

Tero Ojanperä on the progress / success of Nokia service / solution business:

Good question. If you look back a year: zero Messaging deals - now 70 plus (half of which are active in the market); we didn’t have Ovi Store (now getting good momentum); a music offering in 1 market, now 27 markets; navigation we were already established, but with the new client we have significantly increased momentum. So I expect we will continue to concentrate on those four areas - we will drive it harder - more countries, more content, more localised services. We will be significantly up from where we are now and will be reporting on a quarterly basis [active users].

Tero Ojanperä on educating users about services:

That's an extremely good point. We need to talk more about solutions, and not only Nokia, but also work with our channel partners (operator, retail) and our customers to make sure the proposition is understood. We have a joint education task. Ultimately if the consumer does not understand [there is a problem]. Even though we (and the market) have good momentum from the early adopters to really take it to the next level a lot educational work is needed.

Tero Ojanperä on Nokia's ecosystem approach:

I believe it is an ecosystem game. If our partners cannot succeed, we cannot succeed in services. With Ovi Store and the Maps there is now more of a focus on the content partners... and partners will be relevant locally. So it is about working together.

 

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