Nokia, BlackBerry, Apple sew up market with services play

The world’s biggest handset vendor, Nokia, and two outsiders, RIM (BlackBerry) and Apple, stand to gain most by pioneering fresh revenue streams for the mobile handset industry with their emerging push into value added services such as navigation, email and music.

Industry analyst Strategy Analytics said Wednesday that Nokia, BlackBerry and Apple are the first handset vendors to realise that global handset revenues are approaching a peak and fresh growth streams must be found in mobile services.

It’s been well documented that a cocktail of promising applications for wireless consumers is already emerging, such as GPS navigation from Nokia, push email from BlackBerry and music from Apple.

Current revenues from the respective strategies of all three vendors are modest, but growing. Chris Ambrosio, executive director of wireless at Strategy Analytics, said: “We estimate Nokia generated less than one percent of global revenue from its Ovi services sub-brand during 2007. Sales may be tiny, but they are growing.”

Strategy Analytics estimates that Nokia’s VAS proportion can realistically achieve 5 per cent of turnover by 2012. “The real impact of Ovi, and other content offered by handset vendors however, will be in increased shipments of profitable, rich-media smartphones that will be necessary for accessing these advanced services,” said Ambrosio.

The news comes just as Nokia is reported to have struck a revenue sharing deal with Buongiorno, the world’s largest mobile content provider.

Having added previously resistant pan-European carriers Orange, T-Mobile and Vodafone to its growing list of Ovi services customers, Nokia is now seeking to boost its blossoming content and services strategy further. In October, Nokia made its largest ever acquisition, buying Navteq, a US mapping and navigation company, for $8.1bn, effectively sewing up that corner of the market.

The Finnish vendor is understood to be adding Buongiorno’s BlinkoGold mobile site, which carries video, music, graphics and games, to ten device models, including the N95, N70 and N82.

Italy-based Buongiorno, which is listed with a market capitalisation of Eur200m, appears to be betting on this latest deal to help it achieve its 2008 revenue target of Eur330-350m, almost double its 2007 figure of Eur175m. The firm has redesigned its software in preparation for the next level of mobile content services, including social networking and targeted mobile marketing.

Last month, telecoms.com parent and industry analyst Informa noted that the focus is moving away from a limited number of services provided by the operator to internet access and operators’ non-SMS data revenue base is in the process of shifting from services to basic access. The services users are beginning to use on their mobiles are provided by internet players rather than mobile operators.

As such, the analyst expects that mobile operators can look forward to a period of growth in mobile broadband connectivity. But to capitalise on this opportunity, operators need to invest heavily in new high-capacity networks, effectively marking a transition to becoming ISPs. To avoid the fate of fixed-network ISPs, mobile operators will then either need to partner with internet firms and share revenues and/or develop a smart-pipe strategy. This involves ‘exposing’ different parts of their networks to third party service providers and monetising access to them.