Nokia worries operators with Oz acquisition

Finnish handset vendor Nokia has significantly beefed up its Ovi mobile services offering with Tuesday’s acquisition of Canada-based mobile email shop Oz.

Nokia didn’t say how much it paid for the firm, but analysts say $100m is probably close to the price. With the acquisition, the world’s biggest handset vendor has shifted the focus of its email strategy in both the consumer and business spaces.

Earlier in the week, Nokia announced that it has given up the ghost on in house development of business email solutions formed out of the 2006 $385m acquisition of Intellisync.

In an announcement the vendor said it will cease developing or marketing its own behind-the-firewall business mobility platforms, and will instead partner with the likes of Microsoft, IBM and Cisco to deliver such solutions. As a result, Nokia is offloading its security appliances business “to a financial investor”.

Instead, the firm is focusing on its strengthening Ovi initiative, which seeks to put services such as mapping, messaging and music in the hands of end users at the operators’ expense.

Essentially, the Oz purchase allows Nokia the ability to properly access Yahoo, Gmail, AOL, Hotmail and other consumer email, social networking and integrated instant messaging clients, giving access to the big internet brands without having to do separate deals with each company.

But the deal is not without its caveats. Richard Windsor, analyst with Nomura said the acquisition of Oz, “Brings the OVI strategy into sharper focus and gives it greater shape and clarity.” But he warned that Nomura has, “Long been concerned that internet brands increasingly view Nokia as an emerging competitor which could lead to Ovi not getting access to critical content or having to pay through the nose for it.”

According to Windsor, the main issue is branding and operators are right to be extremely wary of Nokia crushing their fragile brands. Consequently some operators may switch out Oz as a supplier, as there are at least two other vendors Seven Networks and Visto, which enable a similar service.

The operator community has to date maintained a wary tolerance of Ovi, and it remains to be seen how far Nokia can push its plan. But the carrier’s have also been forced to acknowledge that the game is changing and Nokia is only getting in on the services space to defend its market share against the new pretenders, Apple and Google.