Nokia ditches operator-focused business to hone in on consumer services
By Chantal Tode
July 1, 2011
Nokia is planting itself as a major mobile player with a rollout of apps
Nokia is selling an operator-focused business so it can pay attention to building its smartphone presence.
Mobile messaging services provider Synchronica is acquiring Nokia’s email and instant messaging services for mobile operators in North America. While the deal is not expected to have a big impact on Nokia’s business it enhances Synchronica’s position in this space.
“From Nokia’s perspective the operator branded email service was a low margin business and is not central to its strategy,” said Nitesh Patel, senior analyst of the global wireless practice at Strategy Analytics, Boston.
“Operator branded services are not a focus area as Nokia aims to drive its own direct-to-consumer services brand,” he said.
“I don’t expect it to have a major impact to Nokia’s North American business.”
Smartphones a factor
Nokia's partnership with Microsoft could be a factor here as well.
"It makes sense that Nokia steps back from offering a white-labeled messaging service to mobile operators in the event that its partnership with Microsoft ultimately results in competitive messaging services on Windows Phone based Nokia devices," said Pamela Clark-Dickson, a senior analyst at Informa Telecoms & Media, London, Britain.
"By divesting itself of the OBM assets, Nokia clears the way for this to happen – if it happens," she said.
Messaging developments for smartphones have changed the mobile space, with companies such as Nokia focusing on building out their own services instead of supporting operators.
“The move is not a surprise given that in the past Nokia has made acquisitions of several companies such as Loudeye, Gate5 and Novarra which focused on operator branded services, but used these companies to develop its own propositions – for music, navigation and proxy browsing respectively– rather than continue to support operators,” Mr. Patel said.
Nokia could have also been looking to get out this space because of the low margins.
However, for Synchronica the deal provides scale.
“It is a very low-margin business,” said Andrew Brown, director of wireless enterprise strategies at Strategy Analytics, Boston. “Synchronica had to expand because the only way they can survive is through scale.”
Synchronica said this week that it has reached a conditional agreement to acquire Nokia’s Operator Branded Messaging business.
The business provides white label email and instant messaging services across a wide range of devices to operators in North America.
The deal brings Synchronica contracts with ten operators, including AT&T, Verizon, T-Mobile and Sprint.
The company currently has more than 80 carrier contracts in Europe, Latin America, Africa, Russia and Asia.
Synchronica will also provide the messaging software that Nokia will preload on Nokia Series 40 phones.
The company plans to continue to develop Nokia’s messaging platform and to merge it with the company’s own messaging infrastructure software.
Synchronica’s software provides operators and device manufacturers with services such as push email, instant messaging and social networking.
Additionally, Synchronica is looking to be a leader is this space as the mobile marketplace continues to evolve.
“The carriers I speak to in North American and Europe haven’t given up on valued added services,” said Carsten Brinkschulte, chief executive officer of Synchronica, Tunbridge Wells, Britain.
“What we are providing is a device-neutral messaging infrastructure that can put the carrier back into control of the value proposition,” he said.
“The times are over when it was enough for carriers to differentiate based on what smartphone they had in their portfolio. We are going back to how it was before smartphones, when what value-added services operators can offer are important.”
Chantal Tode, Assoc. Editor, Mobile Marketer
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