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Nokia to switch focus in bid to beat Apple

Mon Aug 24 2009, 08:56 AM UTC+01:00

Nokia is planning to focus on services such as music, maps, gaming and email in an effort to better compete with Apple's iPhone and Research In Motion's BlackBerry devices. The initiative comes as Nokia struggles to reverse its falling share of the smartphone market, as its newer rivals make gains at its expense.

In an interview with the Financial Times, Nokia CEO Olli-Pekka Kallasvuo says he is planning to implement a "profound" cultural change at Nokia. The company is targeting 300m 'Ovi' service users by 2012. Currently some 53.9m Nokia users access its suite of services.

Though Kallasvuo says that the effort represents a "big change" that will prove "very challenging", he claims it will not require a major internal overhaul, and will be a case of "fine-tuning" the company, which employs roughly 3,000 staff.

The effort to boost its services is the latest step by Nokia to try and tap the ever-growing app store market. In May, Nokia also launched its Ovi Store, consolidating a number of its existing app and media-sharing platforms into one consumer-facing app store. This week the firm also unveiled its first netbook device, the Nokia Booklet 3G, which will include built-in access to Nokia's Ovi services.

Gartner researcher Carolina Milanesi tells StrategyEye that Nokia is focusing on services because its smartphone business is struggling. "Nokia was the first vendor to create the smartphone market," says Milanesi. "Over the past couple of years, although they stayed ahead on the technology side, they lost on usability and that's when the iPhone came in, when BlackBerry got more into the consumer space, and the likes of HTC."

Apple, which only has one type of handset, launched its App Store in June 2008, and as of July offered more than 65,000 apps. By comparison, Nokia currently offers some 4,500 apps, while trying to target customers using a range of some 75 handsets. Nokia only launched its first touch-screen phone - the Nokia 5800 XpressMusic - in January of this year. This was followed in June by the high-end N97, which received mixed reviews.

Nokia had a setback when its Comes With Music unlimited download venture flopped after it launched last year. In April, Nokia Music VP Rob Taylor admitted that the launch of Comes With Music in the UK had been marred by offering the service on "out-of-date" handsets.

Recent Gartner research shows that Nokia, the biggest phone maker in the world, accounted for 45% of worldwide smartphone sales in Q2. This marks a 2.4% year-on-year drop. RIM grabbed 18.7% of the smartphone market, while Apple took 13.3% - a massive increase from the 2.8% market share it had in Q2 2008. Overall smartphone sales jumped 27% in the quarter, despite a 6.1% downturn in the overall handset market.