The Cutting Room

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Just about everyone but the networks backed Nokia’s charge at the content space and interesting statistics were bandied around in making Nokia’s case.

“Average network churn rates are something like 30 per cent. Where’s the brand loyalty there? Customers choose networks on cost, not brand,” said one industry sage – a content provider himself, incidentally.

Content, hey? Everyone wants a piece of it. The networks, fearful of becoming utility pipes, have reinvented themselves as media companies, with limited success. They also claim they ‘own’ the customer relationship, in subsidised markets at least, and understand what, why and how the customer wants content.

“Yeah right, so what about all the complicated tariffs, the nightmare call centres and everything else,” retorts the Mobile News sub at such claims. He’s got a point. If that is understanding, the networks need to ‘over-stand’ their customers if they are going to make a success of content provision.

But what of Nokia throwing off its engineer’s lab coat to recast itself as a digital content provider?

The point about brand loyalty is fair and, despite the subsidy model in the UK, punters choose networks on cost and handsets on brand. And, among the big five manufacturers, Nokia’s brand and market reach is strongest. It has close to a billion users across the world; individual network subscriber figures don’t come close. It is worth noting Nokia’s market penetration dwarfs even the success of Apple’s portable music players.

The iPod has sold 100 million units in five years – a 10th of Nokia’s annual sales. Expected sales of the iPhone run to 8-10 million units worldwide, which again represents insignificant numbers compared with billion-selling Nokia.

And mobile phones, whatever the usability issues associated with engineers jamming multiple functions onto a handset, far outpace Apple’s portables for computing capacity.

As for brand, Apple’s devices are ‘must-haves’ in niche circles where there is plenty of disposable income, but Nokia is truly mass-market. It is like comparing LG’s Prada phone with the full global catalogue of Nokia handsets.

But does Nokia’s content push really threaten the network operators’ music revenues? Yes, probably, but the networks’ music revenues are miniscule anyway – even iTunes’s modernisation/crippling of the music industry is something of a misnomer. Excluding illegal stuff, 98 per cent of music on an iPod is ‘bought’ music – that is, uploaded from users’ CD collections. Just two per cent is purchased from iTunes.

If that is the case on Apple devices, carried by fashionistas and tech-heads, what percentage of music on the handsets of Vodafone subscribers is from the Vodafone portal? A content provider can expect four down- loads per month, per user. Not bad, but it hardly makes up the shortfall from declining voice revenues.

But there is another point: Nokia and Vodafone might ‘fight’ on, to the complete indifference of paying customers – because the real heavyweight content providers are elsewhere. Like Andrew Orlowski suggested last week in online tech publication The Register, it might end up like two bald men fighting over
a comb.

 

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