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Summary:

Nokia has agreed to buy Montreal-based OZ Communications for an undisclosed amount of money in a move that will allow the Finnish handset maker to offer consumer IM technologies on its phones. Nokia’s internal IM efforts don’t even merit an “F” — and this purchase pretty much proves it.

Nokia, the world’s largest mobile phone maker, has agreed to buy Montreal-based OZ Communications for an undisclosed amount of money in a move that will allow the Finnish handset maker to offer consumer IM technologies on its phones. Nokia’s internal IM efforts don’t even merit an “F” and this purchase pretty much proves it. OZ has about 5.5 million monthly paid users, and partnerships with carriers and many other handset makers.

As we’ve already noted, OZ has been through many incarnations.

…began as a 3D graphics company in Iceland in 1991, where OZ CEO Skuli Mogensen was studying at a university. The company says it managed to license its 3D technology to Microsoft, and later moved into Internet and telecom real-time messaging before the telecom bust of 2001. Then when times were tough Mogensen says he and ten executives did a buyout and recapitalization and in 2004 found its VantagePoint funding.

OZ has raised over $70 million in funding from VantagePoint Venture Partners, Wellington Financial, Quebec Solidarity Fund, Deutsche Bank and others. It must be a good payout for these guys. For Nokia, however, I see this as yet another muddled move by the company, which is moving like a boxer after a long and brutal fight.

I think that Nokia just doesn’t get software and, to a large extent, the mobile Internet. They think they do, but they don’t. So every time they try to make a push into the space, they try and they fail. In 2005, for example, Nokia bought Intellisync for around $450 million to take on RIM and Microsoft. It was their big “business messaging” push. Then last week, they shut down the “business messaging” group. Three years of getting nowhere! What will happen to OZ’s messaging platform? While it’s hard to say for sure, Nokia’s past should be all we need to know.

  1. Even though Nokia hasn’t suceeded with its acquisitions in the past, this one seems like a win win for them. By using this technology to power instant messaging on all of the low end phones they manufacture,it could keep their market share strong in places where Nokia is still King (Asia, South America, etc.) Let’s not forget about thier Acquisiton of NavTeq, which hopefully will pay off for them in the future. Don’t see how you could quite lose with that one either, it just may take a while to realize a solid return. Nokia competing in push technologies may not have been the best timing for them, since that really isn’t their space and is not what they are known for. Even though everyone knows the N82 is damn well underappreciated in the US and combined with push technologies can compete with RIM anyday. Oh well. Good article Om.

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  2. “I think that Nokia just doesn’t get software and, to a large extent, the mobile Internet”

    No wonder there’s no name on this article. Is the writer on LSD?

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  3. [...] One foible: I don’t like how you can’t hit the green send key to send a message, like you can in the messaging app on the device. Hopefully this will get added, and the rest of the bugs will get worked out. I’m curious to see what happens in this space for Nokia, since they announced this week they were shutting down work on their enterprise push email software, as well as buying IM/email provider OZ. [...]

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  4. $400m deal, Skulli is laughing with a 51% stake in OZ. Shame the screwed over the employees

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