New Business Models Forcing Manufacturers Into Services

A couple of press articles have written that handset manufacturers like Nokia (NYSE: NOK) and Sony (NYSE: SNE) Ericsson (NSDQ: ERIC) have been forced into the mobile services market by the launch of the iPhone, and Apple’s (NSDQ: AAPL) move to siphon users from operators stores to its own. If they have been forced it certainly hasn’t been against their will — the manufacturers have been angling for this for a while, but previous efforts have failed. Also, it’s not just Apple — that’s just the company that received the most hype. Nokia chief executive Olli-Pekka Kallasvuo is quoted in The Independent talking about the big internet companies like Google: “The competitive dynamics are different as these people don’t apply the same business model…You have to be extremely alert in order to be competitive against people using a different model. We have to have a strategy around each of these people separately.”

Of course, the handset manufacturers still want to work closely with the carriers, and it is a change in the carriers’ attitude that seems to be allowing this new move. Fortune notes that while Vodafone (NYSE: VOD) is talking tough about owning the customer, it also links to Nokia’s Music Store and at the same time beefing up its own MusicStation. Choice is good — not all of the people who sign up to manufacturers music offerings will be cannibalized from the operators’ efforts. The Independent had a good description of the change in operators’ attitudes: “John Delaney, another analyst at Ovum, likened Vodafone’s partnership with Nokia to a famous Lyndon Johnson quip about ex-FBI boss J Edgar Hoover: “It’s probably better to have him inside the tent pissing out, than outside the tent pissing in.”

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