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New Business Models Forcing Manufacturers Into Services

By James Quintana Pearce - Sun 16 Dec 2007 04:36 PM PST

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.”

Posted in: Companies, Apple, Nokia, Operators, Vodafone, Sony Ericsson, Gadgets

Tags: iphone,

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