Masters at Game Theory: Nokia and Skype

Various mobile operators are allegedly "furious" that Nokia (NOK) intends to put some form of Skype client on upcoming devices like the N97.

It's not immediately obvious to me whether it's a full two-way mobile VoIP service intended for use on HSPA, or whether it's an iSkoot-type circuit voice dial-around as seen on various of 3's phones (especially the INQ Skypephones and Facebook device).

Either way, it's clear that Nokia has hit something of a sore spot for the operators.

But although various operators seem to be waving sticks and threatening Nokia on this issue, I reckon it's all bluster.

Because if Nokia was really serious about VoIP as an important generator of revenue and traffic, it would have done it itself, not partnered with Skype. The possibility of adding voice into Ovi was something I wrote about over a year ago. An Ovi VoIP client could be perfectly integrated with the device, Nokia could even use SMSCs to create a good off-net SMS. I'd also bet that Nokia could create a really good multi-IMSI experience like Truphone's if it chose.

I reckon that the Finns are really, really good at poker.... or at least the more academic discipline of game theory.

The operators know that Nokia is large enough and skilled enough to "go nuclear" with VoIP if it really wanted. Apart from the devices, its relationship with NSN would help on interop testing and optimisation. And it's large enough to acquire a (struggling) operator with pre-existing roaming deals and number ranges.

I reckon we'll see a bit more grumbling about the Nokia / Skype thing - like we did with Ovi and its SIP VoIP capability and others. Nokia will probably add a "delete option" for the N97. But it will happen elsewhere, and Orange, O2 and co. will start to doubt the wisdom of their N97s being under-specced compared to the ones available elsewhere.

Of course, it's not a surprise that two of the most RCS-friendly operators are the ones with the biggest chip on their shoulders about this. What they don't realise is that Facebook integration on-handset is way more of a threat than Skype when it comes to "ownership". I reckon people would churn VoIP/IM provider (or multi-source) much more easily than social network. It's only the relatively small handful of paying SkypeOut users that's the real threat from a revenue standpoint.

Disclosure: No positions

Comments

[Terry Small:]

You miss the whole point why Nokia is doing this deal.

Nokia is adding Skype because it has over 400 million users worldwide, growing by over 350,000 new users per day and those users already communicate via voice, video and chat.

The average consumer doesnt go to a store and ask for a phone 'with VOIP'. It's the same reason that operator branded instant messaging services failed - it's not about the technology that enables the communication but the brand and the community behind (or in front of) it.

And yes, the Nokia Skype experience is 'full VOIP'.

Mar 03 04:20 AM

[donzelion:]

"It's only the relatively small handful of paying SkypeOut users that's the real threat from a revenue standpoint."

Today's handful of paying SkypeOut users are just a starting point for something that could be much bigger. The main impediments to VOIP have mainly come from complexity and convenience - start putting VOIP onto a phone that works pretty much when you turn it on, and you change everything.

Mar 04 04:03 PM