David Wolf

Nokia's Restructuring: Nobody Loves A Value-Chain Hog

Hi Lauri,

Thanks for your comment.

Your point, if I am reading you correctly, is that carriers cannot hope to offer walled-garden services. If you believe that, however, you must grant my point, which is simply that Nokia cannot either. Now, as an analyst who has covered Nokia in Finland for a very long time, you may know something about their plans on the services side beyond what was disclosed yesterday, but from here in Beijing it sounds like they want to create a proprietary, walled garden.

There are two great questions that hover over the future of mobile services. The first is "will mobile services be more like the Internet, with thousands of services freely available and accessible, or will it be like cable television, with operators assembling bouquets of standard and premium services?" With respect, as certain as you appear to be that the former will be the case, I think it is too early to call this one either way.

Personally, I believe that in some markets we will continue to have a walled garden for the foreseeable future. In other markets we will see an Internet-like free-for-all within 1-3 years. And in most markets, we will see some form of interesting hybrid twixt the two. Either way, each market will go its own way.

Now we come to the second great question that hovers over the future of mobile services: "who will create the services that will turn the world into compulsive users of the mobile device as an all-purpose information, entertainment and services terminal?"

That one is a lot easier to answer: everybody. The reason for that answer is that no single entity - no operator, no online search giant, no software monopolist, and indeed, no mobile hardware manufacturer - has a clear enough grasp on the market to create more than a few of the services people around the world will want. Even the mobile operators who successfully maintain a walled garden will have to build their bouquets from a large variety of service providers.

My issue with Nokia leaping into that fray is not whether or not they belong there - certainly they do. My issue is with the apparent scale of their ambition. Setting up some small entrepreneurial units to create or invest in services that build heavily on the features Nokia builds into their devices is a natural. Creating what appears to be a massive corporate bureaucracy ostensibly to offer carriers "complete solutions" sounds a bit different, like they want to displace carriers' walled gardens with their own. That sounds, well, unrealistic. Inappropriate. Ominous. Perhaps even megalomaniacal.

If Nokia's ambitions are simply to be a player, it should walk before it tries to run. If its ambitions are to be a dominant force in the global online services industry, it should know that it faces a battle royal, and from where I sit, its likelihood of failure is high.

You've made your call Laurie. I've made mine. Let's sit back and watch the game.

Thanks again,

David