Nokia inspired by Apple - wants cut of wireless contracts

Posted on Sunday, Dec 16 2007 @ 12:42 CET by Thomas De Maesschalck
ARS Technica reports Nokia wants to try to seduce wireless carriers to get a slice of their contract revenues, just like Apple does with the iPhone.
Nokia's chief Olli-Pekka Kallasvuo announced the move in an interview with Frankfurter Allgemeine Sonntagszeitung, which also highlighted the company's efforts to position itself as a provider of entertainment services, such as Comes With Music, in addition to its mainstay of mobile phones and other devices.

How much Nokia wants out of each contract and what happens when wireless carriers don't play along is unclear. Part of the leverage Apple surely uses to score its deal is the iPhone's buzz-worthy appeal, as up to 50 percent of iPhone buyers in the US, UK, France, and Germany are new contracts. That translates into a massive boost to wireless carrier revenues, out of which they can afford a percentage to scratch Apple's back with. Nokia, however, makes both high-end phones that are on par with the iPhone's profit margins, as well as bargain-bin or "free with contract" phones that might not rake in as many customers or offer as much negotiating headroom for the wireless carriers.

Meanwhile, the greater damage—or breakthrough—has been made: contract revenue sharing is here thanks to the iPhone. Now Nokia—the world's leading provider of mobile phones with nearly 40 percent of the market—wants a piece of the pie. It's only a matter of time until more manufacturers and wireless carriers begin making deals like this, bringing more change and innovation to the market. The real question will be whether these deals will benefit the customers and not just the wireless carriers and device manufacturers. Innovation like the iPhone's Visual Voicemail feature is good, but two-year contracts that remove competition and choice aren't exactly winning any awards from consumer rights groups.

About the Author

Thomas De Maesschalck

Thomas has been messing with computer since early childhood and firmly believes the Internet is the best thing since sliced bread. Enjoys playing with new tech, is fascinated by science, and passionate about financial markets. When not behind a computer, he can be found with running shoes on or lifting heavy weights in the weight room.

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