We Need Nokia: Innovation Central to Smartphone Growth and Apple iPhone Competition

Implications: Admittedly a next generation / innovation proponent, I have long held Nokia as my "old world" wireless players or those not named Apple or Google.  Nokia can combine great market presence with true software knowledge to compete in an ever-changing smartphone world.  Music may be a tough entry point, but it is also a necessary facet to a convergent device; I applaud Nokia's efforts, even if the model with Warner may be flawed.

Analysis: Nokia's music efforts may not seem worthwhile to some, but, I believe this effort is an intelligent step in Nokia's overall mobile strategy.  And, unlike most handset manufacturers and almost every U.S. based carrier, Nokia, RIM, and Google are in the best position to compete with the likes of Apple.  Apple will win majority music share, assuredly, but Nokia needs to compete against the Apple iPhone platform in order to protect diverse offerings in the smartphone space.

Though they are at a severe handicap in the U.S. market due to year's of underestimating the U.S. distaste for candy bar form factor, I like Nokia's positioning.  My rationale ...

1) As I have mentioned before, mobile phone / device competition has moved from carrier dominance to hardware/carrier dominance to software dominance.  Apple iPhone's OS and UI is a vast improvement over the old, tired mobile UI.  Only Nokia, with their once part and now full ownership of the dominant Symbian UI, have that software ability.  Otherwise, only Google or Microsoft would be well positioned to battle Apple, removing all of the old guard.

2) Nokia is by far the leading seller worldwide, significantly increasing its lead over the past year.  Thus, their distribution network and market is huge for this iTunes competitor or any software service.

3) Sometimes, you have to throw things against the wall to see if they stick.  When a big player does this, it forces the incumbent -- Apple in the music space -- to improve its offering.  This accelerates innovation and improves the customer experience.

4) Nokia's N-Series, with its convergent functions and expensive prices, are praised in most parts of the world.  They are likely too expensive still, but they are surely the leader in true convergent multi-media devices, which the iPhone is poised to take over.  Music, video, and especially the Internet are all inroads into this convergence.

5) Nokia has such dominance in Europe and customers already engaging in mobile commerce.  This service may pick up steam more quickly there.

6) Nokia is poised with a number of other services to throw through the pipe, after undergoing a steady stream of large acquisitions including Navteq (mapping), Loudeye (digital media), Enpocket (mobile advertising), Twango (media sharing), and Plazes (social networking).  They can roll out additional services to the phone to increase its convergent utility.

7) Nokia needs more PR from the innovation side, as Apple is dominating the buzz followed by RIM and Google.

To repeat, I don't know if the service will be fantastic or a worthwhile competitor to Apple, but I do know that competition in the music sector, and in the pro-sumer (if not eventually consumer-driven) smartphone sector, is important to Nokia's market share and the best offering for the public.