Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: Ruffian who wrote (13086)	6/27/2001 3:53:33 PM
From: Eric L	Read Replies (2) \| Respond to of 34857

re: Club Nokia >> Club Nokia - Taking The Battle For Future Revenue Direct To The Consumer Devine Kofiloto EMC Cellular 27-Jun-2001 Nokia has achieved its current standing in the mobile industry by consistently being one step ahead of its rivals in predicting industry trends and positioning its product offerings accordingly. It appears Nokia has once again seen the writing on the wall and is moving to position itself for the future. At a time when demand for handset terminals is stagnating across Europe and the mobile markets in advanced nations near their saturation points, it appears the Finns have realised that it will no longer be the hardware that will ensure the high operating margins they have grown accustomed to, but rather what a handset terminal can do. Hence the need to explore new sources of revenue. Nokia's recent profit warning that overall sales growth for Q2 2001 will fall significantly short of its prior estimate of 20% to below 10%, serves as a good indication of the industry's future outlook, all the more so when this warning fell in line with telecom counterparts such as Ericsson and Motorola who have already cut their earnings forecasts in 2001. The profit warning sent Nokia shares down by more than 20%. New Growth Area Nokia has realised that content will become more important in mobile terminals with the introduction of new technology, software or more specifically applications. Exploiting content appears now to be Nokia's new strategic direction, and Club Nokia, the company's internet portal, is the most likely vehicle that will spearhead this growth. Club Nokia is a medium to bypass mobile network operators and retailers to create direct relationships with mobile end-users, and effectively circumvent the network operators 'gatekeeper' role in the revenue earning chain. It has not gone unnoticed by Nokia that companies creating applications utilising SMS, the mobile consumer's first experience with mobile data, are creating totally new ways to take advantage of wireless services and are generating significant revenues. *Club Nokia* Club Nokia is a value-added platform for Nokia handset users allowing owners of Nokia phones to download SMS-based games and ringing tones, as well as receiving online help with phone problems and the ability to preview new models. Club Nokia's roots date back to 1996, when it was originally started with the focus of offering product information to the Nokia mobile phone users. Today it offers exclusive services to owners of Nokia mobile phones in Europe and Africa. The Club Nokia web and WAP services can be accessed once the Nokia phone is registered with Club Nokia. How many registered subscribers does the service have? A Nokia spokesperson would only comment that Club Nokia has 'millions of members' and is enjoying steady growth. In the future, Club Nokia will be available to Nokia phone owners globally. Services Offered by Club Nokia Club Nokia Services Ring tones* WAP & Web Picture messages WAP & Web Operator logos WAP & Web Caller group graphics WAP & Web Downloadable profiles WAP & Web WAP comics, for example Flip & Mick (free except for airtime) WAP Nokia 3330 Downloadable game packs for Space Impact, Bumper and Snake2 WAP Nokia 3330 Animated Screensavers Source: Club Nokia In August 2000 EMI Music Publishing and Nokia signed a licensing agreement for EMI Music Publishing's catalogue to be used for custom downloadable ring tones Nokia means serious business with Club Nokia, with plans to gain a global footprint. In August 2000 EMI Music Publishing and Nokia signed a licensing agreement for EMI Music Publishing's catalogue to be used for custom downloadable ring tones. Nokia's move is clearly an attempt to gain a slice of subscribers' revenue for services historically provided by its customers (operators and ISPs). The market potential here is enormous, and has apparently not gone unnoticed by Nokia. According to a report on SMS published by Strand Consulting in March 2001, the total value added SMS revenue in Europe could reach as much as $7.3 billion this year, $9.4 billion in 2002 and $11.6 billion in 2003. Quoting an analyst (Johan Brostroem) with Hagstroemer & Qviberg in Stockholm, 'If it's possible to swing this overnight, Nokia would be able to add a totally new leg to the business that would protect margins, long term,' a fact Nokia's chairman and chief executive Jorma Ollila confirmed, at a recent analyst conference on 26 March 2001 in Frankfurt, saying Club Nokia should become a major revenue source for the company. The nominations of Marjorie Scardino Chief Executive of the international media group Pearson, and Arne Wessberg, President of the Finnish Broadcasting Company as new members of the Nokia board further underline the company's emphasis and effort to improve its know-how in content production. A Threat To Operators - Conflict Of Interest?* As bold as this strategic move appears, it is not without its risks. It could easily put Nokia at odds with its main customers, the operators, who have launched their own mobile portals in a bid to capture as much of the revenue from mobile internet services themselves, particularly in the wake of the heavy licensing fees paid for 3G mobile networks. That Nokia is willing to risk its long term relations with its customers can only further serve to reinforce how critical this strategic move might be to the company's future survival. In the short term, operators cannot afford to spurn Nokia because of the popularity of its phones within the consumer market, a fact Nokia is keenly aware of and exploiting to the fullest extent. Nokia's argument in the face of this is that Club Nokia is a platform for the company to further enhance the Nokia brand and increase customer loyalty. But there is good reason to believe it runs deeper than that. Conclusion The dimensions of the mobile phone now extends beyond the physical device you get in the sales package. It has become a bigger concept today, encompassing a set of services through which one can customise and personalise the device. It is only those who are quick to realise this and redefine their business accordingly who will ensure their long term survival. Nokia has seen this coming and has begun positioning itself for the future, as mobile phones become more of a commodity. The company's market initiatives in the forthcoming months will merit close scrutiny as it moves to exploit to the full the opportunities offered through the ongoing evolution in the mobile internet and its own place as brandleader in the handset market. << - Eric -