Nokia, Vodafone cut content and services deal: Companies’ alliance may buffer Apple, Google advances

As the pace of convergence quickens, Nokia Corp. cut a deal with wireless telecom giant Vodafone Group plc to integrate mutual service offerings designed to grab eyes, ears and wallets-as competitors from within and without the wireless industry rapidly move in with similar treats.
Vodafone-one of the world’s largest carriers-will integrate aspects of its own communications, Internet services and content with Nokia’s recently announced Ovi content play onto Nokia handsets, some of which will be exclusive to Vodafone.
Vodafone apparently will offer both its own music service and the Nokia Music Store on Nokia’s 2008 handsets.
The deal appeared to reflect Nokia’s continued march toward Internet-based content and services and Vodafone’s recognition that an existing player with the scale, distribution and portfolio breadth of Nokia can make a formidable partner.
The move also appeared to defuse the resentment of at least one major carrier towards Nokia’s dominant market position in the handset business and potentially competing content and services offerings. (Vodafone earlier this year contracted with Chinese original equipment manufacturers for low-cost, carrier-branded handsets, in part, analysts said, to counter the bargaining power of handset giants such as Nokia.)
The alliance between Vodafone and Nokia also highlights the two partners’ sense of urgency in the face of convergence of mobile communications with the Internet and computing industries. The push is embodied by Apple Inc.’s iPhone product and related revenue-sharing arrangement with carriers, and by Google Inc.’s announcement Monday of a Linux-based platform for handset makers that could fuel advertising revenue for the Internet search giant.
Apple is expected to continue to roll out iPhone-related devices, and Google plans on OEM partners such as Motorola Inc. and HTC Corp. to roll out Android-based handsets by the second half of next year.
According to American Technology Research analyst Mark McKechnie, the deal between Vodafone and Nokia confirms the latter’s services-based strategy and illustrates that it can be a viable play with large carriers. John Delaney, analyst at Ovum, pointed out that Vodafone is the second major carrier to work with Nokia on Ovi, the first being Telefonica. Vodafone, by partnering with Nokia, is leveraging the handset manufacturer’s substantial investments in content and services, Delaney said.