Why Nokia's Service Efforts Have Fallen Flat

nokia_logoNokia’s struggles over the last couple of years are well-documented: The Finnish handset manufacturer has watched its Symbian platform consistently lose market share in recent years, falling from a staggering 73 percent in 2006 to 51 percent in the second quarter of this year. And as the smartphone space has heated up, Nokia has spun its wheels in North America while Apple and RIM produce enviable margins with their high-end devices.

But Nokia’s attempt to morph from manufacturer to mobile Internet services provider has been even more painful to watch. The launch of its much-anticipated Ovi Store earlier this year was deemed “a complete disaster” due to its being plagued by glitches, and while its new mobile e-mail service has gained traction in emerging territories the offering has yet to find an audience in Western markets.

The problems with Ovi, though, have been in the execution — not in the concept itself. The ambitious offering has been rushed to market in an ill-advised effort to catch up to Apple’s App Store, resulting in a confusing storefront that can be nearly impossible to navigate.

Comparing the App Store to Ovi is unfair, of course. Apple supports only two handsets (the iPhone and iPod touch) while Nokia is attempting to support a host of devices, including both Symbian- and Java-based phones. And while Apple has effectively leveraged close ties with carriers, Nokia has stuck to a lone-wolf strategy, opting to compete with carriers’ own data services rather than forging partnerships with them. That tack has alienated some Western network operators — which is why the company’s current flagship phone remains far too expensive for most U.S. consumers, and why Ovi doesn’t leverage a carrier-billing relationship in the U.S. (Not that irritating its carrier partners is anything new for Nokia.)

Nokia’s new netbook doesn’t seem to be changing perceptions yet, and I think the company’s tie-up with Microsoft is nothing more than a distraction. Nokia’s position as the world’s largest handset manufacturer can’t be discounted, though, and gives Ovi a huge competitive advantage over many of the other app stores coming online. If the company can give Symbian a major facelift and learn to play nice with carriers, Nokia will become a force to be reckoned with in the era of the superphone. If not, it will be just another phone maker — one that continues to lose ground to Apple and RIM.