‘Furious’ UK Operators Want Nokia To Strip Skype From N97

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‘Furious’ UK Operators Want Nokia To Strip Skype From N97

UK operators O2 and Orange are reportedly “furious” with Nokia (NYSE: NOK) over the Finnish handset makers plans to pre-load Skype, the VoiP provider that lets consumers make free calls, on to its upcoming flagship device, the N97. According to Mobiletoday.co.uk, citing “operator sources,” the networks may end up refusing to stock the devices if Nokia doesn’t strip out the application.

Nokia has always taken pains to show publicly that it gets along very well with its operator partners. But looks like operators are seething behind the scenes. Apparently, the operators are “venting their anger” at high-level executive meetings with Nokia, whom they believe are trying to wrest away control of their customers and offering easy access to an app that could potentially hurt call revenues. Mobiletoday.co.uk’s source said to them that this was yet “another example of [Nokia] trying to build an ecosystem that is all about Nokia and reduces the operator to a dumb pipe…But if you spend upwards of £40 million per year building your brand, you don’t want to be just a dumb pipe do you?” The source added, “Nokia have tried several ways to own the customer over the years and operators have had to say no.”

Will Nokia end up having to remove Skype from their N97 devices? It would be quite an embarrassment if that were to happen, especially as the deal was announced with great fanfare at MWC in Barcelona last week. It also seems odd that Nokia wouldn’t have foreseen the operator backlash as it ran into similar problems with its Comes With Music device in the UK, which operators feared would compete with their own music products. Nokia ended up launching the phones with only distribution from handset retailer Carphone Warehouse. But Nokia needs widespread distribution for its flagship device, which is supposed to help it compete with Apple (NSDQ: AAPL) and RIM (NSDQ: RIMM), whose products are eating into its share of the smartphone market, and it needs operators to help subsidize the gadgets if they want to get consumers on board. We may yet see the app removed.

Dianne See Morrison Feb 27, 2009 10:50 AM ET

Posted In: Gadgets, Companies, Nokia, O2, skype

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John

about time, these short sighted telcos are holding technology back and deserve to go the way of typewriters.

Dianne

So who thinks the app will disappear from the handset?

Stark Ravin

Roger: you're clueless, whistling past the graveyard as IP networks lay low the business models of yore. Wireless carriers will follow the path of wireline carriers whether they like it or not, becoming the dumb bit pipe they appropriately should be. Yes, they'll go kicking and screaming, but eventually end up like the music industry and newspapers if they don't get on the train. The apps and intelligence belong on the edge of the network, not in it.

Current wireless coverage (voice or data) is so disparate and so crap, you'd think carriers could find a mission in just working hard to solve that problem. Instead, they keep throwing fits over devices and applications that actually make their networks appealing to use. What idiots.

roger

Nokia has spent 40 million GBP a year on building a brand. Wow! Well actually not wow. The mobile operators have invested gazillions on networks, spectrum, equipment, customer support, branding, blah blah. I'm sure they never intended to buy spectrum bandwidth for billions only to find companies that have made no such investment taking away the core voice business. Unfortunately the mobile business was once strong, with a great commercial model, but is now becoming weakened by thinking from the internet industry; and industry with a poor commercial model. My advice to Operators; Stick to your guns, charge your customers (like all good businesses should), and shut out anyone who is going to erode your customer relationships and the massive investments you made in them. And stop listening to the defectors from the internet world - they couldn't make money there, and they won't do it in mobile either!

Name

Why not smart pipes instead of dumb pipes? I think there's an opportunity for a "Southwest" or "Ryan Air" of the mobile phone business. The one who wins is the one who does the best, most efficient job of getting bits from A to B. Stop offering "meals" (i.e. value add) and "duty free" (i.e. 'services') and just focus on the core of the business.

Christoffer

As a consumer, I generally don't consider myself to be owned by neither operator nor phone maker. They, Orange and Nokia, should be able to find some middle ground, and make a package which is best for the consumers needs.
If Orange and O2 don't want to sell mobile phones which advertise use of a competitor product, then don't. But don't whine about not owning the consumer, especially when the consumer is in fact given more options through the Skype application.