The music wars have well and truly started, with Nokia following on from the genuine threat that Verizon, RealNetworks and MTV launched in the US last week, with its own service meekly dubbed simply the Nokia Music Store, launched with more razzamatazz than Nokia can usually muster, complete with a rare outing for its CEO, in what was a copycat event of the iTunes European launch.
Three years and a handful of days after Steve Jobs prowled the stage at London’s Old Billingsgate Market, in front of 600 journalists, trawled from the music and technology press, impressed at how wonderful his iTunes invention was, surrounding himself with music stars like Alicia Keyes, Nokia has tried to repeat the event.
All of the Nokia top management gave their versions of what Nokia is about these days, all echoes of the top man Olli-Pekka Kallasvuo’s view that Nokia is now an internet company, dubbing all ‘internet’ activities of the company with the brand Ovi, the Finnish name for door.
This was essentially saying to Apple, that Nokia may be three years late, but it finally has its music story right, and the time is right for people to throw away their MP3 players and absorb that function into phones, but not iPhones, Nokia phones. And it was also saying that it would spend cash on a lavish launch, at the same location, because its service was no less important than iTunes.
But it was the shadow of the iPhone, not the iPod, that was everywhere throughout the event, though only mentioned at question time. Nokia will soon have handsets that can be controlled by touching the screen. The Nokia Music Store is the first one that is built with the handset in mind, not the PC. All the new devices have 8GB of flash memory, identical to the iPhone and they search web sites just like the iPhone. Samsung must be laughing up its sleeve at two of its fiercest rivals using Flash memory chips so wantonly, given that it still dominates the Flash memory market.
The Nokia Music store of course is based around the Loudeye service that Nokia acquired for $60 million just one year ago, but that also includes the On Demand Distribution (OD2) which Loudeye acquired in the same month that iTunes launched in Europe 3 years back, paying $39 million to internationalize itself. Although Loudeye as a brand has disappeared, it would be interesting to know whether or not Microsoft, which used to sit its MSN Music service on MusicNet in the US, but on OD2’s platform in 20 plus non-US countries, has also disappeared.
Either Microsoft has had to find another source for several million tracks or this service that Nokia is parading, is the very same source of Microsoft’s music. If that’s the case then Microsoft can either jump OFF this bandwagon, or it can jump on. It may in fact be the main reason for the announcement two weeks ago that Nokia would support PlayReady, the new Microsoft DRM that runs across Symbian, Microsoft and Linux handsets, as well as PCs and other Microsoft devices. What price would you get for betting that the Microsoft DRM, which is backwards compatible with its old Windows Media DRM, sits behind this new service. It would only be a short step then for Nokia Music Store music and MSN Music to be interchangeable, especially given that music tracks on the service are delivered in 192Kbps audio in Windows Media Audio (WMA) format.
Nokia says that between now and Christmas it will offer a PC download manager, like the iTunes application, so that instead of buying music from its store using the handset cellular connection, customers can use the PC, which is likely to be cheaper, and sync the handset with the PC, just like an iPhone.
This very facility, and the fact that existing devices in the N series can use the store (we think it must require at least a software download to update them and perhaps a whole refit), means that Cellcos which don’t really want to get involved with the Nokia Music Store, are in a tough position.
France Telecom’s Orange has made loud noises that it will not stock the new 8GB N81, or N95 or the Nokia 5310 XpressMusic and Nokia 5610 XpressMusic, which are the first devices that support the service, because it wants to push its own music services and of course it plans to offer the iPhone in Europe later this year.
But what can it do if existing clients simply download the store software and begin storing their music on their existing handset. In a way, the iPhone model of working with just one exclusive cellular operator means that Apple got a great deal from each of them in terms of profitability, but it is supporting the old walled garden approach to cellular services. The fact that the iPhone has been hacked and can be moved to other cellular services is not of much use, since all of those services are all old GSM services while operators want to push their 3G services. The Nokia stuff is all 3G of course.
The Nokia approach is going to be open, according to Kallasvuo, which means that not only is this a pure internet delivered service which goes over the top of any existing cellular service, but it runs on 3G handsets, can harness fast services such as HSDPA, and could even make it onto the wi-fi based internet tablet, and cut the operator out all together. But beyond this, Nokia has already begun to license its technology to other handset makers, that’s what it means by open. So at present Widsets can be harnessed by its rivals, so how long before the Music Store can be connected to be them, if they so choose.
It would be just possible for Orange to say it won’t sell Nokia devices. That won’t really stop Nokia devices getting on the network by the simple expedience of swapping out a SIM card. But what happens if Samsung or Motorola take the service. Perhaps Orange could block traffic from Nokia Music Store, but that would be a very unpopular move with customers, and likely backfire.
The Nokia Music Store can be accessed via a PC through Windows Media player for now, or directly across a network from the N81 and N95 which each have new 8GB versions. It supports browsing for new music, recommendations, allows PC streaming of any track to decide if you want to buy it, search by artists or song name. It offers a ‘wishlist’ which customers can elect to buy later from their PC and offers payment through credit cards, PayPal and pre-paid vouchers.
Main European markets get the service this Fall, tracks cost €1, albums €10, and a monthly subscription for PC streaming for €10.
But Nokia didn’t stop there. There have been hints that Apple may eventually get around to building some games into future generations of the iPod/iPhone, and Microsoft is known to be working on a Sony PSP-like handheld version of its Xbox, and while the N-Gage Nokia handheld has been an unmitigated failure, Nokia also showed off new publishers and titles at the event, and announced a network, N-Gage Arena, for the new N-Gage capabilities that can now be software downloaded into many of its devices including the new N81 and N95 8GB versions. So the event was also a renewed attack on the Sony PSP, and Nintendo DS devices from Nokia handsets. The N-Gage Arena allows game sales and downloads pretty much the same as the new PS3 network and the established Xbox Live network. Nokia also announced EA soccer title FIFA 08, the Sims 2 Pets, Tetris, Tiger Woods PGA, Crash Bandicoot, Snakes Subsonic and Bounce Boing Voyage.
N-Gage games sold through the store will range between €6 and €10 euros and although credit cards are supported, operator billing will be supported in 20 countries. Daily and weekly game licenses will also be available for less, and all games are free to try before you buy and once again you can create a wishlist and download it later from your PC or take the games over your data link.
Whatever cellcos think of all this, it makes it tough to consider NOT sourcing Nokia handsets, and once consumers amass a music and games collection through Nokia, then they might just insist that their next cellular supplier supports both all Nokia handsets, and in Europe that means subsidizes them, as well as offers flat data rates so that all these goodies are easier to take on the run. Nokia has just struck a blow for re-establishing its control over cellular operators, and it will be interesting to see just how those operators respond.