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Notes on Nokia's Ovi news - August 29, 2007

Finnish phone maker Nokia today unveiled its new music/video/game playing handsets and a new online music store dubbed Ovi. The move is both a direct challenge to Apple's iPhone and iTunes, and an effort to capitalize on the opening Apple created for handset makers by enabling WiFi on the iPhone and insisting on establishing its own service relationship with iPhone users.

A few quick thoughts on its possible implications:

• Any technology provider willing to challenge the hegemony of Apple's iTunes is likely to get a warm reception from the record labels, as Nokia has apparently done in signing deals with Universal Music, Warner Music Group, EMI and Sony BMG, as well as gamemaker Electronic Arts. But a service that bypasses the PC by leveraging wireless broadband to download songs directly to the phone is likely to look even more enticing. By not stopping on a PC's hard drive, the Ovi Music Store limits the opportunities for massive redistribution of tracks as well as for burning and ripping their way around the DRM. As such, it could take some pressure off the DRM debate.
• Leveraging wireless broadband to develop new, competitive services is much easier in Europe, where they actually have wireless broadband, than in the U.S., where it remains excruciatingly limited.
• While Nokia is likely to encounter some resistance from the major European wireless carriers over Ovi's independent service relationship with phone users that resistance could be even fiercer in the U.S., where carriers have generally been more successful in defending their turf.
• The fact that no U.S. availability has been announced for the new Nokia phones is bound to get some attention in the ongoing debates over the upcoming 700MHz auction and net neutrality. The more the U.S. is perceived to be behind other countries in the introduction of new services, the greater will be the pressure on regulators and Congress to force network operators to open their systems to competitive offerings.
• Especially since the Nokia announcement came the same day this story appeared in the Washington Post, detailing the huge lead Japan enjoys over the U.S. in broadband speeds and applications, and the positive role played in Japan by a vigorous regulatory posture in fostering its rapid broadband build out.

Let the shouting begin.
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