The wireless Internet is heating up

The Wall Street Journal announced another Nokia mobile internet purchase today of a company called Twango which allows users to share photos, video, and media.  According to the WSJ, the Twango service will be integrated into Nokia phones and will start with a free and premium based subscription model.  While this acquisition in and of itself is not mind blowing, the fact that Nokia has made a number of acquisitions over the last 18 months encroaching on possible carrier revenue does make the story more compelling (see an earlier post-Nokia’s Coopetition with Carriers).

Taking a step back and looking at the wireless industry overall, one can continue to hear the buzz about Apple’s entry into the wireless handset market with the iPhone.  And as much as analyts and the like want to pit Apple vs. Nokia and others, I see lots of similarities between both companies.  In fact, the more I look at the world, the more I see Nokia taking a page out of the Apple playbook and vice versa.  Apple, as we all know, has done a tremendous job with its vertical integration strategy – developing new products from start to finish, controlling the design, hardware, and software to create insanely great products which are incredibly powerful yet elegant and simple to use.  That is why the Mac gets the margins it does and why the iPod has been doing so well versus the competitors who have solely focused on one piece of the device ecosystem, software, hardware, etc.  Looking at Nokia, it seems to me that the company could clearly go into a couple of different directions – go the Dell route by providing awesome hardware or going the Apple route and providing a full end-to-end elegant experience for the consumer.  What I mean by that is that Nokia can either just be a dumb handset manufacturer with decreasing margins like Motorola or it can try to figure out how to control and provide a seamless and great user experience from handset to desktop for its customers.  What is at stake are significant margins and dollars. 

Given that Nokia has always had expertise in the hardware side of the world, the fact that the company is increasingly buying software companies for its devices (loudeye, gate5, intellisync, and now twango) and integrating it into the handsets shows that it is bulking up and getting ready for the next battleground, the phone as minicomputer and gateway to the Internet. As you know more people around the world access the web from a mobile device versus a PC or laptop.  The blurring of cell phone and mini computer is only increasing as Apple, RIM, Nokia, and others come out with devices that can do more and more-take/share/view pictures/video, listen to music, surf the interent, make VOIP calls, and watch television.  What is at stake is a bigger opportunity that will bring Apple, Nokia, RIM and others head-to-head with the large Internet players like Google, Yahoo, and Microsoft.  At the end of the day, Nokia is more like Apple than you can imagine as it is starting to take control of its destiny and beginning to offer its own web-based and wireless services directly to the consumer. Like Apple, it is increasingly clear that Nokia wants to provide its consumers with a holistic end-to-end experience delivering everything from the hardware to the operating system to the applications that reside on the phone and desktop.  This is an important shift and one that Motorola does not seem to be getting and consequently one of the many reasons its stock has been floundering.  As mentioned in an earlier post, Nokia has acquired Loudeye for a future music offering, gate5 for turn by turn navigation, intellisync for syncing software and email, and now twango for music, photo, and video sharing. Nokia ships around 350mm handsets every year and it can either let the Internet players GYM seize the opportunity or go after itself.  This is an interesting transformation that will take years but think about how much money Nokia could make if it could extract an extra $0.50 or $1 per month from a customer.  Of course the carriers won’t like that but this is why watching the wireless Internet market is so fun.