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Will Nokia’s planned acquisition of Enpocket pay off? Or could a short-term lack of confidence in the wisdom of this acquisition on the part of Nokia’s carrier customer base negate any longer-term advantage the handset giant might hope to gain in the mobile content space. Emma Mohr-McClune puts Nokia in the hot seat.

Enpocket may be leveraged to make Nokia’s new Ovi content portal more attractive and price-competitive in the mid-term, but this will need ultra-careful treatment to offset damage to service provider relationships. Internet service provision is far outside Nokia’s core competency, and it will take time, money and resources for Nokia to realize a larger software-and-services ambition, within which Enpocket will play an important role.

Established in 2001, Enpocket is counted among the leaders in a new pack of mobile advertising and marketing players. It enables third-party publishers (such as Pepsi or MasterCard) or even carriers (such as Vodafone) to exploit the mobile channel for mobile advertising and marketing opportunities, mostly (but not exclusively) off-portal. Within its own competitive landscape, Enpocket’s key strength lies with its intelligent platform, which enables companies to convert standard customer data into targeted, personalized campaigning, using predictive analytics and end users’ historical behavior.

Enpocket’s insistence on campaign personalization has largely protected it from the charges of spam-mongering. However, more importantly, Enpocket is one of the loudest voices in the call for “mobile content democratization.” The idea, now fairly widely touted, is that the mobile content services market today is over-priced, nascent and failing to resonate with a customer base greater than an elite set of early adopters. Ad-sponsoring these content services – so the argument goes – will take the sleepy mobile content market to the next, mass-market level.

Nokia’s interest in Enpocket must be seen within a wider strategic context, in which Nokia seeks to move its business beyond hardware to court Internet-based and mobile media opportunities.

Over the last year, Nokia has been engaged in a multi-million dollar spending spree of mobile media platform, content delivery and middleware acquisitions. This started in earnest with the purchase of gate5 (mobile mapping and navigation) and Loudeye (mobile music) in August 2006, culminating in the more recent acquisition of media sharing solutions provider Twango last month. Carriers have eyed Nokia’s acquisition spree with increasing concern, questioning where this would take Nokia, as well as how these services would compete with their own mobile content businesses.

Then, last month, Nokia seemed to confirm service providers’ worst fears by unveiling its new Internet services brand, Ovi, a portal proposition that is set to showcase all the fruits of these recent acquisitions under a single portal umbrella, with stronger service features such as the anticipated Nokia Music Store. News of Nokia’s interest in Enpocket will only serve to frustrate service providers further. Not only will Nokia compete head on with carriers’ own mobile portals for mobile-centric services such as music and content share, but it is also likely to disrupt the current pay-for-content model with ad-sponsored pricing challenges.

Service providers, of course, have known all along that the ad-sponsored model for mobile content would arrive this year or next, and have been busy preparing by building their own mobile advertising relationships and units. Fear of Google, Yahoo and other Internet giants has gradually been replaced by a reluctant admission of their influence and bearing in the developing mobile content world, and most players now accept that the market is heading for a showdown.

This event should also be seen within the context of a polarization of traditional value-chain relationships. A new world order is emerging in the communications landscape, with one of its chief characteristics being the breakdown of traditional provider roles, identities and loyalty bonds within the value chain.

Business threats took on a new, unpredictable edge in 2007. A PC manufacturer (Apple) launched what is arguably the most successful and hyped mobile phone of all time, establishing an unheard of five-year exclusivity deal with a US carrier. The world’s leader in online search (Google) is threatening to buy up spectrum and launch its own device; Europe’s largest device manufacturer has just unveiled an Internet services portal; and Europe’s leading mobile operator is aggressively entering the broadband space. In this environment of proliferating ambitions, all players need to assess the strength of yesteryear’s partnerships, and the fallout for a provider such as Nokia may well be significant.

In years to come, industry historians may point to the launch of an ad-sponsored Ovi as the start of a cold war between Europe’s largest device manufacturer and its key carrier customers. Nokia’s first post-Enpocket acquisition task will be one of diplomacy. This event will need ultra-careful communication to Nokia’s key customer base.

How far will Nokia compete head-on with the operators’ own mobile content businesses? Nokia will need to have a jolly good answer for that one.

Emma Mohr-McClune is a Principal Analyst at Current Analysis, responsible for coverage of European mobile consumer services. For more information on Current Analysis’ competitive response and market intelligence services, please contact VP Sales Europe, Jack Zimmerman

• Posted in
• Mobile Content, Mobile Advertising

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