Nokia, like Apple, will seek its slice of the revenue sharing pie

The argument of the iPhone being an industry "game changer" repeatedly suffers the same pitfall: people end up arguing about the device, not the deal. Fact is, the oh-so-secretive, revenue-sharing model which Apple struck with AT&T, O2, T-Mobile, and Orange as part of their non-subsidized, carrier exclusive has changed the rules of carrier / device maker dance. Now Nokia, as you'd expect with their 40% market share, is asking for their slice of the pie. "As far as mobile phones are concerned we are sticking with our old business model," said Nokia CEO Olli-Pekka Kallasvuo, "that is, we get paid for our devices. But for providing new services we are seriously considering a shared turnover model." Hear that carriers, Nokia just put you on notice. With this and carriers now fighting to be seen as more open than their peers, well, we have a feeling that in a few years we'll barely recognize the US cartel of today.

[Via MocoNews.net]

[Vega @ Dec 11th 2007 6:55AM]

It's heartwarming to see all these mobile phone CEOs who just 6 months ago sneered at the iPhone scrambling to try to emulate Apple's business model.

[Argot @ Dec 11th 2007 9:41AM]

Well, in their defense, they probably didn't think that the level of greed that Jobs introduced to the game would fly. But suprise suprise...

[roole @ Dec 11th 2007 10:31AM]

Whether or not the "level of greed" is a problem depends on who you are. As an Apple shareholder, I am ecstatic. And, if you believe that Nokia wasn't into this greed thing until Steve Jobs came along, well, I guess you must believe in the tooth fairy too.

[Constable Odo @ Dec 12th 2007 11:21AM]

Apple shareholder here. I'm glad Apple is milking everyone. I can buy their products because they're making me plenty of money to afford their products.

Other manufacturers hate Apple's so-called greed, but give them a chance they'll be just as effin' greedy. That's what good business means. Grab every amount of leverage you can and bleed suckers dry.

Microsoft become #1 by stealing or monopolizing everything they could at every chance that could get. Microsoft, so far, is the ultimate company. Their greed is unrivaled.

Anyway if the Nokia N95 is so great and so much better than the iPhone, why not just continue to use it to beat the crap out of the iPhone. No need for Nokia to design a better handset to compete. The N95 supposedly already has so many more features than the iPhone so why bother to add more. Wouldn't that be just considered overkill.

The iPhone has next to no handset market share so why should Nokia even sweat about such a upstart wannabe part-time mobile/home electronics company. Nokia should just leave the US market to the iPhone. Now that the media is already declaring the iPhone a flop and a failure overseas in it's first month, it should be smooth sailing for Nokia and it's current iPhone-killer N95.

Hell, Nokia is so damn good, they should start building home computers. To them, I'm sure a home computer is little more than an oversized handset. They just need to scale up their Symbian/Series 80 OS a tiny bit to put Leopard to shame. They should be able to take over Apple's computer market share in a couple of years.

The above chatter is pure sarcasm. Nokia's smartphones are toast.

[sminor @ Dec 11th 2007 11:11PM]

Interesting. Don't know much about the negotiations between Apple and ATT but a lot of analysts think that Apple would benefit more than ATT if they were free of the contract. Apparently ATT is getting a lot of value from the relationship with apple in terms of new customers. Not sure how this translates into greed on the part of Apple.

[DT @ Dec 12th 2007 1:22PM]

You live in a completely immature market and have no idea about the rest of the world. Who ever heard of paying for phone calls you receive? Anyway, enough education.

Apple has screwed the market. Phones will now cost more as and so will the services from the operators. Who do you think will be paying part of this new revenue sharing model.

In short, Jobs "effed" us all with a 3 year old piece of crap phone. Take away the UI and you have a 2004 SE or Nokia.

No wonder the US is the third world when it comes to mobile telephony.

[SteveS @ Dec 11th 2007 7:30AM]

...and so continues Nokia's dwindling US market share. The US carriers have been doing just fine without their phones and now Nokia is thinking about making it even more hostile to carry their devices? Nokia and the US market might as well just divorce instead of teasing us with a relationship that will never work out...

[michaelmakro @ Dec 11th 2007 7:30AM]

WoW! Next the TV manufacturers will want a slice of advertising revenue as will the manufacturers of radios. Oh! and MP3, CD Player manufactures will want a slice of performers royalties. Rock on! the troughs big enough!

[Carbonize @ Dec 11th 2007 7:33AM]

I love all these people who seem to think America is the only country in the phone that has mobile phone users. Nokia could totally withdraw from the American market and still be the biggest mobile phone manufacturer and have a ridiculous turnover.

[Carbonize @ Dec 11th 2007 7:34AM]

In the world not in the phone obviously.

DOH!

[sam @ Dec 11th 2007 11:10AM]

this is convienient, i can just recycle my engadget commentery :)

The yanks often (almost always?) use the word "world" when they refer
to both east cost and west cost. Sometimes they also include the
landmass in between. Widest definition includes parts of Canada,
perhaps unintentionally.

So when they "think America is the only country in the world that has mobile phone users" they actually do think exactly that! Just not the way you might understand it...

[Tom @ Dec 11th 2007 11:57AM]

@Carbonize and Sam
Huh? Where the crap are you getting this thought from? The word "World" isn't even in the post, or any subsequent comments minus yours. In fact, the only time the "US" is even mentioned is when a poster (or the newswriter) is simply talking about a situation they're familiar with (I'm sure the writer isn't completely familiar with the innerworkings of EU wireless carriers - as living in the US there is really no pertinent need to. I'm sure if it weren't for reading a US-based blog you wouldn't know about every little thing that Verizon or AT&T does over here).

Man, why do all foreigners ALWAYS have to generalize negative thoughts about the United States and its citizens?

[Carbonize @ Dec 11th 2007 12:41PM]

Oh where to begin.

1 - The blogger ends with "we have a feeling that in a few years we'll barely recognize the US cartel of today" therefore making the story only about the US as opposed to the whole world.

2 - Some commenters then went on to further push the idea that story only affected the US.

3 - As has already been noted Nokia is not that big a name in the US so anything they do is going to affect the rest of the world more than the US.

4 - Whilst the company than runs this site is US based not all of it's bloggers are and neither are the stories they post about. If this site was US only they wouldn't be talking about phones in Korea or Xbox Live video downloading in Europe.

5 - I have American friends from all over the US from Wisconsin to South Carolina and several of them use your mobile phone network for internet access

6 - We generalize about Americans because you have a very vocal minority (majority?) who appear to be opinionated, brain dead and under the impression that the US is either the entire world or runs the entire world. The same applies (mainly in Europe) to the British who are generally thought of as racist arrogant drunkards.

[Tom @ Dec 11th 2007 1:22PM]

I think that if my German was good enough to read a German tech blog, I'd be reading mostly stories about Germany and the EU - and the occasional story relevant to the USA. And I could probably say the same thing to those commenters on the German blogs that you are saying here on this US blog. I really don't think it's cultural ignorance in this particular instance (although it is certainly an overall problem here in the states), it's moreso cultural relevance in a US-based blog. The majority of the writers and readers are in the US, so that is what is most pertinent to the news front.

But back to the story on hand, this has the potential to create an even MORE corporate based economy. Where the consumers pay the excess in order to fund their phone maker's monthly rate. Shared turnover models are never good for the consumer. Ever. Regardless of the country you live in, these extra costs will get pushed directly onto you, the consumer.

[PDubNYC @ Dec 11th 2007 1:23PM]

Hey Sh*tbird, it's an American blog. They have every right to look at things from a US-centric point of view.

While I agree it is true that Americans are often not good at taking a global view of things, you are being just ridiculous about this one. Over the next few years, they will experience changes in what country's telco system? Yup, that's right, the U.S. cause that's where they live.

Get over yourselves and start your own local blog.

[Carbonize @ Dec 11th 2007 1:26PM]

Maybe you should ask Mr. Ricker where he lives these days. I know he lived in London for a while so atleast he's aware there is a world outside the US. This is neither an American blog nor a US based blog but a gadget blog. If you want it to be a US based blog I suggest you email them and ask them to stop reporting on stories from Europe and the East.

[Jah @ Dec 11th 2007 8:30AM]

Olli-Pekka Kallasvuo was referring to revenue sharing in Ovi - give networks part of the income! I wish engadget would check its facts!

[freakmarket @ Dec 11th 2007 9:33AM]

Beyond the basic Nokia phones i don't think anyone cares in the US. Nokia is very far from the cutting edge of phone technology.

Their upper end phones use that wierd o/s and are WAY over priced ... Nokia isn't in a position here in the states to demand anything from carriers.

[Carbonize @ Dec 11th 2007 9:44AM]

Yes because the iPhone doesn't use a weird OS and isn't overpriced at all. Honest.

And why do you think Nokia is only concerned with the US? The world does not revolve around the US nor does it end at it's borders. Nokia has a 40% market share of GLOBAL phone sales and given their poor showing in the states that means most of these are not in the US so as I said early I doubt Nokia will be to upset if American operators choose not to use them.

[Tiik @ Dec 11th 2007 10:29AM]

That's is wierd considered that Nokia is the number one in smartphoens too. So it's kinda hard to say that they wouldnt be good on that side majority of the people in this planet prefer Nokia's smartphone.
Thought it's true that Nokia isnt always in the cutting edge of tech, but it does make it available on one packet example N95 was that when it came pretty cutting edge as the numbers sold in uk (that might have the most competive mobile phone market)shows. Symbian has 60% of the market share so yes it's kidna wierd in some parts of the world ;)

They arent actually that pricey as you are living in US they are pricey in there of course.

Though you probaly made that post just to provoke hopeless Nokia fans....and yes i got in to it =)

[Tom @ Dec 11th 2007 12:06PM]

@Carbonize
Freakmarket didn't say anything about Nokia's global standings. He said "I don't think anyone in the US cares". It's kinda like being at a party with bad music, and saying "Man, nobody in this room likes this music". You can't say anything about the other rooms in the house because maybe people in those other rooms like the music - you're not there to see for yourself. It's not a blanket statement, it's a specific statement pertinent to his current knowledge. He's probably never stepped foot outside US borders and thusly has no say in what's going on around the world - especially when talking about local's opinions and whether or not they care about Nokia phones.

[Carbonize @ Dec 11th 2007 1:03PM]

Ok Tom I'll go with that. I was fed up with all the other US BS that's been posted in this story. Freakmarket was just giving the side from where he lives as is clear from his last sentence.

My first paragraph is valid though.

[xbit @ Dec 11th 2007 4:57PM]

@freakmarket
That "weird o/s" has 75% market share...

[freakmarket @ Dec 11th 2007 9:10PM]

yeah ... i was only saying that Nokia's policy have like zero effect on our lives here ... i wasn't saying our "bombs" are bigger than your "bombs" or anything.

Because i have a point of view doesn't mean i don't respect yours :)

lotsa luv
fm

[Doug @ Dec 11th 2007 12:00PM]

Despite all of the comments from the rest of the world, Nokia should be concerned about the US market. They have gone from 78% market share to being 4th, maybe 5th by now. But since the US has higher disposable income than most countries AND (foolishly) the US consumer tends to spend more than they should, the US is very lucrative. Nokia can keep increasing market share with $20 phones in India and other countries, but their profit would go up considerably if they would sell something here that people want.

[Carbonize @ Dec 11th 2007 12:40PM]

Given the current state of the US economy I would of thought disposable income was something of a rarity for the masses?

[simon @ Dec 11th 2007 1:08PM]

But they spend that money on overszed SUV's not on high end phones. Many Americans look for whatever $0 phone is available.

S

[Pdexter @ Dec 11th 2007 1:27PM]

Problem is that US dosent really use much of cash for phones compared to Europe and Asia. Phones are seen maybe more of status symbole in here Europe? Thought i would think that 90% Nokia's Vertu line or big part of 8xxx series are selling more in USA compared to EU and Asia. Would actually be nice to know if that's so.

[xbit @ Dec 11th 2007 4:56PM]

@Doug
Making phones for the US market is very expensive. There's a variety of competing technologies (CDMA, iDEN, GSM/UMTS on wacky frequencies) and so every phone they develop has to be tailored to just one carrier. Compare that to Europe where a single model will work on practically any network.

American carriers also lock down their phones a lot more and spend more time certifying them. Many phones have a very short window of release to catch otherwise they look outdated and don't sell. Customization and certification problems often hold up US phones, thus making them miss this window of opportunity.

You mention that Americans have a lot of disposable income. You're right, but they generally don't spend it on cell phones. As a percentage of total users, the US has half the number of smartphones compared to Europe and Asia.

There's very little profit to be made in the US market for any company without Apple's rock star status. That's why Nokia and Sony Ericsson have reduced their efforts in the market. And guess what? Both companies are doing better than they've ever done.

[KPO'M @ Dec 12th 2007 12:50AM]

I think they recognize that, Doug, and have stated that they want to increase their share in the US. They have started by releasing basic phones for AT&T (6555) and T-Mobile's new 3G network. They are also attempting to sell their high-end phones such as the N95 unlocked through other channels. Verizon's decision to open their network (and switch to 3GSM's successor LTE in the future) may also open the door for Nokia to return to the CDMA market. Their abandonment of CDMA is the real reason they have lost a lot of market share. You can't expect to be number 1 when more than half of mobile subscribers can't use your phones.

[KPO'M @ Dec 12th 2007 12:50AM]

I think they recognize that, Doug, and have stated that they want to increase their share in the US. They have started by releasing basic phones for AT&T (6555) and T-Mobile's new 3G network. They are also attempting to sell their high-end phones such as the N95 unlocked through other channels. Verizon's decision to open their network (and switch to 3GSM's successor LTE in the future) may also open the door for Nokia to return to the CDMA market. Their abandonment of CDMA is the real reason they have lost a lot of market share. You can't expect to be number 1 when more than half of mobile subscribers can't use your phones.

[Doug @ Dec 11th 2007 1:08PM]

Disposable income should be what you have left over after paying the bills, saving, etc. But here it seems that it's whatever you can get by with your minimum payment on your credit card. I seem to remember that the US had negative savings last year.

[Magallanes @ Dec 12th 2007 12:23PM]

Nokia :"we also can be evil".