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How the telecom industry saw the future and missed it - a continuing saga

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Nokia future lies on yellow(ish) Bric road

2010 was a shocker for Nokia, and if it were expecting a better start to 2011 it must be disappointed.

The former master of the handset universe has conceded defeat with its free Ovi music service, pulling the plug in 27 of the 33 markets it served.

According to the FT, the weak take-up was a result of poor marketing, limited handset choice, DRM issues and the ambivalence of operators who also offered music service. In other words, just about everything.

Nokia has also cancelled the launch of its Symbian-powered X7 phone in the US, reportedly because it was unhappy with the level of subsidies from AT&T.

The telling stat: Nokia’s flagship N8 costs $469 in the US (down from its $549 launch price). Consumers buy an AT&T-subsidized iPhone for as little as $199.

So there’s no love for Nokia from US carriers, and there won’t be until it comes up with an OS that is as user- and developer-friendly as the iOS or Android.

For that reason, we will continue to see stories like this one, reporting that Nokia is considering Windows Phone 7.

The grain of hope for Nokia – in fact more than a grain – is in emerging markets. In Q3, 65% of device sales came from Asia, Latin America and the Middle East. Greater China is now its biggest market outside Europe.

No surprise that Ovi Music Unlimited will confine itself to China, India, Indonesia, Brazil, Turkey and South Africa. According to iResearch, the Ovi Store is China’s most popular download channel, just ahead of China Mobile’s Mmarket.

So Nokia's story is not all bad. It may be losing traction in Europe and North America, but it's making new ground in the high-growth BRICs. There are worse places to be.