Nokia now has three of the Big Four labels signed on for its upcoming “Comes With Music” service, which is expected to launch later this year. EMI hasn’t signed up yet, but apparently it is planning to. Although the terms of the deals are unknown, Nokia has reportedly paid the record companies millions of dollars for the right to offer some of their songs for download, and will build some of that cost into the price of Nokia handsets. Not surprisingly, Warner boss Edgar Bronfman Jr. is full of visionary enthusiasm for the project:
“Nokia’s Comes With Music service will be a significant step forward in the evolution of digital music. It’s the first global initiative to fundamentally align the interests of music companies with telecommunications companies.”
Who knows, maybe this time all of Edgar Jr.’s pronouncements about a revolutionary step in digital media will actually come true — unlike, say, his similar pronouncements about the benefits of a merger between Seagram and French media conglomerate Vivendi, a deal that would eventually vaporize billions of dollars in shareholder value, along with a substantial chunk of his Montreal-based family fortune. But let’s not dwell on that. And I’m also not going to mention how Edgar has repeatedly pledged that he has “gotten religion” about the need for progress in the music industry, only to repeatedly demonstrate the exact opposite whenever it comes time to actually do something.
Nokia’s announcement this morning that it is acquiring the rest of the Symbian mobile operating system it doesn’t already own (about 52 per cent) and turning it into an open-source OS that anyone can contribute to and use seems like an arrow aimed straight at the heart of Android, the Google mobile effort that is still in its infancy but promises great things. Nokia is clearly threatened by the giant Web company’s plans, and has been bulking up in all sorts of ways.
Despite Google’s geek cred and the iPhone’s cool factor and the BlackBerry’s popularity in the corporate market, Symbian is still by far the biggest mobile player. It would be unwise to count the company out as a competitive threat — not because it’s going to create something as cool as the iPhone or as useful as the BlackBerry, but because having something like 200 million handsets out there running your operating system is a powerful force, and it is going to draw developers in just because of its sheer mass and size.
Imagine what might happen if Microsoft went open source — this is kind of like that, but for the mobile market. Of course, Google likely saw this coming (or at least it should have).
A free music-download service on your mobile? Cool. Nokia’s new “Comes With Music” offer? Dumb. The details are sketchy so far, but it sounds like Nokia has done a deal with Universal Music to offer downloads of the record company’s catalogue for free, with the cost of the music built into the price of the phone. So far, so good. Unfortunately, it sounds like the files are also DRM-laden, and thus crippled.
According to The Register, the songs will be playable only on one PC (not Mac or Linux) and on a Nokia device, and that’s it. While they will not expire — as music downloaded with some other services does — you can’t burn them to CD or play them anywhere else, although there are hints that burning might be allowed for a fee. Seamus McCauley says that such moves say one thing to him: “uncomprehending death spiral.”
Poor old Nortel Networks — or “No-tell Networks,” as one wag dubbed it after the fourth or fifth time the company had to restate its earnings. It was bad enough when the company flamed out so quickly after becoming the king of the Toronto Stock Exchange (and of many people’s investment portfolios), but then that was followed by the repeated financial restatements, the firing of senior executives, and so on. Then there was the whole Bill Owens fiasco, in which the former Navy officer did virtually nothing to move the company forward, and in fact arguably set it back (by hiring two senior Cisco executives and then quickly showing them the door).
The end result is that Nortel has been unable to make much headway in the telecom or networking equipment market, and that hasn’t changed much lately, despite the best efforts of Mike Zafirovski, the new CEO. Now, the company finds itself even further behind, with the reported merger of the networking arms of Finland-based cellphone giant Nokia and German telecom equipment vendor Siemens AG. The deal as described would create a $30-billion equipment supplier that would rank up there with Lucent/Alcatel. And it removes the possibility of Nokia merging with Nortel, an idea that was recently floated by analyst Gus Papageorgiou.
It’s not surprising that Nokia would choose Siemens over Nortel, if it ever even considered a similar merger with the Canadian company. A history of financial restatements, allegations of improper behaviour by executives, lawsuits flying left and right including class-action lawsuits, and products that have fallen further and further behind the competition over the past few years. Not a great bio if you’re looking for a hot date with one of the telecom industry’s leading players. Nortel has raised even more question marks with some of its recent moves, including a short-lived partnership with China’s Huawei.
So now it seems that a merger with Nokia is off the table, and Siemens is also off the market. Who does that leave for Nortel to pair up with — Ericsson? Motorola? Mark Evans has some more thoughts here. I think Mike Z. had better put on his dancing shoes and start thumbing through that little black book.