After its launch in December(http://www.nokia.com/A4136001?newsid=1274500), Nokia's N97 mobile phone appears to be really generating some interest within mainstream press.
If it lives up to billing and expectation, there seems to be a groundswell of opinion that this handset could do for the mobile phone industry what the I-Pod did for digital music.
For the technophobes it might seem like yet another gadget packed mobile phone, but its big point of difference is that it will allow users to make free calls over the Internet which is great news if you're a punter but probably not so hot if you're one of the mobile networks.
And this is where the issue gets really interesting and poses some fundamental questions. For years handset manufacturers have utilised the networks, service providers and retailers as their route to market and it has been a relationship that suited both parties. Handset manufacturer drives large scale distribution of its product. Network makes the call revenue having put that handset in the hands of the consumer.
And just for good measure to ensure the consumer actually wants to upgrade to the latest gadget laden handset, the networks, providers and retailers have subsidised the cost of the handset to the consumer which is why you always see incredible deals on new technology (often in return for a longish term contract).
But Nokia's decision to embed technology that gives free voice calls over the Internet potentially breaks that cosy relationship between handset manufacturer and network.
Granted it is responding to consumer research/demand but if the handset takes off, it will has the potential to drive down revenues for the networks. In simple terms if your N97 is within range of a WiFi cloud you'll be able to make free phone calls over the Internet, which sounds really attractive if you're calling from abroad and want to avoid roaming charges.
It sounds too good to be true and it probably is because that functionality only works if you've got Internet access which you either get from a WiFI cloud or if you have a 3G/GPRS connection via your mobile phone. It seems somewhat unlikely that the networks will allow you to connect to the Internet via their 3G service to then make free calls over the web, but who knows they may have to bow to consumer pressure on this one, especially if one of the networks breaks ranks in a bid to capture market share.
If this handset takes off in the way that Nokia hopes, it potentially changes the balance of the relationship between handset manufacturers and networks. At best the relationship will become pretty tense (put yourself in the network's position) and at worst (from the network perspective) it has the potential to drive down call revenues and maybe even start a revolution in how we use and pay for mobile phone calls. Could this be another I-Pod in the making? Maybe, just maybe, but the consumer will be the ultimate arbiter
1 week ago