Nokia and Skype partnership has carriers in a fit

It’s always interesting to see the politics of business play out through leaks in the media, and I suspect that in the case of Nokia and its mobile carrier “partners” we haven’t seen the last of it. The Finnish handset maker’s recent announcement of a tie up with Skype has, predictably, rankled two carriers in the UK, reports Mobile Today.

See also: Nokia announces online music store – takes aim at Apple and mobile carriers

Both Orange and O2 are unhappy that a Skype client will be bundled with Nokia’s upcoming N97 and are threatening to boycott the device and the company’s future Skype-enabled phones, for fear that including the application will further reduce their role to that of being a “dumb pipe”. According to Mobile Today’s source:

“This is another example of them trying to build an ecosystem that is all about Nokia and reduces the operator to a dumb pipe. Some people like 3 may be in a position where it could make sense to accept that. But if you spend upwards of £40m per year building your brand, you don’t want to be just a dumb pipe do you?

Nokia have tried several ways to own the customer over the years and operators have had to say no.”

Owning the customer, of course, is something that Apple has managed to achieve, and which 02 seems to have accepted in return for iPhone exclusivity here in the UK. Nokia, with its aggressive move into providing various web services (music subscriptions, maps, email, IM and social networking) is also trying to have a more direct relationship with the customer, presumably hoping that said services will help lock them into a continuous cycle of Nokia handset upgrades. At the same time, both companies, like any handset maker, need the carriers to stay on side so that they’ll continue to subsidize and market their wares. That seems like a conflict of interest if there ever was one, and I can’t see the issue being resolved any time soon.

Smarter phones, dumber pipes

As I’ve commented on before, the carriers are scared that in the future they’ll be reduced to being a dumb pipe, “selling commodity services such as voice and data at commodity prices with little or no differentiation.” But if phones are to become smarter, built on powerful software platforms that allow users to install an array of different applications – including Skype in the case of Nokia’s future handsets – then carrier networks will have to get dumber. I can’t quite see a way around this, and for me personally, the “dumber” the network, the more likely they are to get my business.


last100 is edited by Steve O'Hear. Aside from founding last100, Steve is co-founder and CEO of Beepl and a freelance journalist who has written for numerous publications, including TechCrunch, The Guardian, ZDNet, ReadWriteWeb and Macworld, and also wrote and directed the Silicon Valley documentary, In Search of the Valley. See his full profile and disclosure of his industry affiliations.

4 Responses to “Nokia and Skype partnership has carriers in a fit”

  1. Finnsense says:

    I’ve used Skype for years. For a long time it hovered around the 8 million concurrent users mark and then suddenly it has shot up to 15 million. If this is the shape of things to come Nokia is wise to make it as easy as possible.

  2. Steve O'Hear says:


    I’m also a long time Skype user. My mobile carrier “Three” already offers Skype on most of its handsets, and although it’s not always as clear as a regular mobile or land line call, it is useful nonetheless, especially IM or to see when a contact is online and available to talk.

  3. Chris says:

    Nokia was evidently testing the boundaries. For now it’s a delicate balancing act, but inevitably the cell phone companies will have to transform. They must eliminate their reliance on charging for voice and become content centric. Trouble is, they don’t know how to do it. Wrong people and wrong culture. I can see a Disney cell phone company on the horizon.

  4. Seems to me the wise option for Nokia is to offer the N97 to Orange as an exclusive provider, which is the reason why O2 took it up the nether regions in the first place. Exclusivity is a valuable enough compromise for both to win.

    Essentially Nokia is trying to have iPhones cake and eat it too by wanting their (iPhone’s) deal without the exclusivity. Typical shortsighted decision making by Nokia (whom I love by the way) but unfortunately all too common a move by them.

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