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Nokia Enlists Perry the Platypus for Smartphone Comeback

September 06, 2012

Nokia Enlists Lady Gaga, Perry the Platypus for Comeback

Yesterday, Nokia introduced a free music service that lets Lumia users listen to exclusive playlists created by Lady Gaga, seen here, Lana Del Rey and Rihanna. Photographer: Leon Neal/AFP/Getty Images

(Corrects story that ran Sept. 5 to remove reference to DreamWorks Animation in second paragraph.)

As Nokia Oyj (NOK1V) prepares for a crucial push to resuscitate its smartphone business, it’s calling in some heavyweights from across the Atlantic: Batman, Lady Gaga, and Perry the Platypus.

The Finnish company has teamed up with Walt Disney Co. (DIS) and AOL Inc. (AOL) (AOL) to tackle an application shortage that has left it trailing Apple Inc. (AAPL) (AAPL) and Google Inc. (GOOG) The deals are part of a strategy to ensure Nokia has the most popular smartphone apps, even if it lags in the total number, said Marco Argenti, who oversees Nokia’s relations with developers.

Nokia Doubling Sends Stock to Nine-Year High to Forecastshttp://www.bloomberg.com/news/2012-09-04/nokia-doubling-sends-stock-to-nine-year-high-to-forecasts.html

Nokia fell behind Apple’s iPhone and devices running Google’s Android after failing to attract many app developers. Chief Executive Officer Stephen Elop, who unveiled Nokia’s first devices based on the mobile version of Microsoft Corp. (MSFT)’s new Windows 8 operating system in New York today, is betting that apps with novelty features such as augmented reality will make up for the volume handicap.

“I’m a believer that over a certain quantity it really doesn’t matter,” Argenti said, looking out over the Baltic Sea from Nokia’s headquarters in Espoo, Finland. “We have partners that are creating unique apps for us and I think Windows Phone 8 will really take that to the next level.”

Users of iPhones and Android handsets can choose from more than 600,000 apps -- roughly six times the number available for Windows Phone, the operating system Nokia uses in its Lumia devices. The app superiority has helped Apple (AAPL) and Android grab about 85 percent of the smartphone market, versus 3.5 percent for Windows Phone, according to research firm IDC.

Fighting Bane

The Disney apps, previously available only for Apple and Android devices, include “Where’s My Perry?,” a game starring Perry the Platypus from the cartoon “Phineas and Ferb,” and “Where’s My Water?” with Swampy the Alligator. Among exclusive apps Nokia has added is a Batman app that lets users fight for either the superhero or an enemy named Bane by “checking in” to claim a location for their side.

Nokia is also teaming up with AOL to build an entertainment app for mobile devices that would use augmented-reality technology, according to two people familiar with the matter, asking not to be identified before an announcement. Such technology combines a phone’s camera, location-based function and Internet connectivity to offer services such as allowing users to find the nearest restaurant, bus or check movie times through a camera display.

Yesterday, Nokia introduced a free music service that lets Lumia users listen to exclusive playlists created by Lady Gaga, Lana Del Rey and Rihanna.

Exclusive Deals

“It’s important they sign more exclusive deals with content providers to differentiate themselves,” said Klaus Boehm, head of media at Deloitte Germany, who advises content makers on their digital strategy.

Nokia today introduced the Lumia 920, which has a camera with a so-called floating lens that uses software for image stabilization, and the Lumia 820 with a smaller screen. The phones will be crucial for Nokia, which is burning cash as it tries to reverse falling sales. A failure to appeal to year-end holiday shoppers would ensure continuing losses.

“This autumn is critical for Nokia, and the next Lumia phones may be a make-or-break moment for them,” said Teemu Peraelae, who helps manage $1.5 billion including Nokia shares at Alfred Berg Asset Management in Helsinki.

The new devices will face off with the latest Android and Apple handsets. Motorola Mobility, a unit of Google, is set to unveil one of the first full-screen phones in the U.S. later today in New York, according to a person familiar with the plan. Apple is planning its own introduction on Sept. 12.

Microsoft Accord

In a bid to boost its appeal to developers and consumers, Nokia last year began using Microsoft’s operating system. The new version, Windows 8, makes it easier for developers to build apps that work on personal computers, tablets and smartphones.

Shares of Nokia have declined more than 70 percent since Elop, a former Microsoft executive, announced the partnership with his erstwhile employer in February 2011. They have rebounded recently, rising from a near 18-year low reached on July 18 on speculation the company can recover. The stock fell 13 percent 1.99 euros at the close of trading in Helsinki, giving Nokia a market value of 7.45 billion euros ($9.4 billion).

The Nokia-Microsoft partnership has had some success in attracting developers. The number of Windows Phone apps has increased from just 5,000 since the companies announced their accord, and about two-thirds of the 100 most popular apps are now available for Windows Phone, Argenti said.

Windows 8 will probably help Nokia attract more key developers, said Carolina Milanesi, an analyst at Gartner Inc. And users, she says, may not care that much about how many hundreds of thousands of apps are available on their phones.

‘Bored’ Consumers

“Industry watchers are putting too much emphasis on apps as a buying criteria,” Milanesi said. “Consumers may be a bit bored of ‘how many can I get’ because if they’re like me, they have maybe 100 apps and only use 10 on a regular basis.”

The top 300 applications account for about 85 percent of downloads, according to researcher Strategy Analytics. Still, Nokia is missing popular games such as Rovio Entertainment Oy’s “Angry Birds Space.” Zynga Inc. (ZNGA) has more than 20 mobile games for Apple and Android users and none for Windows Phone (though it plans to introduce two -- “Words with Friends” and “Draw Something” -- this year).

As it seeks to close the app gap, Nokia will try to ensure that content providers can turn a profit by developing for its devices, Argenti said. The company, for instance, is working to make it easier for consumers to pay for apps in countries where credit cards aren’t common, he said.

“Developers who make money make great apps and create a better experience,” Argenti said.

Mexico Visit

Benefiting Nokia’s app effort is its years of experience in emerging markets. Unlike Apple, Nokia also makes low-end devices aimed at first-time users and has long worked with developers targeting such customers.

Inode Entertainment, a maker of apps and games in Chihuahua, Mexico, has seen more than 100 million downloads of its apps and games by Nokia users since 2009. Inode develops games for Apple, Android, BlackBerry and Nokia’s Symbian platforms and is set to release its first Windows Phone games in the next two weeks, said founder Jaime Enriquez.

Nokia’s Elop met several developers in Mexico over breakfast in November to explain why the company was transitioning to Windows Phone. Enriquez said he was moved by the visit and Elop’s plan.

“If this guy is willing to come and sit down with us in Mexico it really shows me he is interested in the developers of Nokia and Windows Phone,” Enriquez said. “I doubt I’ll be meeting any other CEOs over breakfast anytime soon.”

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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