Verizon, Nokia and the Quest for Differentiation

by Tim Bajarin   |   November 26th, 2012

My first portable cellphone was the size of a brick and weighed almost 2 pounds. And it was dumb. All it did was make calls. By the mid 1990’s Verizon started creating what we now call a feature phone and created its own mini OS, which allowed Verizon to create dedicated apps of their own as well as give third party software developers the tools to also create apps for these phones. This was important since it gave Verizon a controlled eco-system of hardware and software that allowed it to significantly differentiate their cell phones over the competitors.

Of course, the apps they had back then were primitive compared to today’s smart phone applications but they did offer their customer’s games, better contact information and simple calendars, etc. But this was a pioneering move in cell phones and helped Verizon grow this business exponentially. However, in this mode, Verizon had complete control of their eco-system destiny and that made it difficult for third party software vendors to break into Verizon’s apps world in any meaningful way.

The new era of smartphones wrestled control of Verizon’s closed ecosystem away from them and other competitors doing similar things since these phones had an open OS and more importantly, an open approach to creating and selling apps directly to the customer. Some think that Apple’s ecosystem is closed but it really is a pretty open program in that third party software developers can and do create a plethora of iOS apps and Apple freely pays them directly for these apps when consumers buy them. Yes, Apple does veto some apps mostly for inappropriate content, but theirs is a very open approach compared to what Verizon had back in the heyday of feature phones.

One of the big problems with an open approach, whether it is with the Android OS or the Windows OS, is that both of these operating systems go to the vendors with identical user interfaces, thus creating what we like to call a sea of sameness. That means that an Android phone or a Windows Mobile OS phone all look the same since they use the same user interface. At the hardware level the handset vendor can try to innovate, but in most cases the OS GUI is untouched. This is especially true with Windows Mobile phones, although companies like HTC, Amazon and a few others have added their own UI layer on top of Android’s GUI to try and distinguish themselves from the competition.

Not to be undone by this turn of events, Verizon is working hard with some of their handset partners to make their phones more unique and add more value to the users. A good example is the way they have worked with Nokia on the new Lumia 822. Verizon went to Nokia and asked them specifically to do a special version of the Lumia that could be sold for $149 and had features only available on this phone.

Nokia worked hard with Verizon to accommodate this request and has added three key features that help this low cost smartphone stand out. The first is something called Nokia Drive. This is a turn-by-turn voice navigation service that uses their stellar Navteq maps to deliver a rich navigation solution to Lumia 822 owners. It will work in 89 countries and while in beta now, it will be released officially soon. This service also has something called My Commute that, over time, learns the directions to your office or workplace or any other heavily trafficked route and automatically gives directions to these places with its voice navigation feature as needed.

The second special thing Nokia brings to Verizon with this phone that is not available to others is something they call City Lens. This is an augmented reality application that works with the mapping program that overlays specific information about a place, restaurant or landmark to give users a richer mapping experience. Verizon sources say that this is first step in their augmented reality software and will make it even better over time to give users all types of data or information about locations they are visiting.

And the third thing that is specifically for the Lumia 822 is a new Nokia streaming music service called Nokia Music. It is subscription free and has 16 million tracks or 10 times more tracks then Pandora. Also no account is needed and works right out of the box. You can listen up to 12 hours of music free. You can also just tap and scroll in something called the gig finder, which seeks out the gigs or details of a your favorite band’s concerts schedule and locations.

I have been testing the Nokia Lumia 822 for a while now and am pretty impressed how much is packed into a $149.00 smart phone. The core of the OS is Windows Phone 8 with all of its new features such as live tiles and the special protected area for family’s and kids. But these new special features from Nokia add a richer dimension that gives customers a great experience that comes close to equaling what is available on more expensive smartphones.

What Verizon is doing with Nokia is significant. In a world of smartphones where the OS and UI are identical, doing things that help differentiate the phones and services over the networks will be an important key for success.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • http://www.facebook.com/profile.php?id=100001035136448 Sihan Zheng

    I have to nitpick a bit:

    “At the hardware level the handset vendor can try to innovate, but in most cases the OS GUI is untouched. This is especially true with Windows Mobile phones”

    In the windows mobile days, the OEMs completely skinned the OS, HTC’s touchflow and Samsung’s touchwiz both started on Windows Mobile, than moved to Andriod to keep a “coherent experience”. After all, fragmentation on Windows Mobile was MUCH worse than it is on Android. You have no touch, dpad phones (Palm Pro), reactive touch with stylus (way to many to list), and capacitive touch with fingers (HTC HD2).

    I personally think the 822 is a pretty bad idea to be honest, The 820 (exact same thing for at&t) is only 49$, and the 920 (its big brother, much better specs) is only 99$.

  • FalKirk

    One problem with this approach is consumer confusion. If you want an iPhone, you can go to AT&T, Verizon or Sprint and buy an iPhone. If you want a Nokia phone, there’s a different one at every carrier.

    The Galaxy used to be this way too but Samsung wised up and made all of their Galaxy S phones the same across all vendors. And they’re reaped the benefits of this simple marketing strategy in spades.

    Choice, in the abstract, always sounds good. In marketing, too much choice leads to buyer confusion and paralysis by analysis.

    • Rich

      “Paralysis by analysis.” I like that. If you have too many products and 37 factors to consider, eventually you end up in a fog and say “I give up. I’m not buying any of them.”

  • pawhite524

    Did I comprehend this correctly or is something missing? From this article: “The first is something called Nokia Drive… This service also has something called My Commute that, over time, learns the directions to your office or workplace or any other heavily trafficked route and automatically gives directions to these places with its voice navigation feature as needed.”

    So a route I drive regularly will be “remembered” by the Nokia Drive and i will get voice directions on how to drive to work from home? Someone at Nokia spent too much time at the Department of Reduncy Department.

    As always, enjoy what I read at techpinions: Intelligent articles and discussion boards!

    • Rich

      My Commute does sound like an unnecessary feature. The only thing that would make it meaningful is if it has realtime traffic updating that would guide you around backups.

      • pawhite524

        I couldn’t agree more with the traffic updates. However, I could not deduce this feature from the article and no nothing else about Nokia’s offering.  Thanks for taking the time to respond.
        Cheers!

  • def4

    All of the services mentioned are standard on all Nokia Windows Phones.
    Verizon is not getting anything special.

  • capnbob67

    Like Verizon, I think Tim here is clutching at straws… One swallow does not a summer make and one effort on a 3rd tier device using a 3rd tier OS from a mortally wounded OEM at an uncompetitive price point ($149 + 2yr contract) does not denote an emerging trend.

    It is a too late attempt to regain a perceived former glory by a carrier and an OEM with limited influence in a device market where extent of distribution is paramount. The iPhone still only has half the distribution (per available subs) of Android (at least until the China Mobile deal is done) and suffers accordingly. RIM is losing carriers and priority in those carriers at an alarming rate. Nokia has terrible distribution in the US and will do anything to appease the #1 US carrier (which is only the #19 global carrier) to try to regain a foothold in a high value market like the US.

    Samsung are going the other way – less carrier differentiation and that is the trend (following Apple) that is dominant.

  • http://twitter.com/OgreDennis Dennis Baker

    Is it really a ‘low cost’ phone at $149? That’s $50 less than the iPhone 5 which is considered premium. If it were available unsubsidized, that’s a $500 phone.

  • bmwmc101

    The 822 is not the 920. I am a Verizon customer and I want the 920…in red please.