Verizon, Nokia and the Quest for Differentiation

on November 26, 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.