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Java has suffered as a mobile content platform, compared to Qualcomm Brew, by having a fragmented channel and a confused economic proposition for developers. Nokia aims to change that with its new Preminet aggregation, download and billing framework. Although operators can brand the service themselves, reflecting the shift away from handset branding, in the longer term Nokia could sideline them by accelerating the creation of open IP portals. Nokia aims to stay out of the battle of content branding and ensure that it controls the underlying software and relationships, giving it the critical position whatever trends drive mobile applications in future.

Despite the rapid growth of mobile Java and the strengths of the industry forces ranged behind it, Qualcomm's Brew platform has clung on stubbornly in the hearts and minds of carriers and content developers. Brew may have had to adapt to Java's presence (and will run on Java platforms now), but it has not been crushed by the Sun-driven technology. Of course, Qualcomm has made a business of standing against the industry standard with its own technology, but Brew does have some genuine advantages over Java, which Nokia is now seeking to neutralize with the creation of, in effect, the first real ecosystem for J2ME. In so doing, it could achieve a huge level of control over how mobile content is handled, and further its goal of gaining power through software.

Brew's advantages

Brew's greatest appeal to CDMA carriers is that it offers a ready-to-go system with simple distribution, digital rights management and billing frameworks and aggregated content. Its big advantage for content developers is that Qualcomm controls the value chain and so it is clear where each element sits and how money is made. It's the old Microsoft dilemma - open standards may be preferable, but sometimes there is a reassurance in having just one version of a technology, firmly controlled by one vendor rather than a committee.

Sun went some way to matching Brew's advantages in J2ME when it acquired Pixo, whose technology became the basis for its Content Delivery Server for carriers, which aggregates, manages and bills for downloaded material in the same way that Brew does. A year ago, it duly introduced that product and made its first steps towards a formal ecosystem with standard methods of gathering content, provisioning it, collecting payments and sharing them with partners. Key to this was the Java Mobility Advantage Programme to help operators and developers develop, manage and sell Java services.

However, little really happened as a result of these changes, and the channel to market remained fragmented between over 100 third party download platforms. Now the baton has passed to Nokia, which has announced a framework called Preminet within its Forum Nokia developer group. This promises to codify the J2ME ecosystem and its mechanisms, just as Qualcomm has for Brew. Preminet is a distribution and transaction service, offering a one-stop shop for developers and carriers on either CDMA or GSM-based systems.

While Brew has opened up to Java, Nokia has excluded Brew, mandating J2ME applications for Preminet. It said it had rejected Brew because of its small base compared to that of Java (there are about 38m Brew devices worldwide, while J2ME is embedded in about 500m cellphones, though not necessarily actively used). Nokia, which has a bitter rivalry with Qualcomm, is clearly keen to see Brews sidelined still further. Nokia director Steeg Thygesen managed to damn it with faint praise, referring to it as "an interesting, proprietary solution for an early stage market", but one without a long term future.

Operators take brand control - for now

Nokia's avid support for J2ME is in keeping with its strategy of encouraging uptake of mobile data applications, thus boosting demand for highly specified cellphones and for the Nokia Series 60 software platform, which supports Java. It is also better positioned than Sun to make an ecosystem really take off for J2ME, with its deep understanding of mobile developers and their requirements.

What is more indicative of the changing times for handset makers, though, is that Preminet will provide an operator branded content distribution system. As large cellcos set increasing store by building their own content brands, the handset makers are having to make concessions to this, at the expense of their own brand visibility.

This is even true of Nokia, whose brand is a powerful one - a recent study by Unisys found that 75 per cent of under 18s surveyed thought that Nokia was their service provider and that they would specify a phone brand ahead of an operator. But increasingly, the Finnish giant is cultivating that brand in its high end enterprise and multimedia activities, and submitting to the cellcos in the midrange. It recently exited the ringtones business that it had offered through its Club Nokia outlet, presumably under pressure from operators, for which ringtones are their primary source of data revenue after SMS.

And mobile operating systems are giving up control of look and feel to the carriers too. PalmSource and Microsoft now allow operators to customize the interface for their systems, and Symbian subsidiary UIQ, which makes the user interface for Sony Ericsson phones, has unveiled an operator configuration package too. With Preminet, the carrier can easily amass and distribute Java-based content, all under its own brand and with its own choices of user navigation and interface.

Preminet's real significance

However, Nokia may be just biding its time. If Preminet becomes the main framework for J2ME content download, and therefore the dominant one on the whole GSM/GPRS/3G system, it gives Nokia a hugely powerful position in the cellular market. It is one that fits perfectly with its recent goal of gaining influence and revenue through software, taking the Microsoft approach of providing the guts of a system and making itself indispensable, thus making concessions on handset design less painful. We have seen this with the licensing of Series 60, the near-control of the Symbian OS and its increasing focus on creating a developer community to try to rival that for Windows and .Net.

Once in control of the content framework, Nokia will have shifted the balance of power neatly in its own direction and will be ready to open up the system to other, more amenable partners. The operators may have the shiniest content portals now, with Live! ahead of the pack, but J2ME's openness also presents a threat to their walled gardens. Broader Java-based content portals are being set up by media companies, and this trend will be accelerated as more handsets feature open IP access. Nokia already plans to work with some of these portals, as well as with cellcos, via Preminet.

Media companies such as News International and broadcaster Endemol are seeking to form direct mobile relationships with consumers using Java, and we can be sure that Nokia will grasp the opportunity to help them, prising loose the operators' grip on its current decisions. The operators can use IP blocking to ensure that users remain within their own portals, but they are also attracted by the increased GPRS or 3G traffic open access could generate, as well as scared of backlash from consumers who are increasingly aware of the potential for mobile internet access.

Wooing the developers

Before Nokia can achieve its desired position, it will have to win over the content developers, just as it has been working to do for Series 60. The main strength for Brew in CDMA - in contrast to the fragmented world of GSM-based download services - has been that its business model is simple and really works for developers. Brew is not known for being either easy or cool to develop for, but it can be very lucrative because of the way Qualcomm controls it. Qualcomm sets the revenue share for the operators, as well as all the billing and settlement, and makes it very easy for subscribers to buy applications, as well as imposing clear guidelines for how much their creators are paid.

Nokia must make Preminet equally attractive. The advantages are clear - carriers are presented with a catalog of content from which they can select applications, with a brandable download client, while developers have to just submit their application once for it to be on show to all participating carriers. Preminet provides a framework for content providers and carriers to negotiate a price, so that likely revenues are predictable for the developer because rules are consistent, and handles billing and payment (Nokia takes a cut of content sales).

The biggest drawback for developers will be that the scheme will use Java Certified and Symbian Signed QA mechanisms for ensuring quality of the applications. This lowers support costs for the operator and assures subscribers of bug-free software, but developers have to pay for the certification as well as going through the processes, which can be a turn-off for smaller programmers. Java verification starts at $200 and Symbian Signed testing costs $700 plus $400 per year. Developers must also join Forum Nokia Pro, which costs about €3,000 a year. However, while ongoing costs in the Brew program are low, upfront investment can be $10,000.

As well as getting pricing right, it will also be vital for end users that, while allowing operators to brand their portals, that Nokia does not let them lock their devices and prevent users installing applications from other content download services such as Handango. This is a real downside of Brew, which is often used by CDMA operators to keep phone users away from content outside their own stores. However, Nokia is operating in a less tightly controlled environment than CDMA, where users do not have to put up with such tactics; and one where it seeks to gain power through opening up software platforms like Series 60, not closing them down and so strengthening the operators' walled gardens.

Lee Epting, vice president in charge of Forum Nokia, knows that a streamlined distribution process will not be enough in itself to boost ARPU and encourage upgrades to smartphones. For such content to be consistently profitable, it must be readily available and easily used, something that Brew has made possible in CDMA. "I would say the consumer awareness issue is the one nut we have yet to crack," Epting said. "If we can make it an experience where the consumer doesn't have to go looking for content it will ultimately drive the revenue that will come out of this type of model."

Copyright © 2004, Wireless Watch

Wireless Watch is published by Rethink Research, a London-based IT publishing and consulting firm. This weekly newsletter delivers in-depth analysis and market research of mobile and wireless for business. Subscription details are here.

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