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Orange sulks at Nokia

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Nokia's share price fell today after Orange threw a spoiler at the Finnish handset giant. In London tomorrow, Nokia is expected to unveil its digital media and gaming strategies - as well as new hardware to support them - in the first major event since the company abolished its Multimedia and Enterprise business units in a June re-organisation.

But in a conveniently leaked memo reported in The Independent today, Orange executives discuss snubbing Nokia's expected music service - and its new N81 handset - in favour of its own music store and handsets from alternative suppliers.

In the memo, the paper reports, Orange wants large volumes of an 8GB model of the new handset, but only if Nokia agrees to trial Orange's own music store.

Executives fret that shipping handsets with both the Orange and Nokia music stores would create "...a significant level of customer confusion and increased calls to customer services as a result of housing both players on a device."

Orange has around 15m mobile users in the UK, of whom 5m are on contracts, and by its own estimation that gives it around 22 per cent of the consumer mobile market. The company has been presenting itself as "media company" recently, rather than a boring old "operator".

But as the Telebusillis blog pointed out late last year, the France Telecom subsidiary long ago lost its former swagger, and now operates a conservative, defensive and risk-averse strategy:

"The strategy is 'optimise' these expenses by: reducing device costs and optimising range; becoming a world class retailer and rebalancing acquisition and retention costs; and leveraging the benefits of a single Orange brand," wrote Keith McMahon.

As if to confirm this, the memo leaked to the Indie also frets about the consequences of dealing with large music files - at a time when rival operators are rolling out HSDPA (eg, 3 and Vodafone), and gearing up for "unlimited" music downloads from Truphone. Who can Orange blame for its network, except itself? ®

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