Feeds

Nokia puts brave face on 'Comes Without Profits'

It does make money, really

High performance access to file storage

Nokia has defended its "Comes With Music" giveway and insists it will make money from the promotion. Somehow.

"We expect to make money both from our traditional device sales, as well as from the 'Comes With Music' service," music boss Liz Schimel told Reuters. "I can assure you that we are looking out for everyone's interests in creating these new business models, including our own."

As we revealed earlier this week, Nokia's rush to announce Comes With Music leaves it with steep liabilities.

Owners of a CwM phone can download as much music as they want from the catalogues of Universal Music and Sony BMG, and keep it after a year. (Nokia hopes to sign everyone in time for launch). But the company failed to look at consumption patterns, and factor a sensible ceiling into the model. As it is, the more people download the more it costs Nokia.

"Recent articles that I've seen have fundamentally misunderstood the concept behind the Comes With Music model," the former Comcast and AT&T executive says.

Perhaps some have, but the executives still have some explaining to do - as shareholders can do the maths themselves.

The per-handset royalty to UMG is lower than others have reported, at about €10. But each download racks up a cost of about 70p (or 70c in the US). Nokia's profit margin is about 23 per cent, and the average selling price of a handset in Q1 was $125, down from $142 a year ago. Even if Nokia limits CwM to high end (ie, $200) phones, it must hope the user doesn't download very many songs at all.

Perhaps there's a revenue stream that we haven't accounted for - from the operators. But if it exists, it hasn't been disclosed.

It would be far more honest to say that in an attempt to catch-up with Apple, Nokia is spending heavily on subsidising the music business, and risks destroying its own margins on certain models for a short period. And that this will be a price worth paying in the long haul.

As it is, Schimel's claim doesn't stand up to scrutiny. ®

SANS - Survey on application security programs

More from The Register

next story
A black box for your SUITCASE: Now your lost luggage can phone home – quite literally
Breakfast in London, lunch in NYC, and your clothes in Peru
Broadband Secretary of SHEEP sensationally quits Cabinet
Maria Miller finally resigns over expenses row
Skype pimps pro-level broadcast service
Playing Cat and Mouse with the media
EE dismisses DATA-BURNING glitch with Orange Mail app
Bug quietly slurps PAYG credit - yet EE denies it exists
Like Google, Comcast might roll its own mobile voice network
Says anything's possible if regulators approve merger with Time Warner
Turnbull leaves Australia's broadband blackspots in the dark
New Statement of Expectations to NBN Co offers get-out clauses for blackspot builds
Facebook claims 100 MEEELLION active users in India
Who needs China when you've got the next billion in your sights?
Facebook splats in-app chat, whacks brats into crack yakety-yak app
Jibber-jabbering addicts turfed out just as Zuck warned
prev story

Whitepapers

Designing a defence for mobile apps
In this whitepaper learn the various considerations for defending mobile applications; from the mobile application architecture itself to the myriad testing technologies needed to properly assess mobile applications risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.