Extending its relationship with HCL Infosystems, Nokia has announced plans to set up a joint venture with the Indian company "to sell mobile value added services and entertainment content directly to consumers in India." This appears to be the offline model for Nokia's services and content business - Ovi. HCL has been working with Nokia for over 10 years now, managing their distribution network and "Nokia Care Centers", their customer care initiative. It appears that we might just see a retail infrastructure established for USB drives loaded with legal music, wallpapers and games. The Big Direct To Consumer Gamble Our sense is that this will be the largest direct-to-consumer VAS initiative in India yet. For many years now, VAS companies have flirted with the idea of developing an offline strategy and bypassing the mobile operator, but viability has been a key issue. Mobile content kiosks are nice to talk about at conferences and present as case studies to the press (including us), but managing a huge distribution network on low content margins, and managing the billing from multiple points-of-purchase, has been a major challenge. Such a business does not work without massive scale - the kind that mobile operators have achieved with their pre-paid recharge business. A few things to keep in mind when considering the retail play, based on inputs from a research MediaNama had done last year: 1. Low VAS ARPU and Limited Base: A majority of the mobile user base in India is pre-paid, and a large…
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