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This week Nokia Corp., the world’s largest maker of mobile phones admitted that its offence on the market of mobile video gaming has failed by announcing that it would close down its N-Gage store, which was specifically designed to sell games for Nokia phones and provide community-related services.

Nokia Closes the N-Gage Store

“As mobile gaming evolves and begins to encompass social gaming, we want to offer one store front with an even broader portfolio of games – games for everyone. It’s much more convenient to have one place to get all your mobile games, and this is what Ovi Store provides. The site will remain in operation throughout 2010, with the exception of the N-Gage Store which will remain open until the end of September 2010,” an official statement from Nokia reads.

The news about the closure of the store is hardly surprising in general since the company has not released a single new gaming-oriented mobile phone for about four years now, which means that the company did not see significant opportunities in marketing of special-purpose cell phones, and it was hard to imagine that N-Gage store would co-exist with Ovi application store launched in May 2009.

It becomes even more evident that Nokia is moving away from N-Gage platform as the company will stop pre-installing N-gage application onto future devices.

“We will continue to sell devices with N-Gage application pre-installed for some time, however we will no longer ship new devices with the application pre-installed. Games will be available through the Ovi Store,” Nokia said.

But what went so terribly wrong that Nokia, the company that managed to capture the lion’s share of mobile phone market, failed to become any significant player on the market of handheld game consoles? Perhaps, Nokia just wanted too much from its N-Gage project? And why Ovi store is better than N-Gage store?

N-Gage Phones-Consoles: A Recap

Nokia introduced its first N-Gage phone back in 2003 and its attempt to enter the market of portable game consoles was not really a success. Better to say, it was a disappointment both for the company and for the industry in general. However, the engine was started and Nokia had no other choice, but to continue developing infrastructure with the same console due to simple philosophy of the console market: more consoles at the hands of end-users means more game developers interesting in creating titles and with more titles available, the console becomes more appealing for gamers. 

Cancellation of even a not that successful game console project and starting a new one, even with ideal technology inside, would be much more complicated as customers would never believe a company who decided to cease support for the lineup moths after its introduction. So, N-Gage with all of its issues stayed on the market and evolved into much more appealing N-Gage QD that lacked certain issues, had improved design and lower pricing at the cost of lacking certain functionality, such as MP3 player and radio.

When Nokia designed the N-Gage QD, the main task was to shrink the sizes, improve ergonomics, get better visual design and make the new N-Gage substantially cheaper to manufacture and sell. Perhaps, this was a major mistake of Nokia – the N-Gage QD was released in mid-2004, but it faced competition from Nintendo DS and Sony PlayStation Portable consoles in 2005 and could offer just two benefits: lower price and ability to make phone calls. Games designed for Nintendo DS and Sony PSP were of much higher quality and when a gamer wants to play, she/he buys something for gaming…

Another effort Nokia had to take was to make sure that the infrastructure for the console was developing: the world’s largest maker of cell phones had to support developers of games and even fund them only to have as many quality titles as possible on the market. Fortunately, N-Gage was sold not only as a cell phone via cell network operators, but as a game gadget by computer game stores, who also carried a wide choice of games designed for the console.

At the end, the N-Gage has made it to the market of handheld consoles. It was not really successful with 3 million devices sold by 2007, however, back in 2003 – 2004 Nokia hardly considered N-Gage only as a gaming device, but was probably more interested in making it much-much bigger…

N-Gage – The Failed Universal Entertainment Device?

As noted, the Nokia N-Gage QD was not positioned as a telephone with game capabilities, but rather as a console with phone capabilities. At first sight, this is an insignificant difference, but if we analyze a bit, we’ll see just how important the N-Gage project was for Nokia.

One of the main things behind the N-Gage project was not only ability to sell games and receive royalties from game makers, but to promote the brand-name Nokia among the young gamers. Obviously, the most active gamers are youth between 10 and 18 years old, those, who tend to follow certain lifestyle, fashion and rapidly adopt a new technology that truly has potential (or, at least, has ad campaign capable of convincing people that it does). In case of success of the first N-Gage, Nokia would get renowned among gamers as a maker of cool and stylish entertainment devices (console, digital music player) and fashionable mobile phones. Needless to say that such a crowd would be very loyal to Nokia going forward. But initial lukewarm welcome the original N-Gage faced forced Nokia not to improve the device, but to cut-down its features to lower the price, which was another major mistake made by the phone giant.

It is known that once a product is adopted by a broad audience, the brand behind it gets valuable and fashionable. There are hundreds of millions of Apple iPod personal digital media players and tens of millions Apple iPhone phones sold worldwide mainly because both devices are parts of today’s fashion and once a customer obtains iPhone or iPod, he or she starts to eye Macintosh computers, Apple TV and so on. As a result, Apple is one a few profitable computer companies amid the global economic slump.

With the N-Gage project, Nokia wanted not only to enter a new video game business, but to turn the N-Gage into a part of the lifestyle. Just imagine, it is 2004 or 2005 and one simple gadget can make phone calls, access the Internet, playback music, play video games and impress everyone with generally rich features and uncommon design. That could be a breakthrough! However, with due to tepid acceptance of the first-generation N-Gage, Nokia had to scrap the possible plan to provide an all-in-one entertainment device to the market, lower the manufacturing cost and concentrate on the video game market alone. This still made sense: after using N-Gage for gaming for years, gamers would become very loyal to Nokia phones in general.

After three and a half years of unsuccessful attempts to become a significant maker of game consoles, Nokia gave up and announced in 2007 that it would open up N-Gage games to its advanced smartphones since consumers, according to Nokia, wanted to have advanced games everywhere. Did Nokia learn the mistakes it made with N-Gage by then? Looks like not completely. But there was another company who knew exactly what to do to make a popular phone…

One Size Fits All – Now a Part of the Strategy

Mobile phones were originally aimed at active people with high income, but as the technologies evolved, makers of cell phones started to position different families of their devices for different types of consumers. As a result, nowadays there are mobile phones with focus on business applications, photography, multimedia playback, fashion and style, luxury and so on.

But is it possible to create a device that would do it all? For Nokia, the answer was (up until the recent future) an almost a clear “no”. However, for Apple, which is originally a computer company, the answer has always been a clear “yes”. Maybe Apple understood that creation of a successful lineup of phones was much harder than designing a one ultimate model. Or maybe Apple wanted to make a phone for everyone. The result is clear: the iPhone and its successors are used by very different people all around the world. It may not be the best phone for business applications, photography, multimedia playback, etc., but it is undeniably the most popular smartphone model available today. Moreover, even though Apple has never positioned its iPhone for gamers, many developers now seriously consider games designed specifically for iPhones.

The success of Apple iPhone (even though its global market share is still negligible) has probably taught a lesson to traditional market leaders that one size can fit all. Nokia’s new business phones are equipped with high-quality cameras and audio processors, whereas multimedia phones gain hardware QWERTY keyboard.

Yet another logical step in the direction of “one size fits all” is establishment of a universal software store from where consumers could obtain whatever software they wish to have. The Ovi store is exactly what is needed and N-Gage store does not make any sense now that Nokia does not ship consoles.

The N-Gage Lesson

Now that Nokia announced that it would pull the plug on all N-Gage-related services by the end of 2010, it is clear that the N-Gage project is dead. Nokia and the whole industry have probably learnt a lesson and we will hardly see any devices that will repeat Nokia’s mistakes.

From many points of view, N-Gage was a very visionary product. The next-generation portable game consoles from Nintendo and Sony are likely to gain 3G/3.5G connectivity along with Wi-Fi and voice communication capabilities. However, those products will feature state-of-the-art hardware that will be there to provide ultimate experience, but not to enable the most affordable one. The next-generation handheld consoles will also be sold below cost and their developers will make money on selling games, not hardware.

Rather unenthusiastic acceptance of Nokia’s Comes with Music program as well as the failure of N-Gage clearly shows that Nokia still has to learn how to sell content. In fact, it is crucial for Nokia to develop a successful strategy for content as in the future distribution of software, music, video, electronic books and other possible types of content will be tremendously important.

Tags: Nokia, N-Gage, iPod, iPhone, Apple


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