Nokia's Ovi Store Off To Bumpy Start

by Mark Walsh, May 26, 2009, 4:50 PM

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So much for a grand opening. Just getting in the door of the Ovi Store, Nokia's answer to Apple's App Store, proved challenging as heavy traffic slowed the widely anticipated site during its official debut Monday.

Slow performance, a meager selection of applications and less-than-intuitive navigation were among various flaws cited by online critics during the global rollout of the Ovi Store, which Nokia first announced back in February.

Among the harshest reviews, TechCrunch declared the Ovi launch a "complete disaster" because of continued slowness, disappearing apps, and a poor user experience characterized by fruitless content searches and thin publisher profiles. Other reports indicated that some registered Ovi users and Nokia customers were having trouble gaining access to the service.

For its part, Nokia issued a statement Monday attributing the site's balky performance to high traffic demand. It addressed the problem by adding servers, "which resulted in intermittent performance improvements."

This marks an inauspicious start for the Finnish phone giant if it hopes to challenge Apple's dominant position in mobile apps with more than 1 billion downloads to date from the company's App Store. Opening with less than 700 paid or free items on offer, the Ovi Store also has a long way to go to catch up with the more than 35,000 that fill the App Store.

"This is still the early days but indeed it seems like it is not that easy to offer a seamless experience to a majority of consumers," said Thomas Husson, a Forrester Research analyst who covers the mobile space. When the Ovi Store was announced at the Mobile World Congress in February, Husson noted then that the quality and speed of execution would be a critical factor in its success.

Nokia has already stumbled in its bid to expand into mobile services with its N-Gage mobile games offering, and music download service--Comes With Music -- failing to gain traction with consumers. Music and games will still be offered separately, but the Ovi Store will combine those content categories with apps, videos, podcasts and location-based services, among others.

Boosting its mobile services business through the Ovi Store would help Nokia offset slower sales in its device business. The company reported its first-ever pre-tax loss in the first quarter, and is slashing costs in its device division by more than $900 million because of falling phone demand.

Mobile phone sales worldwide dropped 8.6% in the first quarter compared to the year-earlier period, according to Gartner. Smartphone sales continued to grow, however, increasing 12.7% from a year ago. While still the biggest mobile phone maker by far, Nokia in the first quarter saw its market share slip from 39% to 36.2%, as No. 2 Samsung increased from 14.4% to 19.1%.

Husson and other analysts have pointed out that Nokia has a big advantage over Apple in the sheer scale of its user base -- selling 93 million devices in the first quarter alone compared to the approximately 20 million iPhones sold to date. That opportunity could be especially compelling to app developers, who will get the same 70% cut of Ovi Store sales as they do from App Store sales.

Nokia said Monday it was making the Ovi Store available to 50 million mobile customers globally across more than 50 devices, including the latest version of its flagship N97 phone. AT&T, which is also the iPhone's service provider, confirmed it will launch the Ovi Store for U.S. customers later in the year.

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