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‘Furious’ UK Operators Want Nokia To Strip Skype From N97

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UK operators O2 and Orange are reportedly “furious” with Nokia (NYSE: NOK) over the Finnish handset makers plans to pre-load Skype, the VoiP provider that lets consumers make free calls, on to its upcoming flagship device, the N97. According to Mobiletoday.co.uk, citing “operator sources,” the networks may end up refusing to stock the devices if Nokia doesn’t strip out the application.

Nokia has always taken pains to show publicly that it gets along very well with its operator partners. But looks like operators are seething behind the scenes. Apparently, the operators are “venting their anger” at high-level executive meetings with Nokia, whom they believe are trying to wrest away control of their customers and offering easy access to an app that could potentially hurt call revenues. Mobiletoday.co.uk’s source said to them that this was yet “another example of [Nokia] trying to build an ecosystem that is all about Nokia and reduces the operator to a dumb pipe…But if you spend upwards of £40 million per year building your brand, you don’t want to be just a dumb pipe do you?” The source added, “Nokia have tried several ways to own the customer over the years and operators have had to say no.”

Will Nokia end up having to remove Skype from their N97 devices? It would be quite an embarrassment if that were to happen, especially as the deal was announced with great fanfare at MWC in Barcelona last week. It also seems odd that Nokia wouldn’t have foreseen the operator backlash as it ran into similar problems with its Comes With Music device in the UK, which operators feared would compete with their own music products. Nokia ended up launching the phones with only distribution from handset retailer Carphone Warehouse. But Nokia needs widespread distribution for its flagship device, which is supposed to help it compete with Apple (NSDQ: AAPL) and RIM (NSDQ: RIMM), whose products are eating into its share of the smartphone market, and it needs operators to help subsidize the gadgets if they want to get consumers on board. We may yet see the app removed.

Feb 27, 2009 10:50 AM ET

Posted In: Gadgets, Companies, Nokia, O2, skype

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