Now the biggest gadget-maker of all, in volume terms at least, is extending its push into services, and is trying to do all these things at once. Nokia, the world's biggest handset-maker, sells nearly half a billion mobile phones a year, roughly two in every five. This week it added revamped mobile e-mail and navigation services to the music downloads it already offers on some of its handsets (see article). So convinced is Nokia of the importance of services that it reorganised itself last year into two divisions: one to build handsets, and the other to provide its growing suite of services, called Ovi.
At your service
There are several motivations for the gadget-makers' shift into services. First, margins on hardware are generally lower than margins on services. Second, saturated markets in many parts of the world mean that hardware sales are slowing in some categories. Soon, everyone in western Europe who wants a satnav will have bought one; what will the manufacturers do then? Make money from subscriptions and updates, of course. At least, that's the plan. Finally, services provide a way to hold on to customers. If you have signed up for a service tied to a particular gadget-maker, the thinking goes, you are less likely to switch to a different manufacturer's device in future.
The world's most successful gadget-makers are those that have been quickest to recognise the importance of offering accompanying services. Makers of stand-alone music-players, such as Rio, have been unable to compete with Apple; and Motorola, once the top dog in mobile phones, let RIM, once an obscure Canadian start-up, grab the mobile e-mail market.
With elaborate branding and advertising campaigns, gadget-makers have long promoted the idea that they were selling something more than just a bundle of electronics in a snazzy case. Now, funnily enough, some of them really are.