As a company that tends to generate most excitement regarding its bottom line, Nokia Corp. for the most part has been unruffled in the recent turbulent seas of the wireless industry. Even when the industry stumbled as in the past few years, the firm never wavered. Some layoffs and plant closings here, some policy tweaking there, but the Finnish giant always returned promptly to the dramatic quiet of its profits.
Nokia may not be everyone’s friend, but most love to partner with the giant. A champion attracting little malice, Nokia belongs to groups and standard bodies and seems to work best within those traditional boundaries.
Yet, its conservative image seems to be giving way to that of a lone player focused on its bottom line. Indeed, recent stumbles in earnings have led the world’s largest handset manufacturer to consider cutting handset prices to re-gain market share, an unusual move for the company. And Nokia is carving out its own path in Push-to-talk over Cellular and recently dropped out of the WiMAX Forum, only to quickly decide to come back to the WiMAX Forum fold, although the company has not yet rejoined. Nokia said it is committed to working with other players to set a standard for the technology.
Likewise, on PoC, Nokia claims to be dedicated to the standards, although it is at present at odds with other topflight players in the space, including Nortel Networks Ltd., Motorola Inc., L.M. Ericsson and Siemens AG.
“Every company has to do continuous planning and evaluations,” said Pertti Korhonen, the company’s chief technology officer. Nokia’s decision to steer the industry in some instances while forging its own path in others is all related to Nokia’s vision, Korhonen said, Nokia’s desire to dream big and not lag in ambition in an industry suffused with new ideas, new players, new highs and lows.
“I don’t think we have been that conservative,” said Korhonen. “We have to take some risk,” he said. “Some will fail … we have to make sure we are playing a solid game.”
Nokia recently reorganized its operations into four divisions with a view to adjusting to the dynamic of an industry undergoing a shift in gravity from voice to a raft of multimedia services. The company was primed into for divisions-mobile phones, multimedia, networks and enterprise solutions. All of these have several groups, which run horizontally in order to integrate the visions of the parts.
“After five months, that has worked well,” Korhonen said, adding that the horizontal groups, including platforms, which operates under him, are bringing synergy to the company’s dynamic. Korhonen joined Nokia in 1986 and worked on designing integrated circuits for the company’s mobile phones. The holder of five patents and a Knight of the Order of the White Rose of Finland, he was a prime mover of the Nokia 2100 series and has held positions as vice president of research and development and executive vice president of Nokia mobile software.
The company, which had soared above the competition in handset market share, has suffered a rude awakening as other handset makers have begun to close the gap on Nokia’s dominant market share. Although Motorola remains No. 2, other companies trying to take market share gains include Samsung Electronics, which has morphed from maverick to legitimate mainstream player; and Siemens, a company not unlike Nokia in its quiet might.
Although some analysts contend it will be a challenging year for the Finnish manufacturer, Korhonen said the company is up to the task.
“We have had some gaps in our product portfolio that have caused some loss of market share,” he admitted, pointing to the release of a slew of new devices that prompted a good feeling on Wall Street. In line with his claim of wading out of its conservative slough, the company released a handset with a clamshell design. Analysts say the company resisted the idea for while.
Nokia still expects its market share to surge to about 40 percent of the market. Its position now is about 30, with Samsung hoping to release more handsets this year than the market leader.
“We’ve had some hiccups, but we’re fixing them,” he said. Korhonen noted that while the company may have delayed some of its products, it has been early in other instances. Nokia delayed the unveiling of its top-end 7700 handset until 2005 and its N-Gage mobile phone/video game gizmo by about a month. It is set to be released before the end of the month.
Life goes mobile
Driving the company’s vision has been the migration toward multimedia services. The company’s CTO said his company has thrown its investment in that area, especially with its Communicator series of devices. The company’s mantra in the early 1990s was “voice goes mobile.”
“In the 1990s, there was skepticism,” about the impact of mobile data, remarked Nigel Rundstrom, vice president of multimedia sales and channel management at Nokia. Now the company’s mantra is changing to “life goes mobile,” to accommodate carriers upgrading wireless networks from mere voice to a full breadth of communication applications, including music downloads and video on demand.
Korhonen said the company is thrilled to see mobile devices whirring with high functionality, power, storage and MMS content, personal content and business content. “It has more capability than a simple phone today,” he said.
Business plans
Nokia, like other players in the market, wants to bring mobility to the enterprise. The company is deploying such business-optimized devices as its Nokia 6820 and 9500 series as well as applications for those devices. It also is harnessing a portfolio of gateways to connect to the network through firewalls, e-mail gateways and virtual private networks. It hopes to achieve its enterprise dreams through a synergy of devices and gateways, according to Dan MacDonald, vice president of enterprise solutions.
The company says it has shipped up to 180,000 gateways to 18,000 enterprise customers. Nokia claims to have a 60- to 70-percent market share in devices in the enterprise space. Some of Nokia’s partners include Research In Motion Ltd., IBM Corp. and SAP in the enterprise arena. Korhonen said PTT will offer great opportunities because of the birth of Internet Protocol.
Emerging opportunities
Nokia is eyeing the emerging market with the same frantic fervor as others like Lucent Technologies Inc., Siemens and Motorola. Korhonen identified India as a market with great potential. “We see a lot of opportunities in the area of total cost of ownership and basic cost,” he commented.
On the network side, the company said it is committed to PoC and the question over disposing of the division is in the past. With more than 30 trials and 13 commercial contracts, Nokia may not go back on its pre-standard solutions, but the company still says it will comply with standards from the Open Mobile Alliance.
Going forward, Korhenen says consolidation in the infrastructure business may have made headlines in the past year, but “it is not the topic of today.”
He said the main challenge for Nokia and the industry is “spotting the right opportunities in the market and getting the right focus.”
