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The changing face of Nokia

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« on: January 09, 2009, 07:37:17 am »

The changing face of Nokia
Tom Gara

 The company is no longer the cool, cutting-edge firm that first captivated the mobile phone business. Brendan McDermid / Reuters
The company that has done more than any other to shape the evolution of the mobile phone is facing a midlife crisis.

Like a married, middle-aged professional watching enviously as a younger, better-looking crowd live carefree and in the moment, Nokia has lost its cool, and it knows it.

Finland’s best-known business has grown from a pulp mill on the banks of the Nokianvirta river to selling almost 40 per cent of the world’s mobile phones, with detours along the way into the manufacturing of everything from rubber boots to electrical cables and televisions.
Today, despite its dominance of a lucrative hi-tech market, the company risks being relegated to the role of a commodity manufacturer. Where it once pioneered technologies and concepts, it now finds itself racing to catch up with fresh new competitors. Apple’s iPhone has it desperate to make a successful touch-screen handset, while the BlackBerry, by Research in Motion (RIM), has inspired a flurry of look-alike devices.
And in its push into the internet services business, it is entering a well-developed market with tough, fast competitors. From mobile e-mail to mapping, social networking and media downloads, the company faces the most challenging and competitive period in its history.

“The complexity is huge,” says Olli-Pekka Kallasvuo, the chief executive of Nokia. “The industry is changing, your competitors are new – suddenly you have the mightiest companies in the world as your competitors. The complexities there are big.”
But while it may be playing catch-up, few companies are in a better position to reinvent themselves and win difficult battles. More than a billion people around the world use a Nokia phone every day, and the company is one of the world’s most trusted, with a reputation for reliability and quality.

In its survey this year of the world’s most-valuable brands, Business Week placed Nokia at number five, making particular mention of its reputation in emerging markets, where its products are often people’s first significant technology purchase. Nokia is the most-respected brand in India, according to the study.
To build on a base of broad global trust and recognition, the company is an engineering powerhouse, with an unmatched ability to turn out hundreds of millions of complex, high-quality units every year. When Apple bragged of selling five million iPhones, a Nokia executive replied that the company had sold as many devices in a weekend. While its trendier competitors push out leading-edge innovations, it is Nokia that will bring them to the truly mass market.
And in the push to become a serious seller of services as well as handsets, Nokia has the deep pockets needed to hire and acquire, two big ways to bring an engineering business into the internet age.

“We have hired a lot of people from different industries,” Mr Kallasvuo says. “New people are needed, and it is my job as CEO to set the balance between the hardware and engineering culture, and the internet culture. I’m happy with the progress, but it will continue to be something we need to focus on.”
As the company began its annual Nokia World event in Barcelona last week, it was this transition, to an internet-style company focused on the whole experience of its users, that had most journalists and onlookers talking.

“This is the week when Nokia either keeps its seat at the cell-phone-thought-leadership table or it will give up its spot to Apple and RIM alone,” wrote the influential technology journalist Robert Scoble. “This is the week that Nokia either shines or moves to the B-list of the cell-phone market”
At Nokia World, the company outlined several new products and services that it hopes will help it retain the thought leadership position that Mr Scoble said was in jeopardy. One “point and find” service will combine global positioning system (GPS) location information with pictures taken by the iPhone camera to identify buildings and landmarks and provide users with useful information. The new mobile e-mail system requires nothing more than an e-mail address and password to synchronise e-mail between most mail services and the handset, and will be available on the company’s most common phones, not just high-end devices.
Nokia also launched its new flagship device, the N97, in the clearest move yet to regain leadership of the high end of the market. With a large touch screen that flips up to reveal a full keyboard, it has the iPhone and BlackBerry clearly in its sights.

While the device may be expensive (the company projects a price tag of €550 [Dh2,610]), and not available until the middle of next year, it is likely to be produced and distributed in the volume for which Nokia is famous, hitting millions of small stores on streets from Shanghai to Dubai, unlike the limited availability of other high-end devices such as the iPhone and HTC’s G1, known as the Google Phone.
Only time will tell if the company can regain its 1990s cool in the second decade of the 21st century, and if it can compete not just with Google, Apple, Microsoft and Yahoo, but with the new competitors, and new technologies, that will inevitably emerge. Mr Kallasvuo already has his eyes on a future where phones will be radically different from what they are today.

“Nanotechnology will give the possibility to experiment with new form factors. Imagine different types of screens, like foldable screens,” he says, mimicking the motion of opening a newspaper. “They will give the benefit of a big screen in a small form factor. Personalisation of the phone will be a big thing: in 2020, no two phones will be alike.”
With imposing challenges matched only in scale by big new opportunities, few can imagine how the Nokia of 2020 will resemble the company we see today. But a move back into rubber-boot manufacturing does seem unlikely.
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