Nokia organisational shakeup elevates status of services and programming

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As of late last year, Nokia CEO Olli-Pekka Kallasvuo has been using every opportunity to emphasise that Internet services are becoming a central development and growth area for Nokia. Now this strategic change can also be seen in the organisation of the mobile telephone company.
      Nokia announced on Wednesday that from the beginning of next year, the company will have three units: Devices, Services and Software, and Markets.
      Services for consumers, such as music and navigation, as well as communications systems for companies, will take an equal footing with telephones in Nokia's operations.
     
At present the flow of cash from selling consumer services is small change for Nokia, and the company has not made public any goals for its business.
      After the new company structure is in place, expectations are great. In the spring, Nokia announced its first satellite positioning service, and an announcement on a new music store service is expected in late August.
      More is likely to come both in new cooperative arrangements, and in Nokia's own services.
      On the Enterprise side, Nokia is already selling software and systems, although the company has not given out any figures on the matter. Nokia is selling e-mail systems to companies, as well as firewalls. For operators Nokia offers many different types of software systems and services.
     
It remains to be seen when Nokia will give out more information on its goals, or on the figures of its service business. At least for now the company plans to announce the results of its Services unit and that of its Devices unit at the same time. Analysts were critical of this aspect of Nokia's reorganisation plan.
      "Transparency will decrease considerably, and that makes the analysis of the company more difficult", says Richard Windsor of Nomura Bank.
      However, the reorganisation was welcomed on the market. Nokia shares surged on the Helsinki Stock Exchange by more than two per cent at first, settling later in a rise of just under one per cent for the whole day.
      In telephones, the Multimedia and Enterprise Solutions units, established in 2004, will be shut down. The entire range of telephones will be led from a single unit led by Kai Öistämö.
      "Now we are in a situation in which all three units are producing smart phones, for instance. There may be some duplication of work there", says Lauri Rosendahl of Carnegie.
      Nokia needed the Multimedia Unit to establish a market for completely new kinds of developed telephones, which were marketed under their own brand - the N Series.
      Fulfilling the same task has been the unit, which produces enterprise telephones. The new enterprise models have apparently sold quite well.
     
The features of multimedia phones, such as e-mail, cameras, and music players, have gradually migrated into basic models as well. The same e-mail and other services are available both for many E-series models as well as for the N-series phones.
      Consequently, the division of the company into units has begun to appear artificial and unnecessary.
      Kallasvuo says that the aim of the whole upheaval is to achieve greater efficiency.
      On the other hand, the company's central management will get a stronger foothold on the company's business activities. The products of two business units will be packaged and marketed by the Markets unit. Mary McDowell, who currently heads the Enterprise Solutions Business Group, will take on the position of Chief Development Officer. Her task will be to coordinate cooperation between units, and to optimise the use of common resources.


Previously in HS International Edition:
  Olli-Pekka Kallasvuo wants to take Nokia into Internet business (30.1.2007)

Links:
  Nokia organizes for the converging marketplace (Nokia press release June 20, 2007)

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