The understated approach of its top executive has made Nokia the leading mobile-phone manufacturer for the past decade.
Amid Silicon Valley’s obsessive interest in Apple’s iPhones and Google’s Android phones, along with de rigueur ownership of at least one Research In Motion BlackBerry device, it’s easy to forget about the quiet Finnish giant that dominates not just the sale of smartphones but the sale of all mobile devices worldwide.
Last year, Nokia rang up $74 billion in sales and counted operating profit of more than $12 billion. Its customers number about 1 billion, or one in every six people on the planet.
But when Chief Executive Olli-Pekka Kallasvuo recently dropped in at the Nokia Research Center in Palo Alto, Calif., he did so without any fanfare.
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Aside from the occasional stray news photographer, there was no sign that a major world business leader was on the premises.
Like the global company he guides, Kallasvuo is decidedly low-key.
The mild-mannered, understated approach has made Nokia the leading mobile-phone manufacturer for the past decade.
In an interview, Kallasvuo talked about the threats posed by new competitors, the future of the industry and what he is looking for in Silicon Valley.
The following is an edited transcript of that conversation.
Q: They do say nothing fails like success. Are you concerned about all the competition you face? During the past year, devices like the so-called Gphone from Google, as well as new versions of devices from Apple and Research In Motion, have all made headlines.
A: I think if you look at the new industry that is happening here, there is so much possibility and so much challenge. I think it is a challenge to everyone. … We are not complacent and we are not on the defensive.
Q: Nokia is the global giant, but you lost share in North America at the beginning of the year. The numbers went down from 20 to 7 percent. What’s going on?
A: The math is quite simple. We decided in 2006 to change our business model in what is called CDMA technology. Verizon is the biggest player in the U.S. We decided to ramp down one business model and ramp up a new one, meaning that we completely did stop that business. Fifty percent of the market is CDMA.
Q: What new model are you ramping up?
A: We are not doing our own manufacturing and we are not doing our own research and development in CDMA technology at all. The first phone that is the outcome of the new model started to sell at Verizon at the end of June of this year. [Nokia 6205, the Dark Knight Edition.] The overall target is to make progress in the United States step by step.
Q: One of the ways Nokia became a global giant is though great design. What do you think of the iPhone’s design?
A: It’s a very good design.
Q: Is it enough to turn Apple into a new Nokia?
A: If you look at the global mobile-devices market, it’s very big, it’s very versatile. The consumers are many. You need to have 40-plus devices out there at any given point in time. You look at the different consumer segments, the different markets, the different price points and the thinking that we need to tackle every part of the market — as opposed to one or two segments only — has, of course, led us to high market share.
If I look at the competition, they are either smaller or in a niche. Our strategy is to go for all relevant markets. One size will not fit all for mobile communications.
Q: How do you see Microsoft as a competitor?
A: Microsoft is, of course, not in the devices business. Their Windows operating system is competing in the smartphones space with us. We are supporting Symbian. It’s competition here between ecosystems.
Symbian is open and mature. It has about 60 percent of the smartphone operating system this year. Every other operating system is smaller. In that way, Symbian is by far the biggest operating system. What we are doing is we are buying Symbian and releasing its code as open source.
Q: What’s interesting to you in Silicon Valley?
A: I think it is noteworthy to remember that mobility was not led by the U.S. It started happening elsewhere. I was based here in the 1990s and the U.S. was definitely not the leader in global communications.
Now the U.S. and definitely Silicon Valley has been the leader in the Internet. That is something that did happen here.
Now mobility and the Internet are converging. It is clear that we must be very much on top of that development. We need to understand the Internet and we need to understand the business models and be active in those.
We need to be leading also in those, hence, of course, the valley and what is happening here. What is the direction? What is the vision? It’s extremely important to us. We cannot manage this from Europe only.
Q: People have been talking about the coming age of mobile computing for a long time. Has it finally arrived?
A: If you think about what has happened in mobile in the last 15 years or so, something that started as a communications device has become a multipurpose device. This industry is not just a cellphone industry — it is something more. It is the convergent digital industry.
Q: Is the PC morphing into the mobile phone?
A: I think that is definitely the direction we are seeing here as well, as the processing power, as the memory capabilities of the device will continue to increase.
The mobile-telephone industry has captured value from adjacent industries like cameras, like music players, like navigation devices. And in that way, the mobile device has become a multipurpose device. But I don’t think the progress is stopping here. I’m sure the PC and the phone will at some point in time meet.
Q: You’ve been very successful in emerging markets. What is the key to your success?
A: I don’t differentiate developing markets from other markets. The basic rules of competition are the same. You need the scale, you need the design, you need the price point, you need the consumer understanding. Our strategy is to go full speed in every market and not to say that this market is more important than that one.