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Nokia CEO Talks about Next-Generation Mobile Technology
March 6, 2001
STANFORD GRADUATE SCHOOL OF BUSINESS—Nokia chief executive Jorma Ollila says he doesn't lie awake at night thinking of how the world's leading mobile phone manufacturer will maintain its market share. Dominating his waking hours is how the Helsinki-based company will renew itself and build on the technological successes achieved in the past decade in order to forge next-generation wireless products.
Ollila, chairman and CEO of Nokia since 1999, spoke to Stanford Business School students about some of the products that will hit United States' markets in the next two years and how the convergence of telecommunications and information will change consumer electronics.
"The key challenge of technology companies today is how we renew ourselves," Ollila said. "The technological cycles are shorter. We must build on our discontinuities and turn them into our favor."
In 1998 Nokia passed Motorola to become the world's leading maker of mobile phones. In 1999 it had a market share of 27 percent (with Motorola at 17 percent, according to Dataquest). Today about one of every three mobile phones is made by Nokia, double its nearest competitor. The number of phones shipped is approaching 1 million a day.
As the number of cell phones sold worldwide rockets toward 500 million, Nokia, like the rest of the mobile industry, is sailing into unchartered waters. It must move its customers into multimedia wireless data, known as Third Generation (3G), entailing spending hundreds of billions of dollars on new base stations, phones and wireless licenses.
"3G handsets will be affected by the number of types of software embedded in the devices," Ollila said, such as gaming, music, streaming video, payment systems and location-based services. "The way in which software is changing what used to be a simple product will change the industry significantly."
With mobile communication moving from simple voice to having a combined camera, computer and, stereo in your phone, "3G is about people communicating person-to-person in a richer way," he said. "The No. 1 application will be multimedia messaging."
Ollila predicted that while 3G communication networks will be up and running next year, it will take time for the applications "to work their way through but I'm confident it will happen."
Nokia plans to introduce several products in the United States within the next two years, including an imaging phone equipped with a digital camera and a "media-rich" phone. It also plans "the communicator," a device about one-third the size of a laptop computer designed for email and accessing the Internet.
Nokia hasn't partnered with many companies, preferring to build from within. Ollila acknowledged that could change in the future and the company could acquire technology partners that complement its infrastructure.
Ollila, 50, has degrees in engineering and political science from the University of Helsinki and economics from the London School of Economics. He began his career in 1981 with Citibank in London and moved to Nokia in 1985. In 1990, he was named president of Nokia's then unprofitable mobile phone division. In 2000, mobile phone sales accounted for 72 percent of revenue.
The speech was part of the View from the Top series that brings leaders from a variety of industries to campus to discuss their management philosophies.
—Joyce Routson
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