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  3. The story of Nokia’s transformation from an obscure Finnish conglomerate into the world’s largest maker of mobile phones is an o

The story of Nokia’s transformation from an obscure Finnish conglomerate into the world’s largest maker of mobile phones is an o

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问题     The story of Nokia’s transformation from an obscure Finnish conglomerate into the world’s largest maker of mobile phones is an object lesson in the virtue of specialisation. A sprawling business that once made everything from tyres to toilet paper to televisions, Nokia switched its focus to mobile phones in the 1990s under its visionary chief executive, Jorma Ollila. Under his leadership, the company overtook Motorola, its American rival, to become the world’s largest handset-maker—a position it has clung to ever since. As Mr. Ollila steps down on June 1st, however, he hands his successor, Olli-Pekka Kallasvuo, the difficult task of leading Nokia into new markets as the distinction between mobile phones and other consumer-electronics devices becomes increasingly blurred.
    Mr. Kallasvuo, a member of the tight-knit group that has run Nokia since the early 1990s, will inherit a company in excellent shape. Nokia has a renewed spring in its step, having recovered from a stumble in early 2004, when a lackluster product line-up caused its market share to drop below 30% for the first time in years. A pioneer in design, Nokia lost its edge when it failed to anticipate the popularity of slim "clam-shell" phones. It fought back, first by cutting prices and then by revamping its designs. Its market share is now at around 35%. The mood at the company is buoyant: in addition to the satisfaction of having bounced back so convincingly, Nokia’s strong financial performance meant big bonuses for many employees. "If you look at the portfolio, I think we have regained leadership," says Mr. Kallasvuo. "The foundation is there, so that we can concentrate on what is next." And what is that? As the leader in mobile phones, Nokia now has to take a broader view of the market, he believes. "Comparison with our own industry is not adequate any more," he says. "We need to look at this in a much wider way." The rise of the camera-phone means that Nokia now sells more cameras than anyone else does, for example, and advanced handsets often also include music-playing, video-recording and computing (including e-mail). Mr. Kallasvuo does not mention names, but his drift is clear: rather than just comparing itself with rival handset-makers such as Motorola or Samsung, Nokia now considers its competitors to be Apple, Sony, Canon and other consumer-electronics firms. "The convergence of internet and media content is happening in the way everyone predicted four or five years ago," he says. "We are more and more competing against other people, against new types of competitors. We are all converging."
    Nokia has responded by launching a range of advanced handsets, called the Nseries, which focus on specific features in addition to being phones. The N73 camera-phone, for example, is aimed at people who maintain photo blogs, and includes software for uploading images to Flickr, a popular image-sharing website. Similarly, the N91 phone doubles as an iPod-style music player with a built-in hard disk; the N92 is a mobile television; and the N93 is a video camera. Perhaps most surprising, however, is Nokia’s 770 Internet Tablet, a hand-held computer that does not contain a mobile phone at all. Instead, it supports web-browsing, e-mail and voice-over-internet calls (using Google Talk software) via short-range Wi-Fi technology. "It is the best possible illustration of convergence," says Mr. Kallasvuo. It also highlights Nokia’s willingness to step outside its usual market.
    That sounds a pretty ambitious expansion strategy. But Mr. Kallasvuo also wants more from traditional markets. Nokia may strive to emulate Apple with its most expensive phones, but the core of its business, with its efficient logistics and huge volumes, has more in common with Dell. (Of the 900 million mobile phones that will be sold this year, 320 million of them will be made by Nokia.) Around 70% of the industry’s growth this year will come in the developing economies, and Nokia’s cheapest handsets are doing well in China, India and Latin America. Some critics argue that Nokia ought to focus solely on high-margin products such as the Nseries, but Mr. Kallasvuo disagrees. "With our volumes, our economies of scale, we want to be in all of these markets," he says. Even Nokia’s cheapest handsets are profitable, he points out. And if your first handset is a Nokia, you are more likely to stay with the brand when moving upmarket—"so being strong at the low end has strategic importance."
    One market in which Nokia could plainly do better is North America. It has been weak mere, because many networks use a different wireless standard (called CDMA) rather than the GSM technology used in Europe. Nokia has devoted a lot of effort to raising its profile in North America in the past two years and has recently formed a joint venture with Sanyo of Japan to produce fancy CDMA handsets. Tellingly, Mr. Kallsvuo plans to spend one week a month in America, which is important not just as a big market but also because it is where trendsetting products, such as Apple’s iPod, often appear first.
    The breadth of Mr. Kallasvuo’s ambition—more convergence, more China, more America, more everything—looks potentially overwhelming, particularly as Nokia moves into a new and fiercely competitive market—consumer electronics. Managing the complexity of converged devices is difficult, Mr. Kallasvuo concedes, but it also provides scope for differentiation, "and overall that’s an opportunity." Another danger is that Nokia may alienate wireless operators, its main customers, by helping consumers get round their proprietary networks and instead supporting open, internet-based services such as Google Talk in its devices. But the rise of Internet standards means the industry’s old rules no longer apply. "We will need to be agnostic enough to make pragmatic decisions," says Mr. Kallasvuo. "Natural evolution is happening in the marketplace, and we need to act accordingly."
What do you know about Nokia’s plan in North American market?
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答案Because of the different wireless standard popular in North America, Nokia has to make itself more accessible by venturing for CDMA cell phones. Nokia has to put emphasis there also because most fashionable products start there first.
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