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Sector shake-up forces Nokia to change tack

(China Daily)
Updated: 2008-09-02 10:28

As the world's largest mobile phone maker, Nokia has enjoyed an approximate 40 percent share of the global market. In China, the company has also gained unparalleled success by outselling its international peers as well as hundreds of Chinese players. That has helped China to become Nokia's largest single market since 2005.

However, as new competitors such as Apple Inc and Google Inc enter the market, Nokia's dominant position has been seriously challenged. In response, the company last year announced that it would turn itself into an Internet company and launched an online platform called Ovi, in an effort to secure revenue outside of its handset manufacturing business where profit margins have been declining. On the eve of Nokia's transition, Olli-Pekka Kallasvuo, chief executive of the company, came to China and shared his views with China Daily reporter Wang Xing about Nokia's new strategy in the world's largest Internet and mobile phone market.

Q: We all know that China launched its telecoms restructuring scheme just a couple of months ago. What is the outlook for Nokia China after this restructuring?

A: China is our most important market overall. What is happening through restructuring will add new dynamism and excitement in the industry. A lot of things will continue to happen in mobile phone communication, and they will be supported by the restructuring and the steps that the government has taken here. We of course welcome the action. It will lead to more action in the marketplace.

Q: We know that Nokia is already the market leader in China with its market share close to 40 percent. What's your next goal in the country?

A: This is applicable to all the markets we are in. We feel market share is important. It gives you scale, it gives you the opportunity to invest more in R&D, brand and marketing. In China, with regards to the markets, our targets remain high. We are working to grow even further, that is the target. We are not limited to where we are when it comes to targets. If you look at the brand recognition, distribution network in China and the scope of the portfolio that we are offering here - yes, we are by far the market leader in this market.

Q: In recent years Apple and Google have made a lot of changes and are challenging the mobile industry. What are your comments on this new environment?

A: It is interesting that there is so much change in our industry. In fact, one really needs to define what the industry is, it's very clear that many industries here are converging, or even sometimes colliding. This means that interfaces come together; there are many more possibilities, much more excitement. You cannot talk about mobile telephones as an industry; it's much more than that. It's about communications overall, it's a combination of mobility and the internet.

Q: What do you think is the key factor for companies such as Nokia to be successful in this new market environment?

A: I think it is the ability to manage the complexity here, to invest in research and development, the fact that we continue to have one of the strongest brands in the world, at the end of the day we are talking to the consumer. At the end of the day, a strong brand that is trusted a lot will help you a lot. That is something we definitely feel that we have.

Q: You said that Nokia is going to become more of a service provider. What kind of role will China play in this transition?

A: Like many other markets, China is very specific in nature. There are things in the Chinese market that are different from the rest of the world. As always, we need to base our strategies on the local circumstances, that is what we are going to do in China as well. It's very clear we need to use local partnerships, and local thinking, in the right possible way in China. I think partnerships in China are very important overall.

Q: Apple's iPhone may come to China in the near future. Apple has me.com, Nokia has Ovi.com. What is the difference between them?

A: Ovi is a brand with a wide service offering. When it comes to the scope of Ovi and the thinking there, I don't think there is anything comparable to that in this scope. This is well illustrated by the fact that we have invested in that area much more through two acquisitions, and R&D work. I don't think we can be compared to any competitor from the mobile services point of view. The strategy is to offer different types of services under the Ovi brand that have the same ease of use and relevance, the same type of user interface, and something that competes with a wide range of facilities.