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 Its stock price has taken a hit in the last year, but Nokia under Ollila’s leadership remains far and away the number one handset maker in the world. And while some have turned skeptical about the promise of mobile data, Nokia is forging ahead. In late September it began shipping the first of its next-generation phones, based on the GPRS standard.
These phones will give consumers a taste of what always-on Internet connectivity can offer. But the fundamental transformation in the industry will come through a combination of several additional evolving technologies: WAP/XHTML, Java and Multimedia Messaging Service (MMS).
Within 12 months Nokia will introduce an array of mobile phones, including new product concepts, based on these technologies. Ollila doesn’t see surfing the Web or playing games as killer phone applications. Instead he believes the real revenues will come from person-to-person communications — such as multimedia messaging, enhanced e-mail that includes data and pictures.
Multimedia messaging is expected to follow the phenomenal success of short text messaging (SMS). An estimated 200 billion sms messages will be transmitted over GSM networks this year. Nokia will start delivering multimedia messaging in its products during the first half of 2002.
The Finnish phone maker is concentrating on developing the software, known as middleware, that will enable this type of enriched content to be delivered to consumers and businesses. Though its competitor in this realm is Microsoft, Ollila is confident Nokia is better positioned to know what mobile users want. Nokia’s first 3G mobile terminals — phones with high-speed Internet connections — are expected to start shipping in the third quarter of next year.
As for telecommunications infrastructure, Nokia has recently managed to capture a greater percentage of the business. But a variety of factors — including the huge debt that operators have taken on to pay for 3G licenses — are leading to a slowdown in the construction of the base stations, switches and systems that will make the next generation of mobile phones work. Analysts at Credit Suisse First Boston think the global infrastructure market is not likely to recover until well into 2002. That means continued slower growth and margin pressure for Nokia.
The Vision Thing: "We will become a software company in the future in many respects."
Forward Spin: Nokia is clearly feeling the impact of the worldwide economic slowdown. But if Ollila is right, wireless and broadband will be the drivers that will restore growth to the tech industry.
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