Nokia: The start of the next phase

Jorma Ollila is to step down as CEO of Nokia next June, although he will remain as non-executive chairman. He will also become chairman of oil giant Royal Dutch Shell.
Olli-Pekka Kallasvuo, formerly chief financial officer at Nokia and currently head of the Mobile Phones unit, will become Nokia’s CEO. Ollila is widely credited with some of Nokia’s most successful key strategies and is not expected to make any major changes, though he will have to face the challenge of a resurgent Motorola.

Both companies are looking for brand domination in the consumer space, the kind of position that Apple can claim with the iPod or Sony with a range of consumer electronics. Motorola and Nokia can both put a lot of cash in the bank thanks to their deals with networks, but increasingly their handsets are looking like the kind of lifestyle statements that build consumer brands.

Under Ollila’s leadership, Nokia leapfrogged Motorola in the late 1990s partly because Nokia was able to spot the trend towards the mobile phone as a lifestyle item. So it designed phones that were easy to use and looked good too.

Which is why it’s a bit surprising that Nokia is now running way behind Motorola in the style stakes. Crucially, the Finnish trendspotters failed to anticipate the demand for clamshell phones: Motorola and the Korean makers now own that style of handset.

And of course Motorola really stole a march with the elegant and skinny RAZR. This is obviously the stylistic direction for most of Motorola’s forthcoming devices – not just the slimline Q smartphone (see page 54) and the imminent PEBL and SLVR handsets, but also higher-end devices like the planned dual-mode WiFi/GSM devices.

Nokia has yet to have the same impact design-wise. Its brand scores in the top 10 for value on Interbrand’s annual Top 100 list – no 6 this year, while Motorola was at  73 – but on the whole its handsets are regarded as workhorses rather thoroughbreds.

The N series may be packed with capability, but they have been brushed with the ugly stick. The 7280 is so self-consciously funky that it shouts “I am a weirdo” rather than “I am supercool”. And the one genuine style statement from Nokia’s studios, the highly desirable stainless-steel 8800, costs between £150 and £300 on contract: the RAZR V3 is usually free.

These two could well be the basis of a whole generation of competing handsets over the next few years. Nokia has the infrastructure in place – the deals with networks, the massive production efficiencies, the smooth-running supply chain (though the delays to the N90 suggest a hiccup or two is still possible), Motorola has the American drive, a good-sized home market, and the chance to leverage its end-to-end comms technologies.

The contest for the consumers’ hearts and minds should be an interesting one.