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Nokia redesigns to become more efficient, leverage growth areas

Nokia redesigns to become more efficient, leverage growth areas
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First Published: Thu, Jun 21 2007. 01 00 AM IST
Updated: Thu, Jun 21 2007. 01 00 AM IST
The world’s biggest mobile handset manufacturer, Nokia, announced a reorganization on Wednesday aimed at taking advantage of future growth areas and increasing its efficiency.
The Finnish company will divide into three units—Devices, Services & Software and Markets—a move analysts said should improve its product line-up and remove some internal rivalry.
The units will replace its current divisions of Mobile Phones, producing its cheapest models, Enterprise Solutions, which has products for the business market, and Multimedia, which makes cellphones with advanced cameras and music players.
Nokia said the new organization, effective 1 January, would help it manage its product line-up more effectively, speed up the time it takes to get new models to market and boost its efficiency in marketing and developing products.
Analysts said the new structure removed somewhat artificial barriers which had led to some duplication as well as competition over resources.
“It should help them achieve a smoother (product) line-up and better focus on what is offered, particularly in smartphones, in the different divisions,” said Lauri Rosendahl, analyst at Carnegie in Helsinki.
“They should also get some synergies from putting together the three business divisions. Definitely I think they will have cost benefits from the research and development side.”
Nokia will also restructure its financial reporting into two segments, Devices & Services and Nokia Siemens Networks, its infrastructure joint venture with Germany’s Siemens.
Chief executive, Olli-Pekka Kallasvuo, said the new structure could help Nokia take advantage of new trends in mobile devices, consumer Internet services and business applications, and boost the effectiveness of investments and operational efficiency.
The company gave no information on expectations of any cost-savings that might result from the changes.
The Devices unit will be headed by Kai Oistamo, who currently heads Mobile Phones. Services & Software will be led by Niklas Savander, who heads Technology Platforms at present; Markets will be headed by Anssi Vanjoki, currently chief at Multimedia.
Mary McDowell, who heads its Enterprise Solutions division, will become chief development officer.
Jussi Hyoty, FIM Securities analyst in Helsinki, said the move should be positive for mobile telecoms operators and consumers, and showed Nokia’s shift to emphasize services as well as the phone itself.
“They have been adding music services and navigation services and so on, and there will be other services coming along,” Hyoty said.
“It should improve their internal efficiency and give new opportunities moving more into the services world, where naturally software is very important.”
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First Published: Thu, Jun 21 2007. 01 00 AM IST
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