Nokia's CEO Outlines Vision for the Future
Published on: 23rd April 2009
Today at its Annual General Meeting, Nokia President and CEO, Olli-Pekka Kallasvuo outlined the company's future strategy. "Nokia is fundamentally changing its business model to transform both the company and the industry. While we continue to compete with the traditional mobile device manufacturers, we also are dealing with new competitors entering the market from the PC and Internet industries," he said.
"To succeed in this new environment, we need to offer consumers irresistible solutions that improve their lives. During 2008, we have taken many steps to ensure we maintain our strong leading position in the device business, while increasing our focus on solutions-centric business models. We have focused our services investments on five primary categories: maps, music, messaging, media and games. These are the areas where the biggest opportunities lie."
Mr. Kallasvuo said the company believes that Nokia's strategy of combining unique services with high- quality devices will increase customer retention and add value. He said that more consumers are not only choosing Nokia, but are also remaining as Nokia customers.
"Our estimated consumer retention rate of around 55 percent is almost twice the rate of our global competitors," Kallasvuo said, and he noted that Nokia customer retention has consistently increased every quarter since the beginning of 2007. "This is a substantial achievement and shows we have made significant progress with our solutions approach during the past year."
During the address, Mr. Kallasvuo also highlighted the Nokia 5800 Xpress Music devices as a great success: "Consumer response has been well beyond expectations, and it has the potential to become our most successful device ever. We estimate that this smartphone alone accounts for around 20 per cent of all touch screen devices sold worldwide. It offers unique value for those who want to experience their music on the move, particularly when combined with our innovative Comes With Music service."
Mr. Kallasvuo went on to emphasize that Nokia sees further opportunities as consumers trade down to less expensive devices, particularly in a time of recession. "The Symbian operating system is the world's most widely used software platform for advanced mobile phones." According to Mr. Kallasvuo, with the help of Symbian, Nokia plans to broaden the definition of the smartphone, by expanding smartphone features into the mid-range, and into new product categories.
"We believe that mobile computing should not be limited only to expensive, high-end devices. Expanding Symbian into lower price points is the right thing to do. We see this as a tremendous opportunity to increase efficiency, to get more scale for Symbian, and gain market share."
He also said that success in the changing business environment would require courage and a shift away from the conventional: "We cannot expect to do it all alone. We have to work together with certain competitors, new players and partners in new ways. We have to compete and co-operate. We are working more closely with many other companies, including operators and partners. We expect more such partnerships to come."
Mr. Kallasvuo told the audience that Nokia has been continually adapting to a changing environment and would continue this approach. "We are scaling our operations accordingly and making sensible but fundamental changes in the way we work. The results of our cost-savings program are not giving us one-off savings for the short term; these are long-term changes with long-term savings."
"Innovation in the mobile communications industry is certainly not standing still. It is very clear we have to continue to invest in our future, but at a more appropriate pace. Given the current climate, we have to balance what is beneficial and sustainable for Nokia's long-term future, while adjusting the speed at which we operate."
Even though the global device market will contract this year for the first time in many years, there is reason for optimism according to Mr. Kallasvuo: "There is a lot of opportunity for the taking in our industry. Mobile devices are becoming true mobile computers and consumers increasingly are more willing to use them in new ways with new services. "