Nokia: No diversification into enterprise networks

Nokia Corp. has no plans to diversify into end-to-end enterprise networking products -- or at least not yet, Chief Executive Officer Jorma Ollila told attendees at Gartner Inc.'s Symposium/ITxpo conference in Cannes.

While the company has looked at or is working on areas such as VOIP (voice over Internet Protocol) infrastructure or PBXs (private branch exchanges), Ollila does not feel it necessary to move into these fields yet, he said. Those additions will, perhaps, happen after 2005, he said in a keynote interview with Gartner analysts Wednesday.

If Nokia did move into new areas, it would likely be through partnerships. "We have never liked (acquisitions) very much, but that's not a religious stricture," he said.

"I don't think it's time to diversify, we feel well-placed without diversification," Ollila said.

Ollila also spoke of the significance of forthcoming 3G (third-generation) mobile services for enterprises; Nokia's reliance on its own products and handset software, and Microsoft Corp.'s foray into the market for mobile communications devices.

Users may be skeptical of 3G now, but by the end of next year there will be an interesting range of handsets on offer, and reasonable network coverage, he said. For enterprise users, the main benefit of 3G will be access to greater bandwidth than is available through current systems, he said. Because of 3G's wide-area capabilities, it will find a place in the market alongside public Wi-Fi access points, he said.

Nokia itself is evidence that enterprises benefit from mobile communications, he said. All staff now have a mobile phone, while Nokia has reduced the number of fixed lines it uses in Finland from 26,000 to 12,500. Across the company's 50,000 or so staff, about 23,000 of them use Nokia's Communicator, a clamshell-format device loaded with software applications and a full QWERTY keyboard.

"It's the corporate gadget. It's very useful, ... productivity-enhancing," he said. It provides a secure way of reading e-mail: We run the company on e-mail and a lot of personal contact," he said. For now, the Communicator only offers circuit-switched data access, but "higher bit rates will make it even better. There will be other versions in the future," he said.

When such an improved Communicator might reach the market, Ollila refused to say.

Ollila carries three or four phones when he travels, he said, changing them every two months in order to familiarize himself with the company's products. In addition to his Communicator, he carries a recently released 6600 in his pocket, but expects to trade that soon for an early-production model of the company's 7700 media device, he said.

One thing all those devices -- and other Nokia phones -- have in common is their reliance on the company's own software, in some cases running on top of operating system software from Symbian Ltd., a company in which Nokia owns a stake.

Gartner analyst Nick Jones wanted to know why Nokia is so single-minded, when other phone manufacturers offer smart phones based on several different operating systems. For example, Jones said, Samsung Electronics Co. Ltd. of Seoul is backing all horses in the market for data-capable phones, with models running operating systems from Microsoft, Symbian and PalmSource Inc., while Motorola Inc. is moving away from Symbian's software to produce phones running Microsoft's Windows Mobile software and also the open-source operating system Linux.

Nokia is not blinkered in its technology choices, and is always looking for the best way to satisfy customers' needs, Ollila said.

"This is not a religious affair," he said. "We have been flexible all along. We look at how to bring value to our customers, and to make a bit of money for shareholders in the meantime."

"The cost would be sky-high if we were trying to be all things to all people. It just wouldn't work, and customers would say, 'What is this, do you really want us to install all these different services?' " he said.

As for Microsoft's foray into the field of smart phones, Ollila said he welcomes the competition, but does not see the company as a threat. In any case, Nokia must continue to work with Microsoft in other areas as it has for the last four years, as users need office systems to work well with mobile devices.

"We will need both sides to make mobility happen," Ollila said.

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