Friday, May 14, 2010

Nokia Goes ‘Back to the Future’ in Attempt to Topple iPhone

Bloomberg / Business Week

Nokia Oyj has chosen Anssi Vanjoki, an outspoken executive who produced its last hit smartphone three years ago, to bring back the buzz.

Vanjoki, a 20-year company veteran named yesterday to take over a new smartphone unit, launched the N95 model in March 2007. That was eclipsed three months later by Apple Inc.’s iPhone. Espoo, Finland-based Nokia, the world’s largest handset maker, still hasn’t developed a phone with the same cachet.

The N95, Nokia’s first handset with GPS, sold more than 10 million units and helped boost the operating margin in devices to more than 21 percent. Since then, Apple and Research in Motion Ltd. have eaten away at Nokia’s customers and profits, driving down the margin to 12.1 percent in the first quarter.

“It’s a bit back to the future,” said Carolina Milanesi, a research director at Gartner Inc. in Egham, England. “The biggest challenge is that he doesn’t have much time, as Nokia needs to deliver.”

Shares in Nokia have lost 22 percent in the three weeks since the company reported first-quarter earnings that missed analyst estimates. Nokia slashed prices for smartphones in the period to compete with the iPhone and RIM’s BlackBerry.

Vanjoki’s first answer to the iPhone was a line of music phones in August 2007. At the announcement, he said, “If there is something good in the world, we copy with pride.” Apple has since cited that comment in an ongoing U.S. legal battle between the companies over patents used in their smartphones, with each side accusing the other of stealing their technologies.

Latest Salvo

Nokia last week filed a patent-infringement lawsuit against Apple in its latest salvo over the iPhone and iPad. The suit, the fifth patent complaint between the two companies in the past year over smartphone technology, broadens the fight to include Apple’s iPad touch-screen computer tablet.

One of two remaining members of former chief executive officer Jorma Ollila’s so-called “Dream Team” from the 1990s along with current CEO Olli-Pekka Kallasvuo, 53-year-old Vanjoki will have to defend Nokia’s position from increasing competition on all fronts, analysts said.

The company has not only lost momentum in touchscreen phones to Apple and in Qwerty-keyboard business phones to RIM, it’s also being challenged by Samsung Electronics Co., HTC Corp. and LG Electronics Inc., which have revamped their lines with Google Inc.’s Android operating system.

“The stakes couldn’t be higher,” said Tero Kuittinen, an analyst at Greenwich, Connecticut-based MKM Partners. “The iPhone is a luxury juggernaut that can no longer be defeated, but Nokia still has a shot at snuffing out the challenge of its Asian midrange rivals.”

Marketing Strategy

Nokia hired Vanjoki in 1991 from St. Paul, Minnesota-based 3M Co. to develop a mobile-phone marketing strategy and the global brand. He started running the multimedia unit in 2004, and shipped the N95 three years later in March 2007.

Vanjoki shifted back to marketing a few months later, after the phone units were merged into one devices division and Kai Oistamo was put in charge. Vanjoki will now once again head a separate smartphone business, while Mary McDowell will run the low-end phones. Oistamo will take McDowell’s position as head of corporate development.

Vanjoki is known for speaking his mind in a company that tends to take a more low-key approach. In February, he criticized the N97, a combination touchscreen and keyboard phone that was supposed to help Nokia take back high-end smartphones, in a video interview with the All About Symbian blog.

“The N97 has been a tremendous success for us when it comes to how many did we ship and how much money did we collect,” he said. “But it has been a tremendous disappointment in terms of the experience quality for the consumers, something we did not anticipate.”

Speeding Harley

A graduate of Finland’s biggest business school, Vanjoki is also chairman of Amer Sports Oyj, the Finnish sports equipment company that owns the Salomon and Wilson brands. He made the Finnish press in 2002 after police tried to fine him more than $100,000 for speeding through town on his Harley-Davidson.

Vanjoki’s first test in the new job will be later this year when Nokia rolls out the N8, a slim touchscreen with a revamp of its Symbian software system to make it more finger-friendly. The phone will come with free access to television content, maps and navigation.

“Anssi’s going to have the ultimate responsibility to be the poster child for these new products,” said Ben Wood, a London-based analyst at CCS Insight. “It’s a big bet and the first step of a long journey back. If these people don’t succeed, they will be doing something different in three years.”

With assistance from Susan Decker in Washington, D.C.