John Paczkowski

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D7 Interview: Olli-Pekka Kallasvuo and the Nokia N97

Olli-Pekka Kallasvuo of Nokia

With a roughly 36 percent market share, Nokia is the world’s largest mobile phone maker. A hard won and enviable position, but a tough one to maintain, especially in a souring economy. More so now with innovative new rivals like Apple emerging in the sector the company has long dominated. But that’s the situation that CEO Olli-Pekka Kallasvuo faces today.

The deteriorating mobile phone market is weighing heavily on Nokia (NOK). In January, the company warned that world-wide sales in ’09 are likely to fall 10 percent year-to-year. As Kallasvuo put it at the time, “the macro environment is challenging and, we believe, will remain so in 2009.” More challenging for Nokia, than for rivals Apple (AAPL) and Research in Motion (RIMM), which both gained market share at the company’s expense in the first quarter. Driving their success: Touchscreen phones and app stores, features Nokia has been late and lame to market with. Consider the embarrassing launch this past Monday of its Ovi Store, the company’s challenge to Apple’s App store. Clearly, lots to talk about this session….

Highlights Video

Live Blog

  • Shifting gears quickly from the Plastic Logic demo, Walt welcomes Kallasvuo to the stage. First question: You have what share of the world mobile phone market? 35 to 40 percent, replies Kallasvuo.
  • Walt: And the devices all these people are using range from low-end devices to devices like the ones Mike Lazaridis was just talking about? Kallasvuo agrees, and notes that he prefers to call the higher-end devices to which Walt refers “mini-computers.”
  • Walt: Who are your main rivals? “Three years ago,” says Kallasvuo, “I would not have hesitated to say Motorola.” Obviously, he won’t be saying Motorola (MOT) today. Kallasvuo rattles off a list that includes Google (GOOG), Microsoft (MSFT), Apple (AAPL) and Samsung. “You can compete with some of them some of the time, but not all of the time. So you must partner,” says Kallasvuo, adding that Nokia (NOK) works with Microsoft on email.
  • “The cellphone industry is becoming a consumercentric solutions business,” says Kallasvuo. “We are roadmapping now on the basis of solutions and not devices….We are going through a major transformation here and all our operations are being aligned with this change.” A lot of learning must be done there, but there’s also lots of opportunity.
  • Talking now about the Symbian OS. Why did Nokia open-source it? Kallasvuo: “We bought it to give it away. And it made Symbian better and faster.” Symbian, says Kallasvuo, is the only mobile OS today that is both open and mature. That’s an advantage when you’re competing against the likes of Apple and Google. If that’s true, asks Walt, why do you have these other operating systems? Kallasvuo admits that Nokia has three mobile OS’s, but says this is necessary to address different sections of the market.”
  • Walt: Did you bring a new phone for us to look at? Kallasvuo says yes. He’s brought Nokia’s N97 handheld computer. Walt asks about price and carrier. Kallasvuo: It will initially come to the open channel and will be priced at $699.
  • Nokia’s Davis Fields joins Walt and Kallasvuo onstage to demo the device. This is the best handheld Nokia’s ever made, he says. He runs through the specs, which are all impressive: Carl Zeiss lens, etc. Boasts a touchscreen. He moves quickly to the OS, which uses GPS to make the devices runtime applications location-aware. Example: The device’s weather app reveals the current weather in San Diego, the location of this conference. Apps will be available through the OVi store. Core photo application supports MMS and has built-in Twitter, Facebook, and Flickr support. Quick demo of the device’s music features. MP3 player, FM radio, music store, stereo speaker support, built-in FM transmitter, Bluetooth streaming. Everything but the kitchen sink in this thing apparently. Text-to-speech AND speech-to-text available in the email application. 3-D maps and turn-by-turn mapping (thanks to Nokia’s ownership of NavTec).
  • Moving on now to the Ovi store, Nokia’s location-aware app store, which launched somewhat problematically earlier this week. Walt asks about those problems and Kallasvuo quickly jumps in to note that they’ve been resolved. “High traffic,” he says. Going over the device’s form factor now, Fields pops open its keyboard. Pulls up AllThingsD on its browser, noting that it browses “the real Internet.” Unlike Safari on the iPhone, it supports Flash. What about video? (This shouted out from the audience.) You can record video and submit it to YouTube, you can download movies from Amazon (AMZN) Unbox. Video chat also supported. Battery life (also shouted from audience). “This holds up very well for all the things you can do with it. It holds up until the end of the day.”
  • Walt’s first review of the N97: “That was pretty cool.” Kallasvuo: “I think so too.”
  • OK, says Walt. you’ve got this device that looks competitive with the iPhone, but you don’t have a carrier partner in the U.S. What is your problem here? Kallasvuo: “I’ve been working on this one for a long time. A few years ago we began making devices specific to this market.” Nokia’s hope is that these efforts will be recognized and their products and services will be embraced by the local carriers. Kallasvuo recalls AT&T (T) CEO Randall Stephenson’s remark earlier this morning about network quality and device being top consumer concerns. He believes Nokia is in prime position to cater to the latter.
  • But Randall and AT&T aren’t carrying this phone. Kallasvuo says the issue here is simple: The device isn’t CDMA. “But I’m working on Randall.”
  • On to the Q&A: Could you talk more about your strategy around location? Kallasvuo says location is very important. The company is working to develop more location-based solutions for people. “The phone knows where you are. It might know where you’re going or what you’re going to do.” He says Nokia is looking forward to social location.
  • How do you see WiFi and 3G coming together to resolve any potential network bottlenecks in the future? Is there a smooth way to offload traffic from 3G to WiFi? Kallasvuo says the technology is there, but ultimately this will be a carrier solution.
  • The final question references the Eve Ensler session and the issue of rape-free phones. Unlike RIM’s Lazaridis, who preceded him, Kallasvuo seems quite knowledgeable about the issue. “We’ve been working on this issue in the Congo since 2001….We are doing everything we can to ensure that we do not use the coltan from the mines in the Congo.” He says Nokia has turned to other suppliers in Australia.
  • End of Q&A

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

Olli-Pekka Kallasvuo Session Photos

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Olli-Pekka Kallasvuo, CEO of Nokia.


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