Nokia Positions for New Challenges

Nokia did not have its best-ever third quarter this year, to say the least. Total mobile device volumes declined eight percent year over year, offset by a five percent sequential increase.

 

Compared to the industry overall, Nokia (News - Alert) said shipments dropped seven percent year over year, but were balanced by a seven percent sequential increase.

 

The lower device volumes year on year for Nokia and the industry obviously were driven by the negative impact of the deteriorated global economic conditions. But the sequential industry device volume increase primarily reflected an improved demand environment for mobile devices.

 

But some personnel and organizational moves Nokia has made point to its strategy for growth as the economy improves. It has made Rick Simonson, currently chief financial officer, head of the lower-end phone business. That suggests cost control is, and will be, the key discipline required to grow a business at the low end while maintaining profit margins.

 

Simonson also will head strategic sourcing, a more-important consideration now that Nokia reports shortages of key components that will stretch into 2010.

 

As Nokia has made a very-big bet on phones designed for emerging market customers, and is the market leader in that segment, the move makes sense.

 

A different priority is required the global smart phone business, where a new executive with brand marketing experience now will lead the smart phone business, a division that is separated from the lower-end phone unit.

 

Nokia has lost share at the high end of the market to rivals Apple and Research in Motion (News - Alert). So Nokia is splitting its phones business into three, including the Mobile Phones unit for cheaper models, smart phones for phones running on Symbian operating system and Mobile Computers for new top-end devices, like the N900, running on Linux software.

 

Jo Harlow would move from global marketing to a new position of smart phone business chief. Harlow joined Nokia's marketing unit in 2003 after a long career at Reebok and Procter and Gamble. The move suggests a heightened need for expertise boosting Nokia's sales of application products.

 

That likely is even more important as Nokia contemplates higher percentages of revenue coming from services rather than devices.

 

John Martin from rival Apple (News - Alert) will head up the new mobile computers business, pointing to the importance of experience as Nokia enters the PC business for the first time.