Nokia Streamlines Structure

Nokia Corp. (NYSE: NOK) announced a major reorganization today, streamlining its corporate structure into three new business units. The world's top handset vendor looks for growth in emerging markets and the mobile Internet. (See Nokia Reorganizes.)

From the beginning of next year, the new Nokia structure will comprise three business units: devices, services and software, and markets. Nokia will also create a chief development office to support integration across these business units.

Nokia's mobile device business accounted for 57 percent of revenues in the first quarter of this year. Nokia reported first quarter revenues of €9.856 billion (US$13.2 billion), of which €5.583 billion ($7.5 billion) came from mobile phones. The Finnish company recently stated that it expected to increase its global device market share in the second quarter from its estimated 36 percent in the first quarter of this year. (See Nokia Updates Outlook, Handset Cavalcade, Nokia Reports 1Q07, and Nokia's Mixed Call.)

In the new devices unit, Nokia says the opportunities for growth are in emerging markets, multimedia devices, and enterprise-featured phones. In the U.S., in particular, Nokia has much ground to make up in the enterprise space. (See Nokia's US Enterprise Headache.)

"We want to tackle all the segments of any phone market," says a spokeswoman. "If you're strong overall, you have magnificent scale benefits."

The new services and software unit will comprise Nokia's consumer Internet services and enterprise solutions and software. Nokia is also on the lookout for acquisitions in this area, particularly Internet services. (See Nokia Invests in Kyte.tv and The Content Conundrum.)

"We will see some small acquisitions in this area," says the Nokia spokeswoman. "We can buy [Internet] competency that can be brought into the mobile space. The whole mobile Internet is in its early phase... And it's a great opportunity for us to build revenue and new services."

All of Nokia's manufacturing, logistics, marketing, and sales activities will be housed in the new markets division, explains the spokeswoman.

Nokia is also changing its financial reporting structure. From the beginning of next year, the company will report results from two business segments: devices and services, and Nokia Networks , which is the network infrastructure joint venture 50 percent owned by Nokia. (See Nokia Siemens Debuts at CTIA and Nokia's Network Margins Take a Hit.)

Kai Öistämö, head of the mobile phone business group, will lead the new devices unit. Niklas Savander, who runs the technology platforms group, will move to head up the services and software unit. And Anssi Vanioki, head of the multimedia business group, will move to lead the new markets unit. Mary McDowell, head of the enterprise solutions business, will take on the chief development officer position.

— Michelle Donegan, European Editor, Unstrung

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