Nokia and Intel believe recovery will rely on new services
Published: 20 July, 2009
While Intel's results announcement last week gave the technology sector a big boost, Nokia's outlook was more cautious. But senior executives had a similar message - the market has bottomed out, but recovery will only follow for companies that invest in brand new services and the platforms to support them. Nokia CEO Olli-Pekka Kallasvuo reiterated his favorite themes about transforming the Finnish giant into a web services player, targeting 300m users of its applications by 2013. And Anand Chandrasekher, general manager of Intel's Ultra Mobility Group, told the Semicon West conference that, while the outlook for the silicon trade remains tough, the future lies in new applications for electronics which will drive usage of chips.
Chandrasekher argued that the greatest innovations emerge during downturns when "money is tight and anxiety is high", because companies want a big return on any R&D and process investment. He reminded the audience that the cellphone was conceived during the mid-1970s recession and the iPod and Intel's own Centrino wireless platform in 2002. This time, innovations will be geared to achieving one billion mobile connected devices by 2015, though he was sticking firmly with variations on the notebook PC, amid all the predictions by Intel rivals of more radical new form factors emerging. "Mobile internet growth is happening, but it's happening on a laptop computer," Chandrasekher said with high optimism for Intel's heartland market.
Back at Nokia, where there are very different views of what the chief mobile platform will look like in 2015, Kallasvuo said Nokia will kickstart a new growth cycle by incorporating more and more applications and services in its phones, with the key ones, in the short term and in developing markets, being navigation and messaging. Many of its targeted 300m web services users will come from emerging markets, where Nokia CFO Rick Simonson argued that the handset giant will have its main advantage over more specialized rivals like Apple and Sony Ericsson - also talking up leadership in navigation (via the Navteq purchase).
"We are confident we are going to be a winner in the solutions space," Kallasvuo told the London Financial Times, pointing to deals with Navteq, Loudeye, Twango, Enpocket and Plazes as proof of its huge seriousness about the services market.
Nokia needs to convince the markets of its new strategy, even though tangible results will be slow to appear - this is a long term and highly complex play. The analysts who show the most negativity about it are those who find it hard to look beyond the iPhone/smartphone space, where Nokia currently has several products but nothing with the impact of its competitors' high profile devices. Jeffries and Co analyst Lee Simpson went as far as to tell Forbes that this factor made Q309 a "Motorola moment" for Nokia. The Finn certainly has major challenges, but maintaining 38% market share - when the rivals most US analyst cite most enthusiastically (north American players Apple, RIM and Palm) have less than 4% apiece - gives its advantages and economies that cannot be ignored.
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