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LLI-PEKKA KALLASVUO HAS SPENT HALF HIS 54 YEARS WITH FINNISH
O mobile telephony major Nokia. Since joining the company as
Corporate Counsel in 1980, he has played a critical role in
transforming the 150-year-old one-time lumber company into a
giant of the digital age. Nokia has also become the largest multi-
national corporation in India and, according to estimates, posted revenues of
Rs 15,800 crore for the year ended December 2006. Globally, Nokia closed 2006
with revenues of m41.1 billion (Rs 2,30,160 crore). A recent survey by Gartner
gave it a global market share of 36.9 per cent in the second quarter of this cal-
endar year during which it sold over 100 million devices. On his first visit to India
since becoming Chief Executive Officer in 2006 to check the status of Nokia’s
second-largest market, Kallasvuo met BT’s Kushan Mitra in Mumbai and dis-
cussed business, batteries, the iPhone and technology. Excerpts:
There are 85 million Nokia handsets in use in India today (out of 185 million mobile
telephony subscribers) and Nokia-Siemens Networks (NSN) is the market leader in the
network sphere. India is Nokia’s second-largest market after China. How do you see
this relationship between Nokia and India developing?
There are several answers to this question, actually. As we expand our business
in the normal way, our business in India will expand as well. This means new
“We want to
connect the
unconnected”
000 BUSINESS TODAY SEPTEMBER 23 2007
OLLI-PEKKA KALLASVUO PRESIDENT & CEO Nokia
types of handsets will start getting sold in India, and that
is just one possibile area of growth. We have also an-
nounced very clearly that we will offer services and soft-
ware out of India, especially to find ways to include peo-
ple who do not have access to the internet as the in-
ternet and mobile communications converge. In fact,
NSN’s global headquarters for the services business
will be in India and the person in charge, Rajeev Suri,
will be based in India.
There is another dimension—India as a sales base.
Of course, you have to be present in India but we
also want to leverage the talent pool here for our
global operations. In R&D, for example, we want to give
our Indian teams complete, viable projects that have a
lot of complexity.
The theme of your visit to India has been “Towards Universal
Access”; you just spoke about how Nokia plans to enable
internet access through mobile devices. What does this
mean in practical terms?
PHOTOGRAPHS BY UMESH GOSWAMI
In 1992, we came up with the slogan “Connecting
People”. We are in the business of connecting peo-
ple to what really matters to them. The slogan is
ingrained in the way we think and the way we
communicate with our employees. But—and this
is not only about monetary benefit to ourselves—
when we say “Universal Access”, it is about ex-
tending the benefits of mobility to more and
more people. It has to be something that is
affordable and convenient and also has to touch
masses of people. We hope to connect the
unconnected to what matters to them.
You visited your Chennai (Sriperumbudur) plant from
which you have rolled out 60 million devices in 18
months. Will you be expanding this facility?
It is important to understand that while there is a
Nokia factory in Chennai, the totality is a lot
wider. We are working closely with our part-
ners and suppliers in a very close set-up; we invest
together and take risks together. When it comes
to our part of the totality here, we can still increase
our output without increasing our investment. But
the time will come when we need to consider
further investments here as well.
But I am very happy with the work that we
have done in Chennai, and, of course, the output
will increase. The factory is only 18 months old
and it is still on the learning curve. As we advance
on the learning curve there, we will add
complexity to the products we make.
So you’ll progress from the low-end devices you make
to more advanced ones?
Yes.
I am sure you have been asked about the (BL-5C) bat-
tery recall issue repeatedly but what was your reaction
when you were first told about this problem?
My first thought was that this was something
we needed to resolve, but we also needed to
investigate the matter. It is quite a complex issue.
You have tremendous brand equity in India and there
have been reports of consumer anger at Nokia. Do you
believe that this issue might have repercussions for the
Nokia brand in India?
I am sure there will be some negative reactions,
but overall, in balance, I have had many people
come to me and say that “this will also strengthen
your brand, because people are seeing that you are
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taking responsible action and that you have resources
to take responsible action”. I think there are lots of pos-
itives to take from this as well and the outcome may
turn out to be positive.
This is the second time in two years that lithium-ion batteries
have been in the spotlight. Do you feel that given today’s re-
source-hungry devices, this will be a recurring problem?
As devices become more sophisticated, they will con-
tinue to need greater amounts of power; so, this is
something that will have to be managed. It can be
managed through better battery tech-
nology but also by optimising power
consumption. Both are important and
we are investing in understanding both.
“We do not
want to shift
Your phones are not just phones anymore;
they have cameras, and are entertainment
something
and communications devices, as well. Then, non-core here.
a large computer manufacturer (Apple) makes
phones, and the world’s largest software
We want to give
company (Microsoft) is becoming very ag- our Indian
gressive in mobile devices. You call your N-
series devices “Multimedia Computers”. How
teams complete
is this evolution changing Nokia? viable projects”
There is still a market for voice-opti-
mised devices without a camera and
without entertainment. But what you are saying
is absolutely correct; the “single-
purpose” devices will be mar-
ginalised and the share of multi-
purpose devices will increase.
But we have to support both—
voice-optimised phones and
multimedia devices or comput-
ers. Some of those devices are
almost like Swiss Army Knives,
because they offer many, many
solutions. And consumers do de-
mand different types of solutions
(for their various needs).
The (mobile
phone) industry has been capturing value from adjacent
industries. As you said, mobile phones have become
cameras as well and in that sense, the mobile industry
has picked up value from the camera industry. We are
today the biggest camera manufacturer in the world.
And, hence, the camera manufacturers have become
our competitors. The same is applicable to music de-
vices and navigation devices and so on and so forth.
The mobile device has expanded its footprint and
has allowed us to add value in our industry and this has
been a major source of the growth we have been
experiencing in our topline.
It’s interesting… did you ever think that you
would compete with a Canon or a Nikon?
The consumer is making a choice
whether to buy an N95 or a high-end
camera. As mobile phones get more
sophisticated, more instances of such
competition will emerge. That, I be-
lieve, is strategically very important,
because our global volumes will allow us
to get economies of scale in compo-
nents needed to make cameras. I think
we have a competitive advantage there
over the camera manufacturers because
of bigger volumes.
You said that you might have a competitive advantage in
terms of pricing. Do you believe that you might have a tech-
nological advantage over other devices as well because
you send things over mobile networks?
I would like to think that the mobile phone gives you
everything the personal computer does and then some
more. And the “some more” is that you are not tied to
a time or place. You have the benefit of mobility. I think
this is a very promising area overall—adding mobile
context to the internet.
Apple recently launched the iPhone with a whole new in-
terface system; Micrsoft has upgraded its user interface in
Windows Mobile. Nokia has always been famous for inter-
face design; but how important is interface design today?
Ease of use and user interface are very important on all
devices—it is actually all about ease of use, ease of use
and ease of use. That is fundamentally important.
And we are investing very heavily in this, but
there is also a paradox. Making something
easy to use is also quite difficult. And you will
hear more from us on this front.
Given the hype around Apple’s iPhone, do you think
Nokia missed the “touchscreen” bus?
I don’t think so. We will come out with
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touchscreens as well, but that will just be one solution.

The markets will diversify; there is no “one size fits all”
solution. But definitely, there will be a segment of de-
vices where touchscreens will rule and we do have
those as well. The N800 Internet Tablet, for example,
is based on touchscreen technology.

What is your opinion of the iPhone?

It is definitely an innovative device. But it is based on
a proprietary platform, while our thinking is open.
There is a huge conceptual difference between the two
strategies. So, you can’t compare the hardware only;
you need to look at the totality when making the
comparison. Apple entering mobile telephony is some-
thing that will definitely add consumer interest in
the market in a way that is good for the industry.
However, when making this comparison, you must re-
member that we have a portfolio of 40-50 devices. And
this market is wide, segmented and fragmented; to sell
devices to different types of consumers in different
types of markets, you need a wide portfolio. So, one
product can never be enough.
Nokia has so many different types of devices in the market.
This must have added a huge amount of complexity to
your manufacturing processes. How do you manage that?
It adds to manufacturing complexity. If you are mak-
ing one device only, things are a lot simpler. But I be-
lieve that when something is complex in business, it is
possible to add value if you manage
the complexity. And I believe that we
have been able to manage the com- “Ease of use and
plexity far better than the competition.
But the point here is the portfolio.
user interface
Consumers do prefer different things are important
and we have identified these different
consumers on a global scale and I am a
on all devices.
big believer in that—people are differ- But making
ent. Very often, someone may not like
a device that we make, but then, some-
something easy
one else will say: “I love this”. And to use is also
that is the beauty of a portfolio. But, yes,
it does add complexities in many ways
quite difficult”
and one of our core competencies is
managing that complexity.
There are several competing new standards; you have
WiMax, HSPA and WCDMA. And then, China is also
developing a standard. What does the future hold?
There is not going to be one solution only, there will
be several solutions that co-exist and different opera-
tors will have different technologies depending on
their thinking. In that way, I believe operator strategies
will differ more from one another going forward
than they have been in the past. From a technology
standpoint, we have to be technology-
agnostic and support all solutions.
Therefore, different operators might have different tech-
nologies. How much of a problem will it be for users?
That is a call that people will need to take, because this
is not a technology question, this is a price-point
question. Adding new features or adapting new tech-
nologies will always add to costs. And you have to find
the right combinations of radio technology here,
whether it is single-mode in some cases or
multi-mode in other cases.
You have experienced great success in India
and China. Where do you see future chal-
lenges coming from? Africa, perhaps?
Africa is a huge challenge and an op-
portunity. In fact, I have said earlier
that from a telecommunications point
of view, there are things happening in
Africa today that were happening in
India five-six years ago. So, in that
way, Africa is getting onto the mobile
phone bandwagon as well. A lot of
(blood) and sweat will be needed for
this, but we are doing that and I see that
as a clear opportunity.
What in your opinion are the unique features of the Indian
market compared to others?
I think the Indian operators have done a fantastic
job. I think the models they have come up with are ex-
portable, very efficient and I take my hat off to them.
Would you say, that at a level, Nokia competes with Nokia?
No (laughs) I would not say that, there is ample external
competition. We compete with our competitors. ■

000 BUSINESS TODAY SEPTEMBER 23 2007