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Nokia to Become Involved with Video Games, Digital Photography, Communications

Posted on: Monday, 24 November 2003, 06:00 CST

Nov. 25--IRVING, Texas--Already a powerful force in the wireless world, Nokia Oyj is changing its organizational structure to entrench itself in video games, digital photography and corporate communications.

A plan to replace its current three divisions with a new structure announced earlier in the year will propel Nokia into a new phase, chairman and chief executive Jorma Ollila said at an analysts conference Monday.

"We are starting a bit of a new era at Nokia," he said.

No longer will the world's biggest maker of cell phones compete merely with other phone manufacturers, it will also take on game console makers such as Nintendo and digital camera manufacturers such as Canon. Nokia of Finland has its U.S. headquarters in Irving.

"We know that we will need to be competitive with many players who are incumbent in their own areas," Mr. Ollila said.

Companies in those other worlds Nokia is looking to invade are not sitting idly by, said Mark Lowenstein, managing director of Mobile Ecosystem, a consulting firm.

"Nokia will face more competitive challenges than ever before, partly because most of the innovations around display technology and camera technology is coming from Asia," he said.

Companies like Sanyo make both digital cameras and cell phones with built-in cameras.

"I cannot imagine that three years from now they will still have 35 percent of the market, but on the other hand they still make a great product," Mr. Lowenstein said.

Mr. Ollila's remarks come two months after Nokia launched its first wireless game console, the N-Gage, which has drawn a lot of media attention but slow sales. The company has also sold a slew of new camera-phone models and plans to release a model that next year that will have a resolution of 1 megapixel, an important quality benchmark.

"This is an area where we feel you will see the new Nokia happen in the next five years," Mr. Ollila said.

He declined to discuss sales of the N-Gage other than to say it has had a better reception in Europe than the United States. He added that it's too early to issue verdicts on the device, because it would take two or three Christmas seasons to know if the company's investment had been fruitful.

Nokia's grand vision comes at a time when industry experts worry that cell phones and mobile service are quickly becoming commodities with ever falling prices. Nokia officials, trying to address those fears, said the fast pace of device introductions was hardly the calling card of a commoditized market.

Beginning next year, Nokia will be organized into four main business units: mobile phones, multimedia, networks and enterprise. That's up from the current three divisions -- phones, networks and venture.

The change comes with a far-reaching shuffle of current executives and a few new hires. On Monday, the company appointed Mary T. McDowell, a former Hewlett-Packard Co. executive, to head its enterprise group.

On Monday, Nokia also said that it's targeting an average revenue growth of 10 percent, excluding currency fluctuations, for the long term. The company predicted worldwide phone sales would grow by a little more than 10 percent in 2004, up from an estimated 460 million in 2003.

For the fourth quarter, Nokia said it would meet its previous guidance: Mobile phone revenue will be flat to slightly up, and profit would range from 23 cents to 25 cents a share.

Nokia has suffered from anemic revenue growth for much of the year because of a fall in the average selling price of phones and the sharp depreciation of the U.S. dollar. About 60 percent of the company's sales are in dollars. Mr. Ollila said selling prices have been stabilizing so far in the fourth quarter.

The company's American depositary receipts closed down 10 cents to $17.69.

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(c) 2003, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.

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