Nokia's Transformation into a Telecom Equipment and Software Company

Pekka Ala-Pietila, the president of Nokia, has highlighted the company's shift in perspective, going from viewing information technology, telecommunications, and media as separate industries to a single, integrated sector. This transformation is evident in Nokia's strategy to attack the "info-media" sector with sophisticated mobile handsets and systems. The company's intention is to focus on telecom equipment and software, a move that has already shown positive results in the past five years. Nokia's profits rose from €8.37 billion to €14.6 billion, with sales increasing by over 50% to €79.2 billion, and market capitalization jumping from €110 billion to €355.5 billion.

Key Takeaways:

In the past five years, Nokia's profits have risen from €8.37 billion to €14.6 billion, with a 96% increase in pre-tax profits to €758m in the first quarter.
Nokia's sales have increased by over 50% to €79.2 billion, and its market capitalization has jumped from €110 billion to €355.5 billion.
The company has abandoned traditional product cycles by moving to modular production, allowing for rapid refinement of product lines with functions normally reserved for premium handsets.
Nokia is rebranding itself as a software developer, focusing on developing products that appeal to the internet generation.
The company believes it can win a large share of the market for internet calls, corporate data networks, and web browsing by investing heavily in research and development.
Up to a third of Nokia's workforce is now employed in R&D, with two-thirds being software engineers.

Statistics:

Nokia's profits rose from €8.37 billion to €14.6 billion over the past five years.
Sales increased by over 50% to €79.2 billion in the previous year.
Market capitalization jumped from €110 billion to €355.5 billion.
Pre-tax profits rose by 96% to €758m in the first quarter.
Sales increased from €2.5 billion to €3.87 billion in the first quarter.
Data traffic on mobile phone networks is growing at 40-50% per year.
Voice traffic is flat, while two-thirds of calls by young people in Finland are text or message calls.

Sources:

Financial Times, "Nokia's transformation into telecom giant" (1999)
Pekka Ala-Pietila, President of Nokia