Nokia rolls phone groups into single division

Revamp shows new emphasis on multimedia, Internet-enabled devices

Nokia Corp. plans to fold all of its mobile phone development efforts into a single new business unit, reflecting the growing importance to its business of multimedia and Internet-enabled devices.

The new Device unit, as it will be called, will produce all of Nokia's mobile devices, including more traditional mobile phones, as well as Internet-enabled devices like the N series. The products were previously produced by three separate divisions, for mobile phones, multimedia and enterprise solutions.

As part of the reorganization, Nokia will also create two other new divisions, called Software & Services, and Markets, to replace its existing structure. The divisions will all be launched on Jan. 1, the company said today.

"When we introduced the [current] structure in early 2004, the market was still very voice-centric," said Nokia spokeswoman Arja Suominen. "The other areas were small but have grown much since then. So it makes sense to bring all these together in one unit."

Nokia said the changes will help make its product development and manufacturing operations more effective and reduce the time it takes to bring new products to market.

"This isn't a cost-cutting exercise," Suominen said. "We seek greater efficiency."

The move comes as Nokia faces new low-cost challengers from Asia, as well as markets with high levels of phone penetration in developed countries.

The current Enterprise Solutions unit will be split up, and business phones such as the E90 Communicator and the E61 smart phone will be merged into the Device unit. Enterprise systems such as e-mail and security will be rolled into the Services & Software unit.

Services & Software will also be in charge of software products, including games and Internet services such as navigation and music, which consumers can purchase separately.

Operating system software, such as the Series 60 OS, will be part of the Device unit.

The Device and Services & Software units will have their own research and development teams. The Nokia Research Center will continue to pursue long-term research at the corporate level.

The third new unit, Markets, comprises manufacturing, distribution, sales and marketing.

The changes will also be reflected in Nokia's financial reporting. Beginning next year, it will publish financial figures for two segments: Devices & Services and Nokia Siemens Networks. Nokia joined forces with Germany's Siemens AG last year to form the joint venture Nokia Siemens Networks BV.

The new Device unit will be headed by Kai Oistamo, who is currently in charge of Nokia's mobile phones business group. Niklas Savander, in charge of technology platforms, will head the Services & Software unit. The markets unit will be the responsibility of Anssi Vanjoki, currently head of the multimedia business group.

Copyright © 2007 IDG Communications, Inc.

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