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Ollila warns wireless sector on emerging markets

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CTIA Nokia's out-going chairman and chief executive has urged telcos and mobile companies to be more sensitive - and responsive - to emerging and diversified global markets in pricing, services, and delivery of new technologies.

Jorma Ollila used his CTIA Wireless 2006 swansong to tell delegates they need to address the needs of low-income and developing markets by providing phones and services that customers want and can afford, to achieve continued growth. Complexity of technology, in areas like DRM, must also be solved.

Ollila is credited with transforming Nokia from a diversified manufacturer churning out Wellington boots to a global leader in mobile telecommunications, following the introduction of its first handset in 1992 for the Finnish equivalent of $5,000.

Back then, wireless accounted for less than one per cent of the voice market. Last year, 2.2bn people were using mobile phones, with that number expected to reach 3bn in 2008. No wonder CTIA awarded Ollila a lifetime achievement for his services to wireless, and CTIA president and CEO Steve Largent branded Ollila "Mr Wireless" ahead of his Wednesday keynote in Las Vegas.

Little was made, though, of Nokia's strategic mistakes that threw away the company's outstanding market lead and appeared to cost Ollila his post.

Last summer, Nokia reshuffled its board, announcing Olli-Pekka Klasvuo as chief executive and Ollila, CEO since 1992, a non-executive chairman.

Apparently chastened by his experiences, Ollila got down to business by pointing out the importance, and perils of, not catering to the challenges of emerging markets. According to Ollila, 80 per cent of the next billion wireless subscribers will come from Russia, China, Brazil, and Afghanistan. And therein lies the rub.

Mobile phones are often many peoples' first telecommunications experience, according to Ollila. And, while cost will be one factor in their choice, customers won't necessarily purchase based on price alone. "Markets differ greatly from region to region around the world," he warned.

"A mobile phone is an aspirational choice - something that expresses and enhances their lifestyle. A lot of success (for companies) will depend on customer loyalty from that first phone. This is something we at Nokia don't take lightly."

He added that service providers must complement handsets with "relevant content at realistic pricing, even at (different) times of the day, because these emerging markets are growing."

And don't go thinking it's just in developing markets where there are challenges. Developed economies may be getting all fancy with their voice and IP convergence, photo sharing, and printing pictures directly from their camera phones, but hurdles to continued adoption of these - and future services - remain.

Ollila highlighted an "incredibly complex landscape" of coding technologies, digital rights management, content management, and content distribution. "We've made great progress in the last few years to create interoperability and simplicity [but] we can't take the uptake of these new services for granted. They are going to have to work simply and well at an affordable cost. "

On handsets, he pointed to the problems developers face when building applications that must be ported to different handsets' hardware, while consumers wrestle with different interfaces. Nokia is famed for its sheer diversity of hardware.

This he seemed to at least acknowledge, saying the biggest challenge for Nokia and others is to successfully run a handset manufacturing and logistics operation that is capable of meeting the diverse needs of this world market.

"With over 33 per cent market share we are talking about huge volumes and constant diversity, but we must manage the manufacturing and logistics challenges. The winners will be the ones who understand the consumer early, understand usability, pick the right technology, and place great products at the core of their strategy," Ollila said.

Ollila's words are, of course, founded on bitter experience. Nokia took a financial pounding in recent years while surrendering market share because it dragged its feet on introduction of clamshell handsets for US markets, failed to address the mid market with affordable, lower-featured devices, and was reluctant to grant carriers greater scope to customize devices. Ollila adjusted strategy in 2004 by announcing a new range of handsets to meet these needs, but the switch came to late for Nokia and for Ollila. ®

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