THE MAN BEHIND NOKIA'S COMEBACK
(FORTUNE Magazine) – THE NOKIA 8800 IS SLIM AND SEXY AND can be opened with barely a flick of the wrist, thanks to ball bearings specially ordered from the same firm that supplies Porsche. But the $700 phone, which hits U.S. stores this month, is more than just the latest gotta-have-it gadget. It's also a symbol of the dramatic--and sudden-- design revolution that has pumped up Nokia's stock 25% in recent months, restored buzz to the world's largest mobile-phone maker, and enabled a taciturn lawyer-turned-tech-impresario named Olli-Pekka Kallasvuo to snare the company's top job as successor to larger-than-life CEO Jorma Ollila.
Nokia was in a vicious market-share free fall as recently as last year, prompting observers (including FORTUNE) to wonder if the Finnish firm had lost it. The charismatic Ollila may have been Europe's best-known high-tech CEO--to Finns, who regard Nokia with fervent national pride, he's something close to Bill Gates, Bill Clinton, and Jack Welch rolled into one--but his dowdy monoblock phones were a washout for consumers hungry for models that flip or swivel.
Enter Kallasvuo, known as "OPK" inside Nokia's ultramodern headquarters near Helsinki. The 25-year Nokia veteran is so unemotional, he can seem like an extra from an Ingmar Bergman movie. Yet since taking charge of the handset division in early 2004, he has unleashed a torrent of creativity, including at least 50 new models this year (phones featuring Carl Zeiss optics, easy-to-download music, and 3G capability are being rolled out just in time for the make-or-break Christmas season). Market share has rebounded smartly, from 29% last year to about 33%. Sanford Bernstein analyst Paul Sagawa predicts it could surpass 35% next year, adding $3 billion in revenues.
How'd he do it? Kallasvuo proudly calls himself a "pragmatist"; in other words, if customers want swivels, then give them swivels--and as quickly as possible. To make up for a shortage of flip phones, Kallasvuo turned to outside manufacturers in Taiwan, a step the company had been hesitant to take in the past. He encouraged his creative types to develop a wider range of styles--while sticking to Nokia's existing product platforms in order to restrain costs. And he pushed his customer-centric approach down through the ranks of the product developers. "We have become very agnostic when it comes to the form of our phones," says Kallasvuo.
Ollila's contract runs out in mid-2006, and despite entreaties from Nokia's board to stay on he says he's determined to retire after nearly 14 years as CEO. When it came time to recommend a successor earlier this year, Kallasvuo--who's previously been both CFO and head of the company's U.S. division--was his natural choice. "He was thrown into the water, and he didn't freeze," says Ollila. "He's a very matter-of-fact leader. I probably lead slightly more through people--he would lead more by numbers or facts."
For Kallasvuo, the biggest challenge will come from Asian competitors like Samsung, LG, and Sony Ericsson, which are aggressively going after the high-end phone market. U.S.-based Motorola, meanwhile, is making an aggressive and stylish push into the low-end market with affordable cousins to its popular RAZR. To counter those threats, Nokia is planning a series of splashy launches, rolling out the N80, a slimmer 3G version of its Transformer-like N series featuring high-quality video and music capability, in Barcelona next month. The company also plans a BlackBerry-like device early next year as part of its new E series, with a Qwerty keyboard and Wi-Fi capability. And there are new "fashion" phones on the way too, updating last season's popular 7280, which resembles a lipstick case. Although it's hard to see Kallasvuo using something as flamboyant as the lipstick phone (he prefers the new 8800), he's determined to keep expanding Nokia's range of offerings. As the ever-laconic "OPK" puts it, " 'Wow' is different for different people."