Nokia Reorg Aims For OS, Apps Integration

For the second time in less than a year. Nokia, the world's largest mobile phone maker, said Tuesday it is simplifying its business organization and implementing a number of management changes.

The company will reorganize its structure in three units: Mobile Solutions, which will focus on Nokia's high-end mobile computer and smartphone portfolio will be headed by Anssi Vanjoki. Mobile Phones, which will drive the direction of Series 40 mobile OS, will be run by Mary McDowell. Markets, which will have responsibility for Nokia's "go-to-market" activities, including sales and marketing and management of Nokia's global supply chains and sourcing operations will be headed by Niklas Savander.

The Finnish company said Rick Simonson, the current head of its mobile phones unit, would retire, but continue to be a board member.

Nokia's move to pair its Ovi services in the same business unit as its operating systems is significant because it creates tighter integration, said Chris Hazelton, research director, mobile and wireless, at The 451 Group.

"Symbian was their only smartphone operating system, but within the last year they launched a device that did fairly well, essentially using MeeGo, a Linux OS," said Hazelton, in Boston. "I'm happy to see they're putting emphasis on their devices again instead of just Ovi, which is facing an uphill battle."

Nokia has adopted this strategy, Hazelton believes, because "the migration of Symbian to open source is taking too long. Symbian has not been able to adjust to the touch environment which is so popular now, and MeeGo is from the ground up a touch-based operating system."

Nokia's competitors, such as Android and Marketplace and iPhone and iTunes, are very tightly integrated, Hazelton added, so Nokia needs to make sure that Ovi is tightly integrated with both Symbian and MeeGo. "When [Nokia] talked about its future before this announcement, Ovi stood on its own, now the company is bundling those three entities together and it seems like a strong fit because they are so dependent on each other."

The move comes in the face of increasing analyst and shareholder criticism of Nokia's management as its share price has missed the market's recovery, and the firm's profits are set to miss the economic upturn this year, thanks to a lackluster smartphone portfolio.

In the three years since Apple's iPhone was introduced, Nokia has been unable to launch a serious challenge. Its last successful smartphone model, the N95, was introduced in 2006.

In an effort to build a new business, Nokia has started offering Internet services ranging from music downloads to e-mail, but this strategy has gained little traction so far.

The changes will take effect on July 1.