Nokia Internet unit eyes growth, profit

BARCELONA, SPAIN: Nokia's new Internet business will focus initially on boosting sales and user numbers, and then target at least the same profitability as the rest of the group, Nokia's new Internet services head said.

"We would not enter this business if we did not think we can make the same or better profits than in the current business," Niklas Savander, the head of Nokia's new Internet services unit told Reuters in an

interview.

He declined to say when the company was hoping to start making profits from the new business line that is built around its new Ovi portal through which consumers can access Nokia's music store or gaming service, among other services.

Savander said the company would open its new Ovi portal during the first half of this year.

"It's about engineering. It comes when it's good enough and when the integration is good enough to add value," he said.

Over the last year Nokia has bought companies and built up its own Internet team, a process that Savander said would continue.

"It has to be a relevant business for Nokia and then we are talking about at least a billion (euros in revenue). At first we have to invest enough to be on a growth track, not to optimise the bottom line," he said.

"I believe top-line is our first measure and then consumer, number of consumers."

Savander said the firm was planning to roll out numerous new services at first to a limited clientele to test their appeal.

"In services it is hugely important to be on the market as early as possible. You will see a lot of beta launches or limited function launches or limited geography launches from us."

With the start of 2008, Nokia reshuffled its three cellphone business units, moving them to a separate device business and splitting them from the services and software business.

Under this reorganisation, all the software immediately needed in running phones, such as the operating system S60, was moved to the devices unit.

Savander said the reshuffle was necessary in the push for new growth as consumers’ needs were changing.

"The N-series (multimedia) phone is used for calling just 12 per cent of the time -- for our value in consumers' eyes and in consumers' share of wallet to stay the same or grow, we have to change with consumer behaviour," Savander said.

"Standing still means you're going backwards, in this business."

Savander said in the long term the amount of new subscriber intake will be limited.

"When one takes a long enough perspective, at one point the phone market is saturated. Then the phone business changes to replacement business, which is of course a huge business where large sales can be created, but the growth has to be found somewhere else."

"Holding on to growth is very important. And of course growth creates additional value -- profits, top-line and more to shareholders."