Reinvention in the services area

Bob Iannucci, head of the Nokia Research Center until his appointment as CTO in January, tells Joseph Waring how Nokia is taking its model as a device company and reinterpreting that on the services and software side

Telecom Asia: How does moving from being strictly a device manufacturer a few years ago and transitioning into services impact your research investment priorities‾

Bob Iannucci: We can look at it philosophically, and we can look at it pragmatically. Philosophically, you're right, we're making a very big change. We're not moving from devices, we're adding services and software to the world's most successful devices in business, and we think that there is a strong synergy between the two.

Our vision of what the internet will become is at first centered on the mobile experience and secondarily on a PC. So having the position we have, with the ability to put in some enabling software in our devices today so that 12 months from now 450 million new users will have that software in their hands, is really a profound way to approach the question of how does Nokia become a services and software company.

From a practical perspective, we have a lot of learning to do. It's one thing to be a device company, where our core strength is in our demand-supply network. But how does that translate into success on the services and software side‾ There is probably some new analog of that demand-supply network. But it's not the demand-supply network; in services and software it's more about content delivery, IP connectivity, authentication, single sign on, the kinds of things we're beginning to talk about in Ovi as being the equivalent of the demand-supply network.

So we're taking the model of who we are as a device company and we're reinterpreting that on the services and software side. But they're very different businesses in terms of how they operate: speed, skills, and in some sense they're complementary, but we have to run them respecting the fact that they're different.

How does that transition affect the types of people you're hiring‾

We have really anticipated this change. In the last three years we have actively augmented our skills in radio and device software and device user interface with new skills in Web 2.0 sorts of things. We built our Palo Alto lab specifically around software and services for mobile communities.

We're moving some of the people from our devices business who are interested in services and software. It's a combination of taking some of our existing people who now have the fire in the belly, if you will, to go after services and software, but we're actually bringing in new skills. We're looking for people who have image processing skills and understand context, user interfaces, etc.

A year ago you talked about the phone as a gateway between the physical world and the virtual word and said it would be a huge area. How has that played out‾

I'm pleased to say now the company recognizes much more directly the idea of having a device business and a services business that are linked.

 

They're linked exactly on this point. I'd say that we've made a lot of headway in recognizing it and starting to play out what that means for our business.

You're probably familiar with Sportstracker, which is this great little application that we put together at Nokia Research Center. It was originally create by some guys, who bicycled and exercised, to log their progress and to share that information with others. We put it out as beta software on the web with zero advertising. In two months we had 100,000 downloads, and I think the latest number is 850,000 downloads.

It's a perfect example of bridging the analog and the digital worlds. We're using sensing data from an exercising experience, making a digital representation of it, and letting people use it to build communities. We're heading exactly down that path.

With voice and messaging growth peaking is most markets, we're seeing huge momentum in device-to-device, machine-to-machine and sensor apps. How is Nokia moving in this area‾

Last year we were talking more about enablers, so we announced Wibree - the low powered Bluetooth. That's a technical enabler that gets you that last few inches from the sensor to the phone. But now we're focused on the services that actually ride on top of the device and the wireless sensors linked to the internet, and the company is moving at full speed toward that vision.

It's a whole different value chain with a lot of small systems integrators and specialized MVNOs.
Exactly. It opens the innovation system. We've also been more vocal in the last year and a half about being an open innovator. Having these enablers and the vision of doing something that's much greater than the business that we currently lead in, demands that we partner with large and small innovators and that we take ideas to market in a much more experimental state. Not just to test the ideas, but to learn from the market to get the feedback about what's valuable and what's not.

We've grown this thing called alpha labs, which feeds our beta labs. Over the last 18 months it went from nothing to maybe 90 experimental applications that were created and now are being used internally, and the best ones are finding their way out to beta labs, and some of them are already on the download service for the N95. This is an example of being open. And we take the feedback that we get from the end-users into the development, that's what happened with Sportracker. The team built the latest version of Sportracker based on feedback they got from end-users.

You're said in the past that Nokia research had been a bit inward looking and that you needed to open it up into a web of innovation and that 50% of the budget would go to the System Research Centers and 50% on core technology. Any change in that‾

That's exactly how it's played out. What we've done within the System Research Centers since we spoke last time is open a number of centers. We've opened Cambridge, Massachusetts on the edge of MIT, we opened the Palo Alto center, we opened the nano-sciences center at the University of Cambridge, and we announced a major collaboration with Chinghwa University.

 

And we're on the verge of announcing a couple more. So we're continuing down the trend in system research of partnering with major universities, and now that trend is catching on in the core technology centers as well. They're reaching out to major universities. You'll hear about major relationships with top-tier universities in direct partnership with Nokia in pursuit of that vision.

What else is in the pipeline‾

I wish I could tell you. I would just say I'm looking forward to this new structure. I think that Nokia has shown what few companies have shown, which is the guts to reinvent itself. In the middle of running a profitable business, what are we doing, we're going after growth business.

How do you feel about moving on from the research center‾

I'll continue to have responsibility for Nokia Research Center. As CTO I have a greater opportunity to look at the architectures and the elements that knit together services and software across the company. Using Nokia research innovation and using external innovation, I'll have the opportunity to further drive Nokia as an open innovator.

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