Nokia on the Move

Nokia Corp. announced its intention to purchase software vendor Trolltech ASA for approximately $153 million. The company also aligned itself with the World Wildlife Federation (WWF) Climate Savers program to reduce its environmental impact, as well as a pilot effort to aggregate traffic conditions using Nokia phones.

Focal Points:

• Nokia has offered to purchase Trolltech, which develops software that runs on a multiple platforms including mobile phones, PCs, set-top boxes, and specialized embedded devices. Trolltech's board of directors has recommended to its shareholders that they accept the offer, and more than 66 percent of stockholders have already expressed their support. According to the companies, Trolltech software has shipped in more than 10 million devices to date.
• Nokia and University of California Berkeley recently cooperated to test a Nokia traffic data collection and aggregation system. More than 100 cars in the San Francisco area were equipped with Nokia N95 cell phones running special software over a 10-mile portion of highway. The software would anonymously send speed and location statistics using the phone's integrated GPS servers and cellular connection to help develop a real-time view of current traffic patterns and projected travel times. The engineers behind the experiment believe that equipping fewer than five percent of highway drivers with similar solutions would provide the input necessary to gather sufficient highway traffic data for use in a variety of mapping solutions. Nokia recently completed its purchase of mapping vendor Navteq.
• The company has recently joined the WWF Climate Savers program to demonstrate and increase its commitment to increasing its energy efficiency and reducing its greenhouse gas emissions. Nokia eliminated 3.5 percent of its total energy consumption between 2003 and 2006, and aims to improve capabilities by an additional six percent by 2012 compared with 2006 levels. The company also committed to increasing its renewable energy purchases to 50 percent of all consumed power by 2010. Approximately 25 percent of the current energy consumed is from green electricity. Nokia also aims for product energy improvements, including reducing the amount of power drawn by AC chargers when left plugged in but disconnected from the cell phone.

Experton Group believes the cell phone market is in a great deal of flux. As new participants including Apple, Inc. and Google, Inc. enter the market with hardware and software offerings, mainstays including Motorola Inc. are struggling to determine if they have a viable path left. Nokia's Trolltech purchase will allow it to better enable and propagate Nokia-developed software solutions to new smartphone platforms. Customers are increasingly demonstrating the desire to use their phones for more than voice and text messaging, and will likely be willing to pay for enhancements that offer productivity and entertainment options. This should prove to be a profitable market space in the coming two to four years, and Nokia will be well served by having a share of that and other spaces where embedded mobility is useful. Additionally, the company is wasting no time in working to demonstrate that its $8 billion acquisition of Navteq has a meaningful and profitable growth path. The current batch of "real-time" traffic and location-based services offerings – such as those offered by the satellite radio vendors – are generally regarded as being slow to include dynamic changes in traffic patterns, despite large investments to overcome these obstacles. Companies have previously sought to overcome this hurdle with costly and imperfect centralized infrastructures, and Nokia has serious potential to supplant these imperfect systems by decentralizing cost and complexity using customers' existing handsets to provide data. This also allows the company to partner with cellular providers for service offerings and software purchase options. IT executives should expect to see Nokia work to diligently get services to market, and for extensions to arrive for enterprise offerings. Nokia's joining the WWF Climate Savers program is consistent with their Nordic approach to aligning business requirements with an eye towards environmentalism.

It is likely that they will be an early adopter of many energy conservation and greenhouse gas-reducing technologies in the future. IT executives should wrap environmental criteria into their requests for proposals (RFPs) and work to adopt environmental practices capable of providing sufficient returns on investment (ROI).