August 23, 2016
Nokia Technologies president on the future of his ‘startup’: ‘Anything is possible’
Rolling back the clock two years, the image of Finland’s Nokia was sufficiently battered that most executives could have been forgiven for steering well clear of it.
But not Ramzi Haidamus, who was then enjoying a successful run at Dolby Laboratories. Haidamus was approached by Nokia to take the helm of a tantalizing new initiative: Nokia Technologies. Essentially, it would be a startup within Nokia, but based in Silicon Valley.
While much of the outside world may have been focused on Nokia’s failings at that moment, Haidamus saw an unusual opportunity to create a new company with the kind of resources few entrepreneurs could imagine, and in the process, just maybe have a global impact that could eventually chart a new future for the 150-year-old parent company.
“I’m always pleasantly surprised how much people love the Nokia brand,” Haidamus said in an interview with VentureBeat. “Our challenge is to remind people that Nokia is still here, and that it’s also a new Nokia.”
To understand why Haidamus made the leap in 2014, it helps to remember what was happening to Nokia at the time, and how Nokia Technologies fits into the broader corporation called Nokia Group.
Nokia had once been the unquestioned leader in sales and design of digital mobile phones. But the company’s fortunes went south in the years after the iPhone launch. In 2013, Nokia announced it was selling its mobile handset business to Microsoft for $7.2 billion. And in the process, Nokia was essentially retreating from the consumer space.
The new Nokia Group appointed Rajeev Suri as president and CEO and said the company would focus on networking, its mapping business, and the licensing of its intellectual property. It was a significantly smaller company with less than half the annual revenues after the deal. It was also a company that many assumed had a rather doubtful future.
Suri made some splashy moves. He announced a deal in 2015 to acquire France’s Alcatel for $17 billion, a move that expanded Nokia’s networking business but that also pushed it more into the Internet of Things market. And he sold HERE, Nokia’s mapping business, for $3 billion to some automakers.
But less noticed, at least at first, was the creation of Nokia Technologies. Based in Sunnyvale, this group was assigned 30,000 Nokia patents that generate $800 million in annual revenue for the unit. It also had 800 employees, mostly engineers.
“The idea behind the move to Silicon Valley was to really bring the research much closer to the center of innovation in high tech these days,” Haidamus said. “There is a center of excellence in Silicon Valley that we can learn from and partner with.”
Still, location was only the first decision. Much tougher was Haidamus’ core mission: figuring out what to do with these assets and how they might be used to propel Nokia back into the consumer space. On Day One, there was no defined product strategy, no defined direction. But despite all the changes, the company believed that its brand still resonated strongly with consumers around the world.
“We had all the key ingredients to relaunch Nokia into the consumer space,” Haidamus said. “The question became what it would be.”
In reviewing what was under development among the company’s engineers, Haidamus began looking for projects that seemed to hold short-term promise. And he applied some of his own filters to assessing the question of potential.
“Timing is one of the more important aspects of any product,” he said. “If you get that right, you can make changes to the product along the way. We looked at a couple of products in the area of virtual reality, and a couple matched disruptions we saw happening right now. Those became the seeds for what has become a full-blown business.”
So Haidamus created a Digital Media business within Nokia Technologies. Its first product was the Ozo, a virtual reality camera. Though he won’t share any details, there is more to come in this area.
Next up: Digital Health. Haidamus saw enough happening here that he wanted Nokia Tech to move quickly. But in this case, the projects weren’t quite far enough along. So he led the acquisition of France’s connected health companyWithings for $192 million earlier this year.
The head of Withings, Céderic Hutchings, is relocating to Silicon Valley and will oversee the Digital Health group, while reporting to Haidamus.
“We have a huge ambition,” Hutchings told me earlier this year. “Nokia Tech is essentially a new company. And it’s in a very strong position to be seeding and building new businesses at Nokia.”
Meanwhile, the licensing business continues to bring in money. And Nokia Technologies earlier this year also oversaw the licensing of its brand name to a new company, HMD, which plans to make smartphones and tablets under the Nokia brand name.
It’s a very complicated deal: HMD is separate from Nokia Group and Nokia Technologies, but it is run by a former Nokia executive. HMD struck a deal with both Nokia Tech and Microsoft to gain control of the brand name. But neither Nokia Group nor Nokia Technologies will have a hand in building or designing the new gadgets.
“Today marks the beginning of an exciting new chapter for the Nokia brand in an industry where Nokia remains a truly iconic name,” Haidamus said in a statement at the time. “Instead of Nokia returning to manufacturing mobile phones itself, HMD plans to produce mobile phones and tablets that can leverage and grow the value of the Nokia brand in global markets.”
For the moment, this frenzy of activity is enough to keep Haidamus and his fledgling company occupied. In the short-term, he says there is no plan to launch into another business category.
“The name of the game right now is focus,” he said. “Focus, focus, focus. We now have 1,000 people and four businesses (including the brand and patent licensing). We’re not considering a fifth right now.”
But then I noted that Nokia Technologies engineers must still be tinkering in their labs on other projects, in categories that were in the works before the official creation of the organization. That, plus all the licensing money, would certainly indicate that Nokia Tech has sufficient resources and ambition to eventually move in other directions.
To which Haidamus replied: “Anything is possible.”