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Interview with Pekka Pohjakalli – Nokia Services Vice-President

We met Pekka Pohjakalli at Nokia Developer Summit 2009 and couldn’t resist to ask him a handful of questions about Nokia’s services and marketing, as well as the company’s recent progress on this front.

To start things off, I would like to ask you about Nokia’s service-related initiatives – not only are they buzzed about at this summit, but outside as well. From your point of view, what services will be popular in, say, five years’ time?

I think that we need to kind of divide this question into two levels – what services our consumers will have and what enablers for them Nokia will have. Let me explain what I mean. If you look at the Internet in the same way, several years ago Facebook wasn’t as much of a phenomenon as it is today and nobody even saw it coming. So it’s always challenging to look this far into the future. Now, as for the mobile market, we see a couple of pivotal factors in it: your mobile phone is already a personal device that is always with you, you have the most important contacts in its phonebook, plus it’s got PIM features as well as GPS. Therefore we can say that services, either Nokia’s own developments or delivered by third-parties, will have pieces of what we call People & Places. Basically, adding an element of location awareness to mobile phones means a lot, as well as the ability to connect the user’s phonebook with his or her contacts in Facebook or any other service, for that matter. So my point of view is that three things prevail in the next five years: people, places and media. We’ll definitely have music services, which are what “Media” is all about in our portfolio as well, but they will have that social element in them one way or another.

What is your point of view on Nokia’s portfolio consistency with regard to services? Effectively, S60- and Maemo-based devices are Nokia’s most service-friendly offerings to date, while phones based on S40 are still somewhat of a weak spot in this sense.

First of all, this is an excellent question, and I think one of the central debates we had here was over how we could increase the productivity of our developers. Basically, it’s all about providing them with a variety of tools for creating new applications and services within Nokia’s software environment, and you are right, they have to serve different platforms at this moment: S40 low-end, S40 mid-range, S60 and then Maemo, that will come in our tablets. And what Nokia has done for them is, for example, the QT environment which helps adapting applications for different platforms. The second thing is that of course we need to give our developers a hand and offer them much better tools, so that they’d be able to provide consistent user experience across various platforms. And I think that’s exactly what’s happening now, since we are moving from the world of mobile phones, limited to a couple of core features, to a more computer-esque environment, so the have weather these pains of the early stages.

Also, considering how huge our S60 touch-friendly displays are, it stands to reason that S40 devices with their smaller and less sophisticated screens won’t be able to offer the same quality of experience, although, naturally, certain elements of their interface will be similar to S60.

In my opinion, to take S40 one step further, Nokia will need to add multitasking functionality to its browser, since it serves as the foundation for numerous features that S40 is yet to receive. So, my question is: when?

I don't have an answer right now. But clearly, what's happening right now is that S60 devices keep rolling down to lower price points, and the S40 vs S60 dilemma is now more crucial than ever, because at present it's possible to get a very affordable S60 phone with features that its S40-based counterparts don't have.

How long do you think it will take S60 to shift down to the mid-to-low end of the market, and S40 to the lower end?

It's impossible to say, because it's all about the state of economy, as well as our technological progress - after it'll it's quite challenging to get S60's sophisticated and power-hungry code to run on lower-performance CPUs.

Nokia Comes with Music in the UK was launched last year, but as the recent reports indicate it has been underperforming. What do you think about its future and are there ways to make it more efficient?

I think the whole discussion about our Comes With Music initiative in the UK wasn't properly covered - in fact, there were other opinions on its performance as well, but nobody bothered to write about them. As for Comes with Music in general, we are deploying it world-wide (in Singapore, Sweden, Germany, Spain, Australia, Italy and Brazil) and the feedback from these regions is totally different. I don't remember the exact figures, but we ended up taking the biggest share on Singapore's digital music market, where we launched Comes With Music along with the Nokia 5800 XpressMusic, meaning that people had to buy the device first to get access to the service, and as it turned out, it was the only right approach to convey our message to these consumers. So I think there is no reason to start all this fuss about Comes With Music being a total disappointment when all you have is one report on the program's performance on one specific market.

Both recording labels and Nokia are dedicated to make Comes With Music successful, because for them it's a very good business, a way to get rid of piracy and whatnot, so together we are moving full steam ahead, learning from our own first steps - after all, you know, nobody has ever done anything like that before.

While it’s true that you have captured significant market shares in Singapore and other Asian regions, your offering isn’t particularly popular in the US, iTunes’ home turf, and in Europe it’s about 50\50. How are you going to deal with the North American market, where you don’t have the same muscle as in Europe or Asia?

I have to be honest with you, what we believe in is offering services and handsets together - you can't play this game and win without top-notch phones or well-designed services. What I mean by this is that in order to succeed in the US we'll need a phone tailored to this specific market. We know what our services are capable of and we know how what iTunes means for the US, so we can't possibly go in there with the same offerings and same pricing policy - in this case we won't stand a chance. Therefore we'll need to find the right phone-service combination for the US, we'll see if we can do it.

As for Europe, though, I really think that Comes With Music's future is yet to be seen - it hasn't been around for too long there (apart from the UK, of course).

In what countries Nokia’s services are more popular today?

Depends on what service you are talking about. But like I said, Singapore turned out to be a decent market for our music services, and some major European countries show a great deal of interest in our navigation services.

What about Nokia's E-Mail services in developing markets? What market share are you planning to capture, say, in Africa, with OVI Mail?

Well, we have never tried to outline our goals or strategy for this aspect, but that's a very good question, as like we said when we launched OVI Mail, it's meant for those 75% of the population who still don't have E-Mail addresses. And in the countries we are targeting here (India, China, other Asian regions), the natural way for them to get E-Mail is via mobile phones, rather PCs, since most of these people simply don't have personal computers. That's why some of our devices come preinstalled with OVI Mail and we see a big opportunity in this field. When we first debuted the service, people were like "Now come on, everybody has got E-Mail these days!", while in reality only developed countries enjoy this privilege, and world-wide 75 persons out of 100 still don't have E-Mail. So we are targeting an extremely large emerging market and for us this is a tremendous opportunity.

Have you taken the Japanese experience into account as well? They don’t use PCs for texting or E-Mail either.

I’d rather say we have learned from our experience in China, since Nokia has never been strong in Japan. But as we found out, in China mobile Internet and games were much more prevalent than anything else.

Will APIs and SDKs for Nokia’s services become widely available in the future? Or you’ll distribute them under certain restrictions?

Again, it goes back to my answer to your first question, and our framework of People and Places. We saw the need to give our developers access to Places (Maps) among our top priorities, and that’s why Maps 3.0 SDK is now available, and then we’ll release other SDKs in areas where it makes sense. I think the recent Developer Summit clearly shows how exciting these events are for small-time companies that are now able to move from small garden-variety programs to high-quality professional applications. Apparently, we need to meet the market’s demands, so we will keep releasing more and more APIs, but not all of them.

Needless to say, these tools will open a new realm of opportunities for our developers – let’s take our music services, for example, and imagine what they can create by fusing our Music API with Nokia Places and Nokia People, thus adding the contextual element to it.

Some people ask me “Why only now?”. Well because it’s only now that we have got products that can handle these tasks; there were no strategic reasons to hide our APIs before.

At Nokia Developer Summit you showcased a whole array of third-party applications, but most of them were demo-versions, and what’s more, the vast majority of these apps had originally been written for other platforms. Do you think it’s possible to turn things around, so that Nokia’s S60 platform will get all latest and greatest applications first?

I think it’s already the case today. Yes, there are certain apps that got their glory and fame with the iPhone, so now they are getting imported to S60, but according to our statistics that we gathered several months ago, actually 90% of the Top 100 apps available for the iPhone had already existed on S60 even before it saw release. I have to say that it looks like that in the US more apps are made for the iPhone first, in Asia it’s the other way around, and in Europe it’s 50\50.

Given that all Nokia’s services are data-hungry, do you think that the data rates offered by European carriers these days will suit your users? Or you would like to see different kinds of tariffs?

As a user, I think I’d get pretty frustrated if I didn’t know what using some application could cost me. So I think that flat rates, subscription models and whatnot are absolutely crucial, and the US phenomenon of the iPhone actually proves one thing – when people get apps and data packaged with the phone, they love it, because they don’t have to worry about getting padded bills or anything. And while the whole package wasn’t cheap in most regions, at least people knew what they were getting and I think that it was more important that its absolute price.

It’s worth noting that most carriers claim that subsidizing both phones and data won’t work out for them, since in this case charging full price for phones would actually be more profitable.

I think this is a very country-dependent thing – some carriers are exactly like that, in some countries they don’t subsidize phones at all and so on. So there is no clear-cut answer to your question. But I’d have been significantly more worried about this issue, say, two years ago – these days Internet and online applications are no longer a niche phenomenon, they are going global, and they have much more weight in carriers’ decision making than ever.

In your online store business model, who is set in charge of all legal issues? Nokia or your partners? As far as iTunes Store is concerned, they have already run into problems with unauthorized use of content.

We always negotiate these matters with developers and content providers individually, since we distribute their products and thus agree to take full responsibility for their content.

So far, you have launched OVI Store in 8 regions, have you had any problems with localization?

There were no problems, really, everything we did was within the scope of our daily routine. We believe that since OVI is a service for the broad audience, it has to be available in a variety of languages, maybe not as many as Nokia’s phones offer, but still a substantial number. And it just takes time, but we have had no issues in this field whatsoever.

Is there any chance we’ll see customized editions of Nokia’s phones with and without certain services? For many consumers it’d be much more preferable to get the phone they like, but without, say, navigation, since they don’t use it all that often, yet it beefs up the price tag.

Such decisions are made on country-by-country basis – we always decide what makes sense for specific markets and whether we should bundle, say, navigation services with our devices there. It’s like in the UK, where there are two versions of our music phones available – with and without Comes With Music subscription.

So there will be alternatives?

In some countries and for some phones – maybe, but when it comes to releasing numerous editions of the same phone it’s always a lot of work for us.

Thank you for your time.

Thank you.

Eldar Murtazin ([email protected])
Translated by Oleg Kononosov ([email protected])

Published — 05 June 2009

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