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Sunday, May 14, 2006 - Page updated at 12:00 AM

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The phone of the future: wired to run your life

Seattle Times technology reporter

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Nokia


The largest cellphone manufacturer in the world

Nokia: The name comes from the river Nokia (on which Fredrik Idestam founded the wood pulp mill, Nokia Ab, in 1865). The river took its name from a dark, furry rodent called the nokia (in English, the musteline), which lived on the river's banks.

Industries: Through its history, the company has made tires, footwear, plastics, power supply, consumer electronics, telecommunications, cables, aluminum, machinery, paper and chemicals.

Employment: More than 63,000 people in about 120 countries

Divisions: Mobile phones, multimedia, enterprise and networks

Data points: Based on its high-end phones sales, Nokia says it is the largest computer manufacturer in the world, exceeding Dell, and produces more cameras and music players than any other company.

Prices: Nokia's average mobile-phone price in the first quarter was 103 euros ($133).

Financials: Trades on the New York Stock Exchange; had profit of $4.7 billion on sales of $44.2 billion in 2005.

Leadership: Chairman and CEO Jorma Ollila

Source: Nokia

ESPOO, Finland — Harry Santamäki vows to take a sip of cod liver oil from the bottle on his desk if he ever utters the word phone.

That's odd, considering Santamäki works at Nokia, the largest mobile phone maker in the world.

"We are forbidden to call them phones," said the vice president of multimedia strategy and business development. Instead, they're "multimedia computers."

The decree reveals Nokia's vision of the cellphone future, one in which one device will manage your information, communication and entertainment needs — a single remote control of sorts for your electronic life.

Situated seemingly at the edge of the globe — its global headquarters in Espoo sits along a waterfront that freezes over in winter — Nokia aims to be on the cutting edge of an industry that determines much of our technology-driven activities. Already, it dominates the wireless business, producing about a third of the 800 million mobile phones sold around the world every year. Contrast that with Dell, the world's largest computer maker, which last year shipped a fraction of that — 37 million units.

In the supercompetitive high-tech world, a handful of companies essentially defines segments of the business. Nokia does that for wireless and mobile technologies. Many in the Puget Sound, with its rich wireless-development community, look to the Finnish giant as a partner or for insight into where the business and the technology are headed.

"You see some innovation there," said Tuong Nguyen, a senior research analyst at the Gartner consulting company. "But the bottom line is they know cellphones. ... They know their business."

For a close look at that business and the wireless future, you cross a low-lying bridge to get from Helsinki, Finland's capital, to Espoo, the country's second-largest city — about the distance from Seattle to Redmond.

The Nokia headquarters, called Nokia House, is a glass, steel and wood structure with simple lines and the feel of an eight-story greenhouse that incubates offices and ideas rather than plants. Only spring will free a fishing boat lodged in ice just outside the window.

With 63,000 employees, Nokia is a long way from its start in 1865 as a wood-pulp company. Over the years, it branched out to more industries — including electronics in the 1960s, with a car radio-telephone. It even manufactured rubber boots until the early '70s. It wasn't until 1992 that Nokia unveiled one of its first digital mobile phones.

Today, the company plots its message on the future of mobile technology from Nokia House. The idea, says Antti Vasara, vice president for corporate strategy, is to change the perception of how we use the Internet. Where we now get content from a range of gateways — desktop computers, handheld devices, TV set-top boxes — Nokia is working to make mobile the "one way — the dominant way — to access it."

That would make access to the Internet — and all that implies — available anytime from virtually any place, as seen in the example of Japanese users who wave their high-tech phones in front of a vending machine to charge a can of pop or a bag of chips to their phone bill.

Developing the future

At Nokia, a company that has virtually no landlines, signs of this concept underscore the showpieces in the demonstration room. There, phones interact with TVs, pictures post directly from the phone to an online blog, and another technology allows you to listen and interact with local radio stations.

Nokia's Lifeblog, for instance, is a service that allows a user to take photos with his phone and transfer them directly to the Internet, instantly sharing the shots with others online, something available today but not widely used. The idea is that the mobile phone is a much better tool to create a blog — the popular online diary — than a PC. Why not share your life as it happens instead of waiting until you get to a computer to write your feelings and upload pictures?

"When you think about it, blogging actually fits much better in mobile," Vasara said. "When you meet someone, you should be able to immediately type down their names and take pictures and upload them into the blog. There are things today that are confined to the PC that make more sense to do whenever."

The idea for "one Internet" may be solid, but the method for getting there has yet to be worked out.

For instance, in home entertainment, Nokia shows how you can sit on a couch while viewing photos on a TV and listening to music stored on your mobile phone — without ever touching the phone itself. But the setup will only be possible if the phone and TV have special chips that can work together. That involves a lot of technical issues that Nokia and others are still working on.

Bigger than that is another key question: Will people want it?

Vasara likens this strategy to playing hockey. Borrowing a quote from hockey great Wayne Gretzky, he said: "A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be."

Looking to the U.S.

Asia and Europe are well ahead of the United States when it comes to wireless culture, from the use of wireless technology to the rate of cellphone ownership — and even the tendency to use the cellphone for anything other than talking.

Despite that, Vasara said Nokia will lean heavily on the U.S. In particular, it likes what it sees among West Coast businesses, where the company thinks most Internet innovation and some cutting-edge mobile-phone developments are based.

But as media companies push movies, music and other programming to the phone, U.S. wireless development and business interests are gaining momentum. In addition, the country's Internet expertise and strength in building brands — think Mickey Mouse and Google — are starting to drive the industry.

"The Internet and brands mostly come from the U.S. ... We believe the convergence is happening online — cellular, content, Internet companies are all there," Nokia's Santamäki said.

Mark Donovan, senior analyst at M:Metrics, a Seattle wireless research company, agreed that the U.S. will take "a leadership role" in shaping wireless based on the success its businesses have on the Web.

The examples are plentiful. ESPN and Disney have launched services that enable users to sign up for a phone with sports or youth-related programming. The network supporting the service is Sprint's, but to the user it is ESPN or Disney.

You can buy and sell on eBay from your phone, and Yahoo!, Google and Microsoft all are building extensive wireless offerings. Cingular Wireless has an exclusive content relationship with HBO, so that its subscribers get snippets from "Sex and the City" and "The Sopranos."

The change has come over the past year with the advent of high-speed cellphone networks that give cellphone users the kind of Internet access they receive with a DSL connection. Verizon Wireless, Sprint and Cingular Wireless have installed networks dubbed 3G, for third-generation wireless technology. These networks can support broadband speeds in many parts of the country.

Real-world challenges

But making all of this work won't be easy for any wireless player.

"The problem with grand visions from an engineering company is that it takes a long time to be realized," said Jim Voelker, chief executive of Bellevue's InfoSpace, which works with wireless operators and content owners.

"There's too many companies with compelling ideas, and too many technologies that leapfrog one another," he said. "The world doesn't work like a carefully crafted engineering plan like Nokia, Motorola or Microsoft wants it to."

The other barrier is that Nokia must continue to defend its global leadership position and boost its market share in the U.S. It may be dominant worldwide, but here its market share for phones is closer to 20 percent, trailing Schaumburg, Ill.-based Motorola, which has done well with its sleek designs captured in the Razr line of mobile phones.

Nokia's share tumbled in recent years, Vasara said, because its phones and prices haven't always matched what consumers want. While Nokia has valued cellphones with a candy-bar shape, the clamshell, flip-top style championed by Motorola was more popular in the U.S.

There are also software challenges. Nokia phones, for instance, run on higher-end, programmable operating systems, but they're inherently more expensive. That pricing flies in Europe, where consumers are comfortable paying upward of $200 for a phone. In the U.S., where carriers subsidize the cost of handsets, lower-end phones can typically be free.

"I think that Nokia will step it up this year," Gartner's Nguyen said. "They've made a number of moves and have brought good devices to the market that are sleeker, sexier and more competitive than what we've seen in the last few quarters."

Personalizing the phone

For now, whatever hardware and software challenges it faces, Nokia's goal is to transform the phone into a device that opens up the electronic world to the individual user.

Among the hottest items it's just beginning to sell is the Nokia N70, which highlights Nokia's idea of the phone being a multimedia computer.

Slide the cover from the bar-style phone and you have a 2-megapixel camera with built-in flash and up to 20-times zoom. It lets you multitask by allowing you to place a video call with a friend while accessing contacts.

Another new line is The L'Amour fashion collection, a series of phones that come partly wrapped in leather with flower-lace motifs etched into the metal components. One phone in the collection, the 7380, is the size of a Milky Way bar and has absolutely no keypad for dialing. The users must rely on a scroll wheel, much like iPod's. The phone is $650 and is available at the high-end retailer NeimanMarcus.com, rather than through your carrier.

But that's today. The phones — the multimedia computers — of the future are still mostly up to someone's imagination.

What Vasara does know, he said, is "the most interesting things are yet to be discovered."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com

Copyright © 2006 The Seattle Times Company

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