Nokia to create smartphone unit in reorganisation

(Nokia)

The world's top cellphone maker Nokia announced changes to its business structure Tuesday, creating a unit focused on smartphones, and said the head of its key mobile phones unit would step down.

After the move, due to come into effect on July 1, Nokia's business would be divided into three units - Mobile Phones, Markets and a new Mobile Solutions division, which will focus on the high-end smartphone segment where Nokia has faced fierce and growing competition.

"We are decisively moving to respond faster to growth opportunities we expect in smartphones and mobile computers," Nokia chief executive Olli-Pekka Kallasvuo said in a statement.

Nokia has sold more phones than competitors for the past 12 years but its position is weak in North America and it faces increasing competition in the expensive smartphone segment from rivals like Apple's iPhone, Research In Motion's BlackBerry and phones running on Google's Android operating system.

Last month, Nokia disappointed markets when it announced that its first smartphone based on Symbian 3, a much-awaited updated version of its operating system, would not ship until the the third quarter of this year.

The new Mobile Solutions unit will be headed by long-time Nokia executive Anssi Vanjoki, who has led the Markets unit since January 2008 and worked for the company since 1991.

Richard Simonson, who joined Nokia in 2001 and served as chief financial officer before taking the lead at the key Mobile Phones unit in November 2009, will retire from full-time duties on June 30, Nokia said.

"However, he will continue as a senior advisor to Nokia, focusing on Nokia Siemens Networks, until the end of the year," Nokia said, adding Simonson would remain on the Nokia Siemens Network board of directors after his exit.

The market gave a cool welcome to the announcement, with shares in Nokia 1.99 percent lower at 8.62 euros on a Helsinki bourse that was off 1.65 percent just before 1430 GMT.

"The slightly negative market reaction could be due to Rick Simonson's exit. He has been well-liked and respected, and has been seen as a (CEO) successor candidate if and when the time came," Nordea analyst Sami Sarkamies said.

Mary McDowell, who joined Nokia in 2004 and currently leads the company's corporate development unit, will take over as head of the Mobile Phones unit, which will focus on the cheaper phones that have boosted Nokia's sales and helped it retain its top spot in the global mobile phone market.

The Markets unit will be headed by Niklas Savander, currently in charge of the Services unit, and Nokia said it had appointed Rich Green as its chief technology officer.

"Nokia has been criticised for not understanding the US market. Now they are hiring an American with a Silicon Valley background. I think it is positive that they are bringing in new blood," Nordea's Sarkamies said.

Kai Oeistaemoe, who has headed Nokia's Devices unit, will assume leadership of corporate development.

Analysts said the reorgnisation did not signal any great shifts in the Finnish company's strategy but did simplify its business and internal reporting structure.

"It is a tradition in Nokia that they change the executive management from time to time," said Handelsbanken analyst Martin Nilsson. "It's in the company's DNA to do that."