Updated 26 May, 2012, 4:18 pm IST

Nokia Cuts Jobs, to Take on Apple

29 Apr, 2009, 12:42 pm IST | by Reuters |

Nokia Oyj will cut up to 360 jobs at Internet services unit as it combines offerings into its new Ovi Store, the world's top cellphone maker said on Tuesday. Nokia's new online software and multimedia store will challenge Apple's hugely successful App Store from May.

"We are moving into Ovi, into a platform strategy," Tero Ojanpera, head of the entertainment and communities operations at Nokia, told Reuters in an interview on the sidelines of Nokia developer summit in Monaco.

Nokia, which made its first ever quarterly pretax loss in January-March, is cutting annual costs at its key handset unit alone by more than 700 million Euros ($911 million) to counter plunging demand. To cope with slowing phone demand Nokia is building a new business from mobile Internet services -- like games or maps -- but has scaled back investment plans due to the slowdown. The Apple store has proved the market for software supermarkets in the mobile world, with one billion applications downloaded in less than a year.

"As much as iPhone and App Store is a success for Apple, it's a humiliating defeat for the rest of the mobile industry," said Bengt Nordstrom, Chief Executive of telecoms consultant Northstream. "Twenty years of efforts from operators and vendors to create mobile applications that customers like is overtaken in a heartbeat by someone that never done it before," Nordstrom said.

Nokia's market is potentially bigger than Apple's -- it says the Ovi store will reach some 50 million consumers when it opens, while Apple has so far sold some 20 million iPhones. But this does not in itself guarantee Nokia's success. While hundreds of millions of people use its phones every day, Nokia has yet to match Apple's success in getting people to pay for software downloads, despite its smaller rival getting a later start. It has also lagged Apple in creating a major following among software developers, the key for success in the mobile software race, who are often attracted by the coolest gadgets on the market, like the iPhone.

"Nokia's biggest challenge in the developer space is to win mindshare from Apple and Google, to provide tools and a platform to facilitate rapid development of innovative experiences," said Ford Davidson, CEO of Seattle-based Dashwire, which makes software for linking cellphone content to the Web. Nokia's Ojanpera said the firm was "absolutely" trying to attract iPhone developers to create attractive programmes for its phones.

"We will have the richest and the most interactive platform for the developers," Ojanpera said in the interview. "This is not only about high-end, this is about scale." Nokia said it would also cut some 90 jobs in internal IT unit and industry collaboration activities. It has so far slashed 3,000 jobs across the organization.

The overall mobile phone market is expected to shrink 10 percent this year, as consumers rein in spending and handset sellers try to clear out unsold phones.