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updated 11/30/2006 5:19:53 PM ET 2006-11-30T22:19:53

Design has always been important to Nokia, and now it's reaching a new level. The world's largest maker of mobile handsets is remodeling its headquarters in Espoo, Finland, part of a reorganization that will put design at the center of the company, literally and figuratively.

"We are sending a strong message to designers that they are respected, and to the rest of the organization that design is important," says Nokia Chief Executive Officer Olli-Pekka Kallasvuo.

The company, which has had most of its Finland-based designers in nearby Helsinki, is creating a new design studio in the waterfront Espoo headquarters that Nokia leaders say will be a true center of creativity, with drafting boards and everything. "It's not just a showroom, it's going to be a living, breathing, design center," says Kai Öistämö, general manager of mobile phones for Nokia.

News of the design reorientation, led by new chief designer Alastair Curtis, came as Nokia announced Nov. 28 it would launch its own "slim" phone, the 6300, to compete with Motorola's popular RAZR and others.

Nokia has taken heat from analysts for missing out on the slim segment, and the announcement that the company is finally launching a thin design helped offset investor disappointment that management had revised downward forecasts for operating profit.

As analysts, journalists, and industry representatives gathered in Amsterdam on Nov. 28 for three days of Nokia briefings and demos, the company adjusted its forecast for operating profit over the next two years to 15 percent from 17 percent.

Nokia's slim-phone miscalculation was a business decision rather than a failure of the design team, Nokia says. Still, the decision to elevate the visibility of design shows that Nokia, which has tended to emphasize function over form, is becoming more fashion-conscious. "As a company we are moving more and more to where consumer marketing and design are more important," says Chief Technology Officer Tero Ojanperä.

To be sure, Nokia probably owes its current dominance of the mobile market to its early recognition in the 1990s that phones were personal fashion statements as well as technology.

And the connection of design to technology is only growing, as people come to rely on their handsets not just for making phone calls but taking pictures, listening to music, and using the Internet. Making phones that look cool is only part of the job. "It's not only about how it looks, it's about how you interact with the device," says Ojanperä.

Fashions for Poorer Areas
Design is also crucial as Nokia moves more deeply into emerging markets. It turns out that most people are just as concerned about design as people from wealthy nations—maybe even more so. A $65 mobile phone represents a huge purchase for a low-income person in rural India. "It's a status symbol, the same as a car in the Western world. It had better be a well-designed object," says mobile-phone chief Öistämö.

While Western Europe is still Nokia's biggest market, the fastest growth is in Asia and Africa, and those regions are critical to the company's future. Even high-end handsets such as the multimedia N-Series sell well among wealthy people in countries such as Indonesia.

Remodeling the Espoo headquarters is just one of the steps intended to elevate the status of the Nokia design team. Another is that designers now located in Southwood, England, will relocate to London, to help Nokia recruit the best talent. London and Espoo will serve as the main centers of Nokia design, with input from teams scattered around the world, from Los Angeles to Brazil to China.

Design chief Curtis's goal is nothing less than to become "the most loved and admired brand in the world.

Another task of the design team is summed up by a print ad for one Nokia phone that pictures a man and a woman running nude along a beach with the headline, "Beautifully Simple." In fact, the handset business is becoming devilishly complicated as handset makers and mobile operators move toward the Internet.

The shift leads Nokia into new realms such as selling music or offering services based on global positioning technology. It will be up to Nokia designers to keep that technology accessible and attractive to the handset-buying masses.

Copyright © 2012 Bloomberg L.P. All rights reserved.

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