Nokia Builds Its Other Business
Lisa DiCarlo, Forbes.com, 05.09.01
LAS VEGAS - The first thing that comes to most people's minds when they
hear the name Nokia is, of course, cell phones. But behind the scenes,
the Finnish phonemaker is quickly building an Internet division that is
already on track for half a billion dollars in sales this year.
Nokia's three-year old Internet Communications division was conceived by Chairman Jorma Ollila, who dispatched his number two, Pekka Ala-Pietila to Silicon Valley to start the
group. The purpose was to build scalable back-end products that would
enable the third generation of wireless communications, dubbed 3G.
That same year, Nokia bought Ipsilon Networks , a maker of Internet
routers and switches. It later ported firewall security software from its
partner, CheckPoint Software Technologies (nasdaq: CHKP - news -
people), to run on the hardware. It also bundled in virus protection
software from McAfee Associates and intrusion protection technology
from Internet Security Systems (nasdaq: ISSX - news - people).
Nokia made another strategic acquisition with Network Alchemy , which
makes high-end virtual private networks. VPNs are a cheaper, more
secure way for businesses or individuals to communicate or do business
over the Web. In fact, the Internet Communications group accounts for
eight of the 14 overall acquisitions Nokia has made since 1997.
Nokia sells appliances loaded up with all this software to service
providers, Web hosting companies and large enterprise customers.
Yesterday it said Exodus Communications (nasdaq: EXDS - news -
people), already a customer of the firewall product, would buy the full
lineup of Nokia VPNs.
What does all of this have to do with Nokia's core competency? According
to Vice President Joe Gottlieb, the company is providing some of the tools
for wireless Internet connectivity and transactions. Secure, reliable, fast
access may finally give customers a compelling reason to buy new cell
phones, which made up two-thirds of Nokia's $28 billion in sales last
year.
In the meantime, the Internet Communications group will continue
providing critical components that operate in the shadows of the Internet.
"No doubt about it we're one of the best-kept secrets," says Gottlieb.
forbes.com |
