Nokia CEO on Why He Wants to Put 5G in Soldiers’ Backpacks

(Bloomberg) -- Pekka Lundmark is seeking to keep Nokia Oyj on track after the Finnish company lost a $14 billion contract with AT&T Inc. to competitor Ericsson AB, meaning Nokia’s communications equipment will get removed from one of the largest US networks.

As chief executive officer since 2020, the 60-year-old is well-acquainted with the company being misunderstood, as many conversations with everyday people involve explaining that Nokia no longer makes mobile phones after it lost its once-commanding lead following the advent of smart phones. 

With its focus now on the equipment that makes wireless connections possible, Nokia is looking to branch out, seeking new areas for growth including data centers and defense, and acquired Infinera Corp. as part of a push into artificial intelligence.  

Lundmark spoke to Bloomberg about the lessons learned outside Nokia, the potential impact of Donald Trump’s reelection and why there’s a growth opportunity in an increasingly unstable world. The transcript has been edited for brevity.

Bloomberg: You got your start at Nokia and then worked in a variety of other firms and sectors. How has that experience affected you after your return?

Lundmark: It’s very important for a leader to have broad perspectives and work in different fields. I actually started my career working in a small software company in Princeton, New Jersey. Then I joined Nokia in the autumn of 1990. 

After 10 years, I decided I wanted to do something else. I was for two years at an early-stage venture capitalist, where we analyzed hundreds of business plans. That gave me a totally different perspective compared to Nokia. It was really good to work with startups, because that really helps you to focus on innovation. 

Q: What was the biggest change at Nokia in the 20 years you were away? 

A: For a Finnish engineer, I don’t think there is anything more exciting than to get an opportunity to run Nokia. Of course, this was a very different company. 

In 2000, we were a rather small challenger in the networks business. The big difference was that when I came back, the market was much more consolidated and Nokia had been the key consolidator. Now we were one of the giants. 

The interesting thing was that I could still see when you go to places like Oulu [a town in northern Finland where Nokia has research and development labs], it was still the same startup engineering mentality with the people there. That was really good to see.

Q: How has Nokia’s failure in mobile phones impacted the way the company is perceived? 

A: I meet people all the time when I travel in different parts of the world, asking what happened to the phones. They were obviously divested to Microsoft 10 years ago. But when we are expanding to these new growth areas, it does help that people recognize the name Nokia. So that’s at least how you get to start the discussion. 

The big challenge is to explain to all of these enterprise verticals. We are attempting to capture from their mind the fact that they all know the name Nokia and reposition it as a B2B technology leader, as a trusted partner for critical networks. 

Q: Nokia is now branching out beyond mobile and fixed networks and moving into data centers. What’s the rationale behind that?

A: The data center market is worth tens of billions. We have currently defined about €20 billion ($21 billion) that’s addressable to us. The network operator market is €84 billion, roughly, but it’s not a growth market. Data center growth is around 30% per year. That’s why there is room for a player like us.

Now when AI and cloud are putting massive new demands on data centers, including safety and reliability, programmability of the data centers, we clearly see that we have a great opportunity now to enter.

We are now in the middle of the acquisition of Infinera, which will add about 3,000 specialists to Nokia. This is a Silicon Valley company that will further strengthen our offering to data centers. So this will be a key growth factor for us in the coming years. 

Q: The world has become more volatile, especially in Europe with the war in Ukraine. What kind of a role do you see for Nokia in the defense sector?

A: We have a very natural right to play there. That’s why we acquired a US company called Fenix Group last year. They are in Virginia. They have dedicated radios for military communications. What we’re now doing is integrating their systems with Nokia’s 5G platform, and together, we’re able to offer a comprehensive wireless communication solution for tactical communications. 

In many countries, we see a growing demand for networks for public safety, sometimes for police, sometimes for fire brigade. In many cases, we believe that military communications will go through dedicated networks.

We are now fine tuning 5G so that it would become robust enough for field purposes, so that the network needs to move with the troops. What we are able to offer now, together with Fenix, is actually a fully flexible and self-configuring network that moves in the backpacks of soldiers or vehicle-mounted. You do not need any cell towers. 

Q: Trump’s first presidency led to companies cutting out or limiting Chinese vendors, which helped Nokia. What do you expect from his second term?

A: It’s still quite early days. We are busy building connections with the Trump administration. We are a business; we are not politicians. We are ready to work with any administration. So we are now going to work with the Trump administration. 

Of course, we continue to push for the importance of trusted vendors. We want to expand that discussion to cover not only mobile networks, but networks at large, including fixed broadband and optical and routing and so on. This is definitely something that we will be advancing.

North America continues to be an extremely important market for us, to all of our businesses, but especially when it comes to data centers and military communications, because that’s where the largest investments are. 

Q: And finally...what are you reading, watching or listening to that has left an impression?

A: I’m listening to books all the time because one of my passions is sports. And I believe that if you want to be able to perform as CEO, you have to take care of your physical condition. 

That’s why I have in my calendar one hour of exercise every day. Like this morning, I did an hour and a half of weight lifting. I recently read the memoirs of my weightlifting coach. He’s talking about this balance between physical and mental well being. 

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