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(Helsinki, Finland) Leave it to Nokia – with its intimate connections to cellular-network operators such as Orange and Vodafone – to nurture new technologies that could help traditional carriers beat back the threat from free or low-cost Internet startups such as Skype. Now, as mobile devices become increasingly powerful, the Finnish company is moving aggressively to develop new service-based mobile technologies that will further blur the line between handheld devices and PCs.

Many of Nokia’s advanced technologies are designed and tested at the Nokia Research Center in Helsinki, Finland. The center is also headquarters for the Nokia Ventures Organization, which commercializes some of the technologies that emerge from the research operation.* One recent example: Lifeblog, an online diary where users of certain Nokia phones can publish pictures, videos, and text messages.

Markku Rauhamaa is vice president of Nokia’s Local Interactions Business Line within the Nokia Ventures Organization, which works outside the big business groups in the company – mobile phones, multimedia, enterprise, and networks – to develop ideas for entirely new businesses.

Technology Review senior editor Wade Roush visited the company’s offices in Helsinki to talk with Rauhamaa about the company’s current R&D and business development activities.

TR: What startups does Nokia Ventures fund, and how will they be exploiting new wireless and cellular technologies?

RM: The Nokia Ventures Organization itself is not a venture capital organization, but for example, in the area of contactless payment, there’s a California company called Vivotech that Nokia has invested in through the Nokia Growth Partners fund.* It is enabling existing point-of-sale equipment [such as cash registers and vending machines] to be contactless. For just $100 or $50 it adds the RFID capability to the point-of-sale device. Contactless payment and ticketing also requires a trusted partner, a [payment service] that somehow gets triggered and handles the transaction when you wave your phone over the reader. That’s another interesting area for us – but I can’t go much deeper on that one right now.

Another example of an area the Nokia Ventures Organization is looking into is marketing and advertisement. The phone is a very personal device, so you cannot do marketing [on it] in the same way you would on TV. You need to be very careful that it is not intrusive. But there are a lot of interesting things happening on that side.

Then there’s “mobile loyalty.” Think about having not only the payment and ticket card in your device, but also your loyalty card for the supermarket. Globally, price reductions through loyalty schemes amount to about $100 billion – it’s a huge business.

One of the general themes is that we need to look forward, outside the device itself, to the new services that will be enabled. This industry has made mistakes in the past. Everybody knows the WAP story. [WAP, for Wireless Application Protocol, allowed carriers to deliver stripped-down text-based information to cell-phone screens. It was a success in Japan, but failed in most other countries due to a lack of standardization and specialized content. -- Editors] At that time, it was said “You’ll have the Internet in your pocket.” Well, they didn’t look widely enough. They didn’t build the solutions customers wanted. I hope we have learned based on that.

* Correction, February 27, 2006: A previous version of this article implied that the Nokia Research Center and the Nokia Growth Partners fund are divisions of the Nokia Ventures Organization. In fact, the Nokia Research Center and the Nokia Ventures Organization are separate entities located in the same building, and the Nokia Growth Partners fund is also separate.

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