The Hot Zone; Real Competition: The CEO of market-leading Nokia says his rivals are finally getting their act together. But he plans to regain the edge.(Interview)

Byline: Karen Lowry Miller

Nokia, which has long controlled more than a third of the global mobile-phone market, was shocked out of complacency in early 2004 when rivals were better prepared with midrange models and fashionable clamshell designs. Market share slipped, and the Finnish giant that had become synonymous with mobile phones had to issue a profit warning. For nine months CEO Jorma Ollila scrambled to put the company back on track. By October Nokia's market share had started climbing again. Ollila discussed the future of his company, and industry, with NEWSWEEK's Karen Lowry Miller. Excerpts:

LOWRY MILLER: Did Nokia make mistakes last year, or are rough patches inevitable?

OLLILA: It's a combination of both, with a little higher weight on the latter. The competition is getting its act together, after us dominating the field for the last five or seven years. Now at least they are making a bit of money. We have a healthier industry today, but it also means that we could for a change have some serious competition.

Has the convergence of computers and electronics changed your purpose?

No, no. We are very much loyal to our theme. We will be a company providing mobile-communications solutions. The convergence means that we need to have much better IT capabilities, work with partners from the IT industry, but it does not mean that we will go into product areas which would be typically IT products. We need to change as a company, looking at how we can, concentrating on those parts of the value chain where we have the best know-how. Clearly, we are in the middle of a process where we will transform ourselves.

And the result will be?