By Darren Waters

Technology editor, BBC News website, in San Francisco



Every day Nokia sources 329 million parts and builds a million phones in 100 plus handset models and distributes these phones in 70 different languages to 150 countries.

But as phones become less about making calls and more an extension of our connected lives, Nokia is transforming itself from a hardware company into something more converged. It's not the parts that matter but what use those parts are put to.

"We're not a cell phone company we're a software and services company as well," Anssi Vanjoki, executive vice president at Nokia, told BBC News.

He said: "We are already living in the converged world; the spearhead consumers, about 200m people, are using their devices to be present in the internet 24/7, using their handsets as multimedia computers."

"The company was established in 1865 and since then we have changed the course of the company several times from the original wood chip factory, to what is our main business, monetising our software know-how by selling devices."

He added: "It's very obvious in a converging internet world that when software, media and hardware come together it allows us to monetise our know-how in multiple ways."

To aid this latest genesis Nokia has invested in research centres around the world, building relationships with universities and academic institutions.

In the UK Nokia has partnered with Cambridge University and is focusing on the application of nanosciences to the mobile phone market, and has partnered with Professor Mark Welland, one of the world's leading nano experts.

Earlier this week the firm unveiled Morph, a concept phone that revealed the company's long-term ambitions; a mixture of high technology and services.

Morph is the product of nanosciences - a handset that can be folded, stretched, used to sense the world around it, and deliver the high end functions of a future communications device.

Morph is a beguiling vision

Technology editor Darren Waters

Read more on the Dot.Life blog

In the US Nokia has built a research centre in Palo Alto, at the heart of Silicon Valley. This centre is focused on developing internet and web applications, leveraging the local talent and expertise found at Stanford and Berkeley universities.

Professor Henry Tirri, head of System Research Centers, is tasked with fostering the collaborative research between Nokia and partner universities worldwide.

"Our research scope is very wide - but we're not focusing on display, radio technology or battery life - it goes from nanosciences in the UK to services and software in Palo Alto."

The research centres work outside the roadmap Nokia has for handsets, looking at future technologies and applications from one to three years ahead, three to eight years and beyond.

"An enormous amount of the patents found in today's handsets originated in Nokia's Research Centres - from the interface design to improvements in audio quality on the phones to applications."

These devices can connect the physical world with the digital world

Professor Henry Tirri

He added: "A lot of things that you will see in the future, as Nokia moves to be an internet company, will come from the research labs."

Mr Tirri said: "Nokia sells 18 phones every second of every day; that is a humungous computing platform.

"Voice is one function of these devices, but we are moving to a data centric world. These devices can connect the physical world with the digital world.

"But what are the services which will marry the two?"

One such project trying to do just that is under development at Palo Alto. Nokia's researchers are using the GPS technology in some of their phones to help create a real-time picture of traffic flow.

The lab is working with Berkeley University and state authorities to trial software on mobile phones which will hopefully lead to a better understanding of how traffic moves through a system, and ultimately lead to better information for motorists as they drive.

"We see the intersecting of the internet and mobility. Nokia has been a device company and that will remain a lucrative business for years to come, but instead of waiting until we have to change, Nokia is looking ahead and making changes now."

He said the focus for the firm was a "total solution", encompassing hardware and software, but focusing on a "compelling user experience".

"The company that understands the end user experience is going to have an edge," he added.

In Palo Alto 50 researchers are working on future mobile services.

Professor Tirri said the challenge for Nokia as it alters its focus was dealing with the issue of scale, and how best to use the information in the digital world that phones were able to gather in the physical world.

Morph is a future concept phone based on nanosciences

"And what do we choose to measure in the physical world? We could measure everything, using the camera and sensors like GPS, which is perfectly possible.

"But the challenge then is indexing that data. How do we sort and deliver that data back to people?"

"And then there is a humungous user interface problem - how do keep the experience simple enough for consumers?"

Dr Shen added: "When technology is below the user requirement, technology drives the industry.

"But once you cross over to the mainstream then you have to look at services and the user experience.

"The real focus now is compelling user experiences. It has to be user experience driven rather than technology driven."