Nokia signals a move away from mobile and Europe with new CEONokia signals a move away from mobile and Europe with new CEO

Justin Hotard (pictured, right) was unveiled by the Chair of Nokia’s board Sari Baldauf (center) to replace incumbent Pekka Lundmark (left) this morning. It looks like Lundmark has got bored of being a CEO and fancies doing something a bit more chilled like a non-exec board role. The word on the street is that Baldauf is thinking of retiring, so who knows?

“I am delighted to welcome Justin to Nokia,” said Baldauf in the canned comments accompanying the announcement. “He has a strong track record of accelerating growth in technology companies along with vast expertise in AI and datacenter markets, which are critical areas for Nokia’s future growth.”

“I am honoured by the opportunity to lead Nokia, a global leader in connectivity with a unique heritage in technology,” said Hotard. “Networks are the backbone that power society and businesses, and enable generational technology shifts like the one we are currently experiencing in AI. I am excited to get started and look forward to continuing Nokia’s transformation journey to maximize its potential for growth and value creation.”

“Leading Nokia has been a privilege,” said Lundmark. “When I returned to Nokia in 2020, I called it a homecoming, and it really has felt like one. I am proud of the work our brilliant team has done in re-establishing our technology leadership and competitiveness, and positioning the company for growth in datacenters, private wireless and industrial edge, and defence.

“This is the right time for me to move on. I have led listed companies for more than two decades and although I do not plan to stop working, I want to move on from executive roles to work in a different capacity, such as a board professional. Justin is a great choice for Nokia and I look forward to working with him on a smooth transition.”

A lot of this was regurgitated in the media briefing but there were a few extra nuggets if you listened carefully. “Planning for this leadership transition was initiated last spring,” said Baldauf. “And that was when Pekka told the board that he would like to consider moving on from executive roles to a different kind of capacity.”

You have to wonder how the FT feels about that revelation. It got a leak last September that Nokia is looking into replacing its CEO and got the following statement from Nokia “The Board fully supports President and CEO Pekka Lundmark and is not undergoing a process to replace him.” Obviously companies often have to keep their cards close to their chest but flagrant lies like that are needless and counter-productive. How seriously should the FT and all other media now take the company’s public statements?

Anyway, this seems to be an orderly transition and, given the time it clearly had, a large number of potential candidates were presumably interviewed. Hotard is neither Finnish nor a telecoms veteran, so his appointment feels counterintuitive on the surface. But as the above canned quotes repeatedly suggest, Nokia is all about the AI datacenter markets these days and that means the US.

“We’re at the start of a super cycle with AI,” said Hotard, who will move to Finland. “One that I see [as] very similar to the one we saw a couple of decades ago with the internet. In these major market transitions new winners are created and incumbents either reinvent themselves or fail… My focus will be to accelerate the transformation journey.”

In the Q&A Hotard mainly played forward defensive strokes to questions about his plans for the company. He did say that he reckons networking comes second only to compute hardware when it comes to share of AI datacenter investment and he looks forward to the completion of the Infinera acquisition. Asked why they went for an external candidate, Baldauf said “US is an important market for us.”

For the past year Hotard has headed up the Datacenter & AI Group at ailing US chip giant Intel. Prior to that he was at HPE for nine years, most recently heading up the High Performance Computing, AI & Labs group. One example of the kind of new business Nokia is looking for in this area was the deal with Nscale announced late last year, which we discussed on a podcast.

While there were a couple of nods to mobile, specifically Nokia’s claimed leadership in the 5G SA cloud core, it’s starting to feel increasingly passé at the rapidly evolving company. We almost expected Hotard to refer to mobile, rather than the internet, as the old super-cycle being eclipsed by AI and there’s no denying that’s where all the buzz is these days.

Hotard reckons Nokia’s telco customer base gives it an advantage when it comes to AI datacenters, which are increasingly built near to sources of power, often in remote locations. So, while this does feel like a promising strategic pivot for Nokia, those telco customers might be worried about mobile being deprioritised as a consequence. The appointment of someone from a company with an appalling track record in that sector is unlikely to ease that concern.