When Olli-Pekka Kallasvuo joined Nokia 28 years ago, the Finnish group was making car tyres and rubber boots. Then he was part of the team assembled by Jorma Ollila, the former chief executive, that transformed the company into one of the biggest mobile phone makers in the world. Now Mr Kallasvuo is taking Nokia on almost as big a journey, into the world of internet services — maps, games, e-mail and music. Moreover, the group, he believes, is better placed to do this than either Google or Microsoft, the internet giants, which are also making software platforms for mobile phones.

In 2007, having taken the reins in June the previous year, Mr Kallasvuo unveiled Ovi, Nokia's services unit. He hoped that the division, which means “door” in Finnish, would open a new revenue stream for the company by providing applications for the users of Nokia phones.

Yet the launch of Ovi was merely the start of a period of rapid change at Nokia. In the past 18 months, it has bought a dozen companies, including the $8.1 billion purchase of Navteq, the digital mapping group, and hired more than 700 employees from the internet industry, kick-starting its transformation into an internet business as the mobile phone market matures and stutters.

“I've spoken about this quite often internally and I've been saying to our own people that we want to become more like an internet company,” Mr Kallasvuo said.

The downturn may yet puncture Ovi's internet services plans, of course. Will people still be willing to pay for extra services on their phones when their budgets are stretched? What is clear is that Nokia can no longer afford the aloof arrogance of the dominant player. It still sells as many phones each quarter as its four main rivals put together and is in no fear of losing its crown as market leader, but it has been bruised by the shifting mobile landscape and the economic downturn.

At Nokia World, the company's annual showcase event, which was held in Barcelona last month, the softly spoken Mr Kallasvuo and fellow executives chose to take a forceful stance, taking pains to point out that Nokia's E71 non-touchscreen smartphone, the company's equivalent to the BlackBerry, had won industry awards against rivals, including BlackBerry and Apple.

Nokia is trumpeting its successes in more competitive times. For the first time, in the third quarter of 2008, Nokia's sales of smartphones - mobiles that send and receive e-mail and surf the internet like mini computers - fell, in part because of its delay in bringing out a touchscreen smartphone. At the same time, Apple, which launched the iPhone in June 2007, moved up to third place, behind Nokia and RIM, maker of the BlackBerry.

Nokia also lost overall market share in the second half of last year - slipping from 40 per cent to 38 per cent - as it shied away from fierce price battles. In November it was forced to issue a profit warning after consumers spent less on mobile phones. To top it off, Nokia predicts a 5 per cent decline in global handset sales this year, ending virtually l5 years of uninterrupted growth.

The arrival of Apple and BlackBerry in the phone market has clearly shaken things up. “It's very clear that new competitors have entered mobile communications,” Mr Kallasvuo said. “That's quite interesting. I take it as a good illustration of the fact that the industry continues to be very interesting because mighty companies like [Apple]and many others have entered. In any business, you take your competition extremely seriously and one needs to be paranoid about competition. I'm paranoid in that way.”

But while Nokia may be bruised, it is far from broken. Mr Kallasvuo admits that Nokia was late with its touchscreen phones, but has declared that it will take on its touchscreen rivals “with a vengeance” in 2009. Nokia launched its first touchscreen, the 5800, known as The Tube, last October. It was followed two months later by the unveiling of the N97, another touch device. More are to follow.

There was a reason for the delay in launching touchscreen phones, Mr Kallasvio said. “Overall, our thinking goes that we put in place a feature that we can then put in our technologies in such a way that we can multiply that, so we are not making one product only on a standalone basis.

“Sometimes it takes more time to do it in this way, but then once you have done that you can exploit economies of scale in a better way.”

In any case, the company is not focusing solely on smartphones, but also on the markets where there is still demand for basic non-smartphone models. The downturn has taken the edge off rapid handset growth, but Nokia far outstrips its rivals in emerging markets - in some parts of India and China, people refer to their mobiles as “Nokias”.

“From a business point of view, all the key virtues Nokia has — R&D capability, brand, logistics, distribution, market position - are applicable in the same way, both in smartphones and in non smartphones,” Mr Kallasvuo said.

In fact, Nokia's broad portfolio of handsets put it in a good position to weather the recession, as it will be able to provide cheaper phones to European consumers if they decide to downsize to a cheaper phone model because of the downturn.

It is less clear what the recession could mean for Nokia's internet services plans. In the past Mr Kallasvuo has predicted that Ovi would bring in revenues of $2billion by 2011, but will people pay for extra services on their phones in a recession?

It is still relatively early days. E-mail on Ovi went live only last month and the company plans to start advertising its services aggressively this year.

Mr Kallasvuo does not appear worried. Nokia has a solid balance sheet — the company was sitting on €2.9 billion (£2.6 billion) of net cash on September 30. It can afford to wait for the economy to improve. “We only started that business as a separate unit as of January 1, 2008, so it's early days. But when we look at the possibilities here to exploit and build on the devices base of 100 million consumers that have a Nokia device, we have a strong brand. We have a lot of credibility in the mind of the consumer.”

Q&A

If you could change one thing in the financial and commercial environment, what would it be?

I focus on what is, not what might be - I'm very much a pragmatist in that sense. Finns in general are practical-minded

What does leadership mean to you?

It's about having good doses of courage and humility. Have the guts to push forward your ideas, but be humble enough to accept that others may sometimes have better ideas than you

Which business person do you most admire?

There are many people in business I hold in high regard, but in the end you need to play your own game. Outside of business, I admire the work that Martti Ahtisaari [the former Finnish president and Nobel Peace prize-winner] has done

What is most important in your working life?

Not being afraid of change. Accept that things around you change and act on it

Which is more important, what you know or who you know?

You need a good balance. In today's world, you can't do anything alone, you have to be networked. At the same time, you need to know your business inside-out

Does money motivate you?

The success of any company is measured by profitability, so yes, it does

What gadget must you have?

My mobile computer. At the moment it's a Nokia E71, but I'll soon start trying out the N97 - basically a pocket-sized laptop coming out soon. It's good to get a first-hand experience of our new products and services

How do you relax?

I play tennis and get in a round of golf when I can. I also read - political history mainly

CV

Born July 13, 1953

Education Master's degree in law from the University of Helsinki

Career joined Nokia in 1980 as corporate counsel. Has been assistant vice-president, legal department, corporate executive vice president for Nokia US, and chief financial officer. In October 2005 named president and chief operating officer; made chief executive on June 1, 2006. Before joining Nokia, Mr Kallasvuo held positions with the Union Bank of Finland

Family Married to Ursula Ranin, a lawyer; two adult children from a previous marriage