A Brief History of Nokia: Rise & Epic Fall

Overview of Nokia

Nokia one of the most widely recognized and universally liked company which was founded in 1865, Finland. It is a multinational telecommunications company which was once one of the largest manufacturers of mobile phones. Once a market leader, Nokia failed miserably as it could not compete with its competitor and technology.

When I say the name Nokia you may think of a phone but you may also think of something bit more abstract and deeper than that it may remind you of brighter times. There was a time when you were only known to one and only phones. It was Nokia with the famous slogan “Connecting People”.

Background of Nokia

The company that eventually became Nokia was established by mining engineer Fredrik Idestam as a paper mill in Finland during 1865. The name Nokia was born due to the location of the second mill, which was set up on the banks of the Nokianvirta river during 1871.

Soon the company diversified into electricity generation and later three companies Finnish Rubber Works, Finnish Cable Works and Nokia merged. Thus Nokia Corporation was born in 1967.

Diversification and Expansion of Nokia

Nokia Corporation back then focused on paper, electronics, rubber, and cable. It produced toilet papers, rubber footwear, TVs, communication cables, etc. The company even constructed its own power plants. Appointment of  CEO, Kari Kairamo, in 1975 played a significant role in the expansion of the company. Soon the company expanded in Sweden, Norway, and Denmark, and then moving gradually into the rest of Europe. The company improved its product line, established a reputation for quality, and adjusted its production capacity.

In 1979 Nokia took its first steps into the telephone by creating Mobira Oy in a JV with Finnish TV maker Salora, and they created the Nordic Mobile Telephone (NMT) service. This was the world’s first international cellular network and in the 80s Nokia launched its first car phone called the Mobira Senator. Nokia DX200, the company first digital telephone switch was introduced in 1982.

Nokia also started producing personal computers in the 1980s but it didn’t go well. In late 1984 Nokia acquired Salora, the largest color television manufacturer in Scandinavia, and Luxor, the Swedish state-owned electronics and computer firm. Salora and Luxor combined into a single division and concentrated on stylish consumer electronic products.

It also succeeded in satellite and digital television technology. Meanwhile, Nokia manufactured items for Hitachi in France, Ericsson in Sweden, Northern Telecom in Canada, and Granada and IBM in Britain.  In spite of these efforts, Nokia’s profits continued to decline in 1989 and 1990, culminating in a loss of $102 million in 1991.

Focus on the telecommunications market
In 1990s, Nokia’s top leadership decided to focus solely on the telecommunications market, and as a result, the company’s data, power, television, tire, and cable units were sold off in the first few years of the decade. This starts the glory days for the company.

Early Success of Nokia

In 1992, the company’s first hand-held GSM phone Nokia 1011 was launched and reportedly it had a talk time of 90 minutes and could store 99 contact numbers.

In 1994, Nokia launched 2100 with the now iconic Nokia ringtone. This was such a big hit that it went on to sell more than 20 million handsets worldwide, much higher than what the company had predicted.

Nokia Communicator was launched in 1997 which offered features like email, fax, calendar, and a massive display.

The same year, Nokia also launched the 6110 and the 5110 two more devices, which were way ahead of their time and competition. These devices offered a much sleeker way of text messaging, a beautiful menu system customization options like multiple color snap-on covers.

These devices were followed by the 7110, which offered basic web functions, the 7650, with a built-in camera and the 6650, the company’s first 3G enabled smartphone.

By late 1990s Nokia was able to establish itself as a global leader. Whereas on the other hand its rivals Siemens, Apple and Sony were still unable to predict customer requirement and were far far behind Nokia.

Nokia smoothly moved through these years with a turnover that increased 500 percent from $ 8.9 billion to $42.8 billion.

Early hiccups of Nokia

Nokia received many hiccups after 2000. The first hiccup came in 2001, when Nokia profit dropped after being top mobile phone maker in the world. Around the year 2000, Nokia occupied 30% market share of phone double then of its competitor Motorola.

At that time, Nokia was a big giant in the mobile manufacture market, so it was obvious that Nokia was arrogant about its product. Nokia ignored retailer and distributor because it thought that Nokia did not require them to sell their phones and this has also impacted Nokia Failure.

Nokia also ignored the consumer feedback and customer taste and preference was also changing. But Nokia being Nokia thought that their hardware was best and no one would be able to compete with them.

Nokia Failure

On June 29, 2007, Steve Jobs announced that Apple will be launching its own series of smartphones called iphone 1 which changed the mobile ecosystem forever. While Nokia was busy in making features phone Apple had announced smartphones.

Google also developed Android in 2008 and other competitors such as Samsung, Gionee, Huawei, and HTE joined android and started making smartphones. Nokia was too big to adapt to sudden change. So it placed its faith on its hardware to make an impact on the market which starts Nokia failure.

But customer shifted fast from Nokia to other smartphones. After being on top mobile seller in 2008, Nokia faced huge decline in 2009 itself.  But Nokia stuck to its operating system Symbian despite the growing popularity of android and ios. Symbian could not compete with ios and android in operating system.

In 2010 Nokia hired Stephen Elop as the CEO of the company to change its fortunes. Stephen was working in Microsoft and Nokia had to pay compensation to the previous employer to bring him on board.  He was a CEO with high competence but low character.

In his speech after joining Nokia he said Nokia was like a burning platform. Either they had to jump in the water or put off the fire to save them. He decided to opt for blue ocean strategy. Nokia decided to join hands with Microsoft for operating system and produce hardware by itself.

The window was not compatible for mobile devices. Despite knowing the need of the hour was android for Nokia, Stephen decided to go the Microsoft. He had good relation with then Microsoft CEO Steve Ballmer and he was hoping to replace Steve as CEO of Microsoft. So the tie up between Microsoft and Nokia was necessary for Stephen Elop but not for Nokia. Elop was Trojan horse for Nokia.

Nokia failure was attributed to the wrong decision made by the company. People think Nokia failed because it did not change which is not true at all. Nokia changed but every change was opposite of android and ios were doing. Once a company of $250 billion at its peak, it was sold to Microsoft for $7.2 billion on 2014 marking the end of an era of mobile phone giant.