What happened to Nokia: the story of the company that ruled the world

What was your first cell phone? If you were born before the start of the new millennium, it was most likely a Nokia device. Once upon a time, the words "cell phone" and Nokia were almost synonymous. This Finnish company controlled a huge market share, about half of it at its peak. Nokia has been named the most valuable European company (2000), and the Nokia 1100 model still holds the top spot among the most popular mobile phones of all time.

But then... then something went wrong. So much so that a company with a capitalization of 149 billion euros turned into a "budget" asset worth 5.5 billion euros in a few years. How could this happen? Let's find out, but first, let's recall some history.

Sources and formation: from the tree to the telephone

It all started far from mobile technology and technology in general. In 1865, mining engineer Fredrik Idestam opened a pulp mill near the city of Tampere in Finland. Three years later, he built a second mill near the town of Nokia, whose name came from the river of the same name. In 1871, Idstam and his friend Leopold Mechelin founded Nokia Ab.

By the way, Mechelin is not just a random character, but a professor of law and political science, a prominent politician, liberal reformer, advocate for women and minorities, and co-founder of the United Bank of Finland. Mechelin's government of 1905-1908 made Finland the first nation in the world to have universal suffrage and during his tenure introduced freedom of speech, press and assembly.

Initially, Nokia produced paper. Even toilet paper. Then we added rubber products (you've probably heard of Nokian Tyres, a division of the company that still produces rubber for cars, trucks, buses, and heavy machinery), cables, and electric generators...

So the company was a jack of all trades. Something like today's Xiaomi, but without a vector at all: it laid cables, stamped rubber boots, and produced paper. But in the 1960s, the company finally turned its attention to electronics and telecommunications-and, as it turned out, for good reason.

In 1967, three different businesses - a paper manufacturer, a cable manufacturer, and a rubber manufacturer - merged to form Nokia Corporation. At the time, no one could have guessed that thirty years later, this company would become synonymous with mobile communications and create phones that would become legendary.

Speaking of legends, the first call on the GSM network was made from a Nokia phone. It happened in 1991, and the caller was none other than the Prime Minister of Finland.

But let's go back a bit. In 1977, Kari Kairamo joined the company, a man with big plans and a fresh perspective on business. He started buying up promising companies like a collector of rare stamps. Among his "trophies" were TV, computer, and electronics manufacturers. The most important purchase was Mobira, which became the foundation of Nokia's future mobile empire. Although few people believed it at first: members of the board of directors considered mobile phones to be expensive toys that no one needed. Oh, how wrong they were!

The machine spun, and by 2007 Nokia controlled more than 40% of the global mobile phone market, more than its two closest competitors combined.

Golden era: when a phone meant Nokia

It would be unfair to say that Nokia was just lucky. In fact, this company was a real engine of innovation. The world's first commercial GSM phone? Nokia 1011. First games on your phone? Yes, it was a snake on a Nokia. The first phone with WAP to access the Internet? Nokia again.

And then there were the cult models. The Nokia 3310, a phone that is still the subject of legends and memes, as if it were immortal (that you can hammer nails and chop nuts with it, and the battery lasts forever). It was sold in the amount of 126 million units. For comparison, the most successful smartphone, the iPhone 6, sold 222 million units, but this happened in an era when mobile phones were already commonplace.

Nokia created the first camera phone (although it wasn't called that at the time), the 7650. At the time, representatives of the photo industry looked down on a "camera" with a tiny matrix and a resolution of 0.3 megapixels. But time has proven that the bet on cameras in phones was the right one.

The ideas were diverse and original. There were double-sided sliders, music phones with 360-degree rotating screens, models with buttons on both sides of the screen, and unusual clamshells. Nokia was the first to introduce NFC with payment capabilities, xenon flashes, real GPS... Many of these features appeared in the iPhone much later. In general, look at the modern market and try to distinguish one phone model from another in a few steps. Back then, the mobile sphere was dominated by diversity and experimentation.

Many people think that Nokia slept through the touchscreen revolution, but the story is not so straightforward and simple. In 2004, the company released the Nokia 7710, one of the first mass-market smartphones with a large touchscreen. It was three years before the first iPhone. The time for such a device was simply not yet ripe - the market was not ready for radical changes in the way we use our phones.

And then there was the legendary N-series. The Nokia N95, which appeared in early 2007, was a real technological marvel. GPS, please. A 5-megapixel camera with Carl Zeiss optics? Of course. Wi-Fi, 3G, support for high quality video? The N95 had all of this before the first iPhone was even released. By the way, reputable American publications, including Fortune, recognized the N95 as better than the iPhone - and for good reason.

But even after the introduction of the game changer (more on that later), Nokia created something interesting. In 2011, Nokia N9 appeared - a flat rectangle with rounded corners, gesture control, no physical buttons on the front panel... It's hard to believe that this phone was created in 2011. Of course, it borrowed a lot from Apple phones (although who borrowed what from whom is something that technology historians and patent office specialists need to figure out), but the first iPhone of this design, namely, without a Home button, appeared only in 2017.

The Nokia N9 ran on the MeeGo operating system, and it was a real revolution. The gesture-based interface was so intuitive that users mastered it in minutes.

The phone could keep 35 programs running at the same time - true multitasking, without being forced to close or freeze. Modern smartphones can handle this too, but they work differently - they save resources by pausing programs in the background.

It was also good looking - so much so that when Nokia switched to Windows Phone, the first Lumia 800 simply "borrowed" the N9's design.

So Nokia didn't sleep through the future - it created it in many ways. It's just that sometimes it's not enough to be the first or even the best. You also need to time it right, have the right people in charge, and... not have the wrong people.

Trojan horse in a Finnish office and what Microsoft has to do with it

Let's go back a bit to 2007. Nokia is on top. Its shares are worth a lot, sales are growing, and the company controls about half of the global mobile phone market. It has its own operating system, Symbian, which is doing a great job. A new revolutionary Linux-based system is being developed - the aforementioned MeeGo. What could possibly go wrong?

But then the iPhone comes along. And the world changes. Nokia... does not notice these changes. Or rather, it does, but it doesn't react in the right way. Instead of recognizing the touchscreen revolution, the company continues to rely on push-button phones and complex Symbian.

Until 2006, Nokia was led by Jorma Ollila, a legendary figure in Finland. It was under his leadership that the company reached its greatest heights. But the market was changing, and Jorma realized that fresh ideas and new perspectives were needed. That's how Risto Silasmaa, an ambitious manager who saw Nokia's problems and offered solutions, joined the company.

And then there was a turning point - in 2010, Nokia got a new CEO, Stephen Elop. A former Microsoft executive (what a coincidence!) comes to run the world's largest mobile company. He receives $6 million for joining Nokia. Everything seems to be right, but... the process begins, which has often been called "the largest corporate suicide in the history of technology" in the press

Elop begins by forbidding Nokia's CEO from meeting with members of the board of directors without his presence. Sound strange? It's only the beginning. In February 2011, he does what many consider to be the beginning of the end of Nokia - he sends an open letter to the company's employees.

In this letter, he compares Nokia to a person on a burning oil platform in the middle of an icy ocean. "We must decide whether to stay and burn or jump into the icy water." The letter instantly hits the media with the headline "Nokia CEO admits their products are bad."

Elop decides to abandon Symbian, the operating system that was the most popular mobile platform in the world at the time, although it was gradually losing ground. But that's not all. It also kills MeeGo, a joint development between Nokia and Intel, a new mobile platform based on Linux, the same platform that was used in the revolutionary Nokia N9...

Instead, Nokia switched to Microsoft's Windows Phone, a platform that already existed but had only a 2% market share. At the time, it was used by HTC, Samsung, and LG, albeit without much success.

And what's even more interesting is that Elop is announcing the switch long before the first Nokia Windows Phone phones are available. In fact, he tells users: "Don't buy our current phones, they are outdated. Wait a year and a half until we release something new." This decision killed Nokia's sales even before the first Lumia was released.

Results of the "jump into the icy water"

Today's consumer does not like to wait so long. But the results of the wise management did not make us complain:

• Nokia shares fall by 14% in one day after announcement of transition to Windows Phone
• The company lays off 40,000 employees
• Sales drop by 75%
• In 2013, Nokia's mobile division is sold to... Microsoft. The price: 5.44 billion euros
• Stephen Elop receives a bonus of 18.8 million euros for the deal and returns to work at Microsoft

Interestingly, a year after returning to Microsoft, Elop was fired. Officially, it was "due to downsizing."

Suspicious coincidences for conspiracy theorists

There are details in this story that make those who study the development of companies think. Microsoft somehow managed to come alongside Nokia at the right time when the latter was weakening. But the story of the Finnish giant's patent portfolio raises the most questions. Nokia had about 20,000 patents for various mobile technologies. And do you know how much Microsoft paid for access to all these patents when it bought the mobile division? 2 billion dollars. To clarify: these patents remained with Nokia, but Microsoft, when it acquired the mobile division, received the right to use them.

And now for a telling fact: in 2017, Apple paid Nokia the same $2 billion, but for just 32 patents! That is, Microsoft received a huge patent portfolio at a price that seems... well, let's just say, very attractive.

Many consider this further evidence that the entire Nokia acquisition was carefully thought out. Was it a planned takeover of a competitor? It is unlikely that Microsoft will ever admit to this. But we've seen this kind of acquisition strategy before, and more than once. One can recall the story of Netscape in the 1990s, when Microsoft simply destroyed a competitor in the browser market.

Life after death: Nokia today

After the sale of its mobile division to Microsoft, Nokia did not disappear. But it had to take off its crown as the leader of the mobile phone market and change beyond recognition. The company focused on network equipment and technology development. And actually, it wasn't such a bad decision.

Microsoft was granted the right to use the Nokia brand for 10 years, but did not use it very successfully. Even with its fairly decent Lumia smartphones, the company failed to win more than 3-4% of the market. The reason: Windows Phone never became a popular operating system and could not fully compete with iOS and Android.

In 2016, the story takes an unexpected turn - the newly created Finnish company HMD Global, founded by former Nokia employees, buys the rights to the brand for mobile phones. And starts producing smartphones... on Android.

An interesting fact: HMD Global is headed by Nokia veterans who actually "chipped in" to buy their favorite company out of Microsoft's grip, just like Shevchenko did with the serfs. Sounds romantic, doesn't it?

Today, Nokia is not the same company that once controlled half of the global phone market. But it is still there:

• is one of the leaders in the development of network equipment
• a leading developer of 5G technologies
• owner of a huge portfolio of patents (about 20,000!)
• continues to make money on its patents by issuing licenses to various manufacturers. And often, these license fees bring the company more money than phone sales ever did.

Bitter lessons from Nokia

The story of Nokia is not just a story about the ups and downs of a technology giant. It is a story about how important it is not to be afraid of change, but to change wisely. It's about not trusting people with dubious intentions to run a company. And that even the strongest can fall if they let their guard down.

In 2023, Nokia changed its logo and abandoned the slogan "Connecting People". The company wants to no longer be associated only with mobile phones. And maybe that's right. Because Nokia has always been more than just a phone manufacturer. It has been and remains a company that is changing the world of technology - it's just that now it's doing so less visibly to the average user.

And Nokia phones? Their fate is now in the clouds. They existed until 2024 under the HMD Global brand. They were Android smartphones - simple, reliable, and without pretentiousness. But recently, even these last echoes of the glorious past have begun to fade: HMD stopped producing smartphones under the Nokia brand, moving the last models to a separate page. Of course, it wasn't even close to being "the same Nokia," but only a distant echo of its past, gradually becoming quieter and quieter.