Nokia sale: History: From wellies to world-beaters - but then the world caught up
(Guardian (UK) Via Acquire Media NewsEdge) For a brief time, as mobile phones turned from curiosity to everyday essential, Nokia was number one. The products of a firm from a small Finnish town were world beaters. But Nokia's astonishing global success has slipped away as fast as the currents of the Tammerkoski rapids, site of the pulp mill where the company traces its roots.
The firm that started at the Tampere mill in 1865 took its name from a second mill built in nearby Nokia six years later. The company expanded into rubber, renowned for its wellies, before heading via cables and electronics towards what would become its defining product with the launch of its first radio telephone company in 1979.
Three decades ago, in mobile prehistory when a pan-Scandinavian cellular network was being developed, Nokia came up first with phones for cars. Designing new models that stretched the definition of portability a little less, by 1987 its Mobira Cityman could be claimed as a handheld. Weighing 800g and costing 24,000 Finnish marks (about pounds 3,400), the Cityman was the trademark of 1980s City yuppies and got a publicity coup when the Soviet leader, Mikhail Gorbachev, was photographed in Helsinki calling a minister in Moscow on Nokia's device - swiftly nicknamed the Gorba.
In technology as in superpower politics, Finland was playing host to rapid changes in the world. In 1991 it was a Nokia phone that was used by Finland's prime minister to make the world's first second generation GSM call - a shift to spark Nokia's ascendancy. Shedding its non-telecoms divisions, the company focused on pushing its first digital handheld, the Nokia 1011.
But the model it launched in 1994 would surf the wave of mass demand for this new technology. Nokia had set a sales target of 400,000 for its 2100 series; it went on to sell 20m of the handsets worldwide. This phone, too, was the first to carry the ringtone that would become carved into a billion eardrums: the signature duh-duh-durrr-duh plucked from a classical Spanish guitar waltz. Within four years Nokia had become the world leader in the mobile phone market. The business was valued at pounds 200bn and its growth was accounting for one quarter of the entire nation's GDP growth. By 2001 it had developed new models that featured rudimentary web access and built-in cameras, and its annual turnover had risen fivefold to euros 31bn.
But at the apparent height of success, as new opportunities were foreseen with the launch of 3G networks, Nokia gave the first hint that the future might not be so bright. It issued a shock profits warning, blaming a slowdown in the market, and announced plans to cut 1,000 jobs.
By 2004 the firm admitted it was losing market share to rivals, although it remained ahead of the pack. The sale of its billionth phone in Nigeria the following year underlined the global reach it had achieved.
Trouble was around the corner. A product recall affecting up to 46m handsets in 2007 dented its reputation. Yet the factor that would topple Nokia so spectacularly was not in its own factories, but Apple's. The launch of the iPhone made Nokia's conventional phones suddenly look as dated as the Gorba.
Nokia profits slumped while iPhone sales boomed. Financial crisis compounded its woes: more job cuts followed. Nokia bosses admitted they had been too slow to respond to the new technology. In 2009 profits turned to losses.
With Samsung and Google's Android also menacing, Nokia called in a first non-Finnish chief executive to turn things round, installing former Microsoft man Stephen Elop at the helm.
Elop could not deliver good news. Instead, he issued a stark warning to the staff: "We are standing on a burning platform." Despite launching new smartphones, Nokia was leapfrogged by Samsung and Apple in the sector.
By 2012 annual losses topped pounds 1bn, smartphone manufacturing moved to Asia and Nokia prepared to close its last factory in Finland. While Microsoft insisted that yesterday's euros 5.44bn (pounds 4.6bn) purchase of Nokia did not mean the end for Finland's R&D facility - and the rump of the firm will continue as a significant telecoms equipment business - the years where Nokia phones underpinned the nation's economy are now just more water under the bridge.
(c) 2013 Guardian Newspapers Limited.
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