In 2007, the Finnish company Nokia seemed like an indestructible empire. Its value reached an astronomical sum of 149 billion euros, and every second phone in the world bore a familiar logo. For comparison: the Korean giant Samsung was then valued at only 15 billion euros. Few could have imagined that in just a few years this technological giant would be sold for an amount 20 times less, informs Ukr.Media.
How did this devastating fall happen? Let's trace Nokia's journey from paper mill to mobile world king and its subsequent collapse…
From paper to phones
Nokia's story began on the banks of the Finnish Nokianvirta River, where an ambitious mining engineer, Fredrik Idestam, founded a small paper mill in the city of Tammefors (now Tampere) in 1865. No one could have imagined then that this modest enterprise would be the beginning of a company that would change the world of mobile communications over a century later.
Three years later, Idestam expanded production by building a second factory in the town of Nokia. It was this place that gave the name to the future technology giant – in 1871 the company was officially named Nokia Ab. Thus, a small paper production in southwestern Finland became the first stone in the foundation of the future telecommunications empire.
Nokia did not limit itself to paper production. The company began to actively expand its spheres of influence. Thanks to a series of strategic mergers with other companies, Nokia significantly expanded its production potential. The company's portfolio became truly impressive: it produced rubber products, plastics, aluminum, electric generators, household appliances and even engaged in wood processing.
The late 1970s marked a turning point in Nokia's history. The company began a strategic expansion into electronics, systematically acquiring small technology companies. 1979 saw an important partnership: Nokia joined forces with television manufacturer Salora to form Mobira Oy.
The joint venture made a real breakthrough in 1981, launching Nordic Mobile Telephone, the world's first cellular network. A year later, the Mobira Senator, a car phone, was launched, marking Nokia's first foray into mobile telephony.
In the same year, 1987, Nokia introduced the revolutionary Mobira Cityman, the first truly portable phone weighing 800 grams. The device received the unofficial nickname “Gorba” after a photo of Mikhail Gorbachev using it went viral.
In the late 1980s, the global economic downturn presented Nokia with a difficult choice. As the company's historical documents state, the management had to decide “which chair to sit on” – scattering into many directions became economically unprofitable. After careful analysis and, as time has shown, a strategically correct decision, the company's management decided to focus on telecommunications. This decision turned out to be a truly golden ticket to the future for Nokia.
Nokia's heyday
In the early 1990s, after a strategic decision to focus on telecommunications, the company began its rapid rise to the top. The real revolution came in 1991, when the Prime Minister of Finland made the first ever GSM call from a Nokia phone. This moment marked the transition from the first generation analog communication (1G) to the digital GSM standard (2G), which opened up new possibilities – a more stable signal and data transmission, including text messages.
In 1992, Jorma Ollila became Nokia's CEO. And Nokia introduced its first breakthrough – the Nokia 1011, the world's first mass-market GSM phone. Despite its impressive weight of almost half a kilogram, this device opened a new era in mobile communications.
The company continued to grow rapidly, introducing new models every year. In 1994, the Nokia 2110 was released, which introduced the world to the famous Nokia Tune – a melody that became one of the most recognizable sounds in the world. It was a fragment of the guitar waltz “Gran Vals”, written by Spanish composer Francisco Tárrega.
In 1997, the Nokia 6110 captivated users with its built-in Snake game, and in 1998, the Nokia 5110 created an entire industry of interchangeable panels, allowing users to personalize their phones.
1999 was marked by two important events. Jorma Ollila, a highly respected leader under whom Nokia achieved its major achievements, became the chairman of the board of directors. In the same year, the Nokia 3210 was released, which became one of the most successful mobile phones in history, with over 160 million units sold. This phone was the first to have a built-in antenna, which made it more compact and elegant.
The legendary Nokia 3310 was released in 2000, selling nearly 126 million units. For comparison, the best-selling iPhone of all time, the iPhone 6, reached 222 million units sold, but that was after 2014, when overall phone sales were much higher.
A real sales record was set by the Nokia 1100, introduced in 2002. It became the company's absolute bestseller — an incredible 250 million devices sold.
By 2006, Nokia was ranked 20th on Fortune magazine's list of the world's most valuable companies. By 2007, the corporation's value had reached a whopping €149 billion, and its share of the mobile phone market was well over 50%. In comparison, Korean giant Samsung was valued at just €15 billion that same year.
During this period, Nokia seemed indestructible. The company demonstrated steady growth, dominated the market and constantly innovated. Each new phone model was not only commercially successful – it brought something new to the industry, whether it was technological innovations or revolutionary features for its time. Nokia did not just follow trends – it created them. No one could have imagined that in just a few years this technology giant would lose its position.
The beginning of the crisis
However, 2007 was a turning point in the history of the mobile industry – the first iPhone was released on the market, and the telecommunications industry experienced a real revolution. Nokia, being a huge and not very agile company, was not ready for such rapid changes. All its actions were based on long-term strategic planning – the company did not try to solve immediate problems, but invested for years to come. It was this sluggishness that became one of Nokia's main problems in the new era.
The situation on the market was seen not only by Nokia itself, but also by its cunning competitor, Microsoft. Events began to develop according to a scenario that many would later call a “Trojan horse”. A seemingly excellent candidate appeared for the post of the new director of Nokia – an experienced manager from America, Stephen Elop, who had previously worked at Microsoft for several years.
His candidacy was actively promoted by Rista Silasmaa, an ambitious member of the Nokia board who not only aimed for the director's chair, but also saw the company's problems and proposed solutions. Elop eloquently convinced the board that he could lead Nokia to success, because he knew the Western market so well, and the Finnish company really wanted to enter this segment of buyers.
Even the wise Jorma Ollila, under whose leadership the company had reached incredible heights, saw no trickery in this appointment and approved Elop's candidacy. However, subsequent events have made many doubt the correctness of this decision.
With the arrival of Elop, strange changes began in the management of the company. He began to communicate directly with employees, telling them that things were going badly in the company. Elop even forbade Jormi to communicate with the board of directors without his presence. His main development policy was the abandonment of his own developments and the gradual transfer of intellectual property to Microsoft.
It was a period when the company, while still maintaining its external grandeur, began to collapse from within. Nokia found itself at a crossroads — on the one hand, it had enormous resources and potential to develop its own technologies, and on the other — the new management was persistently leading the company towards cooperation with Microsoft, which ultimately turned out to be the beginning of the end for the great Finnish corporation.
Period of decline
Under Stephen Elop, Nokia's performance has been in steep decline. At the beginning of his tenure, market share was 29%, but by 2011 it had fallen to 15.9%, and two years later it was only 3.1%. Sales were falling steadily, and losses were becoming more and more noticeable.
One of Elop's most controversial decisions was the refusal to develop its own MeeGo operating system. But it was a truly progressive system – in 2011, Nokia released the only smartphone on this platform, the Nokia N9. The device was ahead of its time: it used a revolutionary gesture control system, there were no physical buttons on the front panel (Apple came to this only in 2017 with the iPhone X), the system worked quickly and smoothly, supporting full multitasking. MeeGo was planned as a universal system for all devices – from computers to TVs, which could create a full-fledged Nokia ecosystem.
Instead of developing its own promising platform, Elop insisted on switching to Windows Phone. This was a key strategic decision by Elop, which turned out to be a failure. It is noteworthy that the first Nokia smartphone on Windows Phone — Lumia 800 — was an almost complete copy of the Nokia N9 externally, but with much more limited functionality. Windows Phone never became a popular system, which only accelerated Nokia's downfall.
Under Elop, massive staff cuts began—nearly 40,000 people were laid off during his tenure, most of them Finns. The company was rapidly losing its best talent and technological capabilities.
Elop continued to tell beautiful stories about the future, but his actions said otherwise. In his infamous letter to employees, he compared Nokia's situation to a man on a burning oil rig, who had to make a decision: burn or jump into the cold sea. “We were putting out the fire with gasoline,” he described the situation. However, many believe that his actions were the “gasoline.”
Microsoft sale
As a result, in 2014, what many considered unthinkable happened – Microsoft bought Nokia's device and services division, along with all the related patents. The deal was worth just $7 billion – a paltry sum for a company that was valued at $149 billion just seven years ago. Of particular value in the deal was Nokia's patent portfolio, which consisted of approximately 20,000 patents – unique developments in the field of telecommunications. Microsoft paid only $2 billion for this huge baggage of intellectual property.
But Microsoft didn't seem to be too interested in developing Nokia's mobile business. The company closed its smartphone division a year after the purchase, and Stephen Elop, who played a key role in the deal, was fired under the pretext of downsizing. He received more than 33 million euros for his work at Nokia.
Elop himself vehemently denied that he was a “Trojan horse.” “As for the Trojan horse, I have always worked at Nokia solely on behalf of and for the benefit of shareholders. Furthermore, all fundamental business decisions and strategic plans were made with the support and approval of Nokia's board of directors, of which I was a member,” Elop said on the Nokia blog. But no one has been able to prove malicious intent or a direct order from Microsoft.
Nokia today
Contrary to popular belief, Nokia did not completely disappear after selling its mobile division to Microsoft. Today's Nokia focuses on developing advanced technologies that it sells to other companies. Particular attention is paid to the development of 5G technologies – in this field the company has become one of the world leaders. More than 5,500 Nokia patents have been recognized as critical for 5G technology.
The company is not standing still and continues to develop in new directions. In 2020, NASA signed a contract with Nokia worth $ 14.1 million to launch 4G on the Moon. This ambitious project involves creating reliable communication for the future lunar base, which is planned to be built by 2028. In the future, these lunar 4G networks can be upgraded to the 5G standard.
As for the Nokia phones on store shelves today, they have little in common with the original Finnish company. They are products of HMD Global, which uses the Nokia brand. Significantly, in 2023 Nokia even changed its logo to distance itself from associations with mobile phones. As Nokia CEO Pekka Lundmark said: “In most people’s minds, we are still a successful mobile phone brand, but that is not what Nokia is. We want to launch a new brand that is very much focused on networks and industrial digitalization.”
