The Rise and Fall of Nokia | Why Nokia Failed?

The Rise and Fall of Nokia | Why Nokia Failed?
Updated:15 Apr, 2022

Nokia, the brand, was born in 1865 in a paper mill in Southwest Finland, considered one of the most influential and substantial Fortune-500 companies. Nokia had sold the telecom industry in handsets and networking to Microsoft.

Earlier, it established itself as the market leader in the telecom industry. However, the position was threatened by competition from new lower-cost Asian manufacturers. In addition, Apple launched an entirely new category (iPhone) in 2007 - the smartphone - which was immediately popular with users.

But what were Nokia's missteps over the years? What should Nokia have done differently? Today, we will look at the rise and fall of one of the most loved mobile companies - Nokia. 

How Did Nokia Start? - An Overview!

In 1865, Fredrik Idestam opened a paper mill at the Tammerkoski Rapids in southwestern Finland. He further established a second mill by the Nokianvirta river - the place that gave Nokia its name. However, before reaching the leadership position in the Telecom sector, Nokia had gone through various businesses.

Let's understand the stage-up process towards its growth to the pinnacle.

  • 1898: Eduard Polon founded Finnish Rubber Works, which later became Nokia's rubber business.
  • 1912: Arvid Wickstrom starts Finish Cable Works, the foundation of Nokia's cable and electronics businesses.
  • 1937: Verner Weckman, a former Olympic, became President of Finnish Cable Works.
  • 1960: Cable Works discovers its first electronics department, selling and operating computers.
  • 1962: Finnish Cable Works produces its first in-house electrical device - a pulse analyzer for nuclear power plants.

Exploration: Different Industry Exposure

After completing the successful kickstart, Nokia expanded into other industries such as rubber, cables, tires, TVs, boots, etc. Thus, it is acceptable to speak that the early Nokia was an utterly different company that we know and admire. With this in mind, let's move on to when Nokia became the Nokia that we know today.

We will pick up the story of the 1960s - when there was a great deal going on. The new ways of thinking were gaining momentum in social, political, and diverse places but overshadowing all of this was particularly ominous.

From the middle to the late 1960s, the conflict wasn't so ice-cold in the Cold War. Nuclear war was a possibility. The communist superpower - the USSR - and the steadfast capitalist - the USA - were testing their bombs. Both of these parties are testing with increasing ferocity. This tension made the whole world nervous. Therefore, Finland was preparing for the worst. The Finnish Government wanted military research into radiotelephone communications to support the country's understanding of the full potential of reliable military communication.

Nokia's Turning point

A lesser-known company known as Nokia got this contract - boosting their confidence. Nokia later converted the expertise developed in communication into a civilian radio car telephone network. This network spanned the whole country by the start of the 1970s, and the system was very primitive by today's standards because he had to take turns to speak.

However, the real boom for Nokia began in the 1980s when mass production took place. 

Nokia further expanded into mass production methods of manufacturing. The economy of scale added features like less cost, a smaller size, and an affordable price. As a result, the company exported half of its entire production and expanded globally by 1985. Furthermore, it finally hit the big time when the company smashed the USA by teaming up with Tandy. Meanwhile, the concept of a mobile phone was incredible. It freed users from slotting money into machines to make a call, waiting in a payphone line, and being at home hoping that the cable could stretch.

The market was recognized soon when sales extended predictions by 3,000 percent. People love to talk about Nokia may have been into something. Here, it said that Nokia's secret to success was its ability to tailor different markets in the mobile industry while keeping the efforts going in various other industries.

Significant Launches: Rise of Nokia

Nokia launched the first portable car phone - Mobira - in 1984. Later on, in 1987, Nokia introduced the Mobira Cityman - the first handheld phone. It weighed in at 800 grams, and the price was 24000 Finnish Marks ($3400). The Soviet leader, Mikhail Gorbachev, used this phone to call his Communication Minister from Helsinki to Moscow.

In 1991, the Finnish Prime Minister, Harri Holkeri, made the first "global system for mobile communications" using equipment from Nokia. The central growth point for Nokia was the entrance of the digital handheld GSM phone, the Nokia 1011. The Nokia president and chief executive, Jorma Ollila, decided to focus on mobile phones and telecommunications, and the process started selling off its rubber, cable, and consumer electronics divisions.

In 1994, Nokia launched the 2100 series, the first phone to feature the Nokia original ringtone. After that, it went on to sell over 2 million phones globally. By 1998, Nokia had evolved into the world leader in the mobile phone market. From 1996 to 2001, Nokia increased its turnover almost from 6.5 billion to 31 billion euros. Ultimately, Nokia launched various mobiles and technologies for the next few years, including Wireless Application Protocol (WAP) and 3G technology. In addition, Nokia launched its first phone with a built-in camera, Nokia 7650, in 2001.

However, Nokia was still among the leaders in the mobile segment, but due to its contrast profits warning, it announced plans to cut 1,000 jobs by the end of 2002.

Why Didn't Nokia Sustain Its Monopoly?

Before iPhone penetrated the market in 2007, Nokia used to own a large portion of the smartphone market. Their refusal to change and adopt new things; or lack of adopting new technologies leads the company to its demise. It used to be the authority in its market, whereas Samsung was nowhere to be noticed. But, Samsung made a move at the correct time and gained success. 

What was the actual cause of the fall of Nokia? The monopoly brand missed responding to the modification with a full touchscreen and the application-based operating system. The years passed, and it did not keep up with the expectation of people, and the consumers turned back. The major downside was the company's focus on the Symbian series. While every competitor was shifting towards new technologies like Android or iOS, Nokia was still stuck with Symbian. Until 2011, the company did not make the leap of faith onto the Windows phone, and due to its slow response, it suffered such losses. 

The Fall of Nokia

In 2011, Stephen Elop warned staff that the company was standing on a burning platform. He further declared a strategic partnership with Microsoft days later to compete with Apple and Google's Android platform. Nokia ripped off a further 4000 jobs globally from its 65000 strong workforces. Elop denied it is in talks about a takeover by Microsoft. Nokia was overtaken by Samsung and Apple in the smartphone sector as profit and sales dwindled.

Furthermore, Nokia shifted its smartphone manufacturing to Asia. The company's share started following, and it sank to a €1.3 billion loss. Various analysts predicted a possible takeover by Microsoft as it cut 10,000 more jobs and announced its last factory in Finland would close. In 2013, Nokia returned to profit after surviving for 18 months. However, Microsoft bought the Nokia Telecommunication (Handset and Network) industry for €5.44bn (£4.6bn).

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