Nokia

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This article is about the telecommunications corporation. For other uses, see Nokia (disambiguation). For the company arisen from Microsoft's acquisition of Nokia's Devices and Services division, see Microsoft Mobile.
Nokia Oyj
Type Julkinen osakeyhtiö
(Public company)
Traded as OMXNOK1V
NYSENOK
Industry Telecommunications equipment
Computer software
Successors Microsoft Mobile
(Nokia Devices and Services Division)
Founded Tampere, Grand Duchy of Finland (1865)
incorporated in Nokia (1871)
Founders
Headquarters Espoo, Uusimaa, Finland[1]
Area served Worldwide
Key people
Products List of Nokia products
Services Maps and navigation
Software solutions
(See services listing)
Revenue Decrease €12.70 billion (2013)[2]
Operating income Decrease €519 million (2013)[2]
Profit Decrease €-615 million (2013)[2]
Total assets Decrease €25.19 billion (2013)[2]
Total equity Decrease €6.46 billion (2013)[2]
Employees 90,981 (2013)[2]
Divisions Mapping Services
R&D Center
Subsidiaries Nokia Networks
HERE
Nokia Technologies
Website Nokia

Nokia Oyj[3] (Finnish: Nokia Oyj, Swedish: Nokia Abp; Finnish pronunciation: [ˈnokiɑ], English /ˈnɒkiə/) is a Finnish communications and information technology multinational corporation that is headquartered in Espoo, Uusimaa, in the greater Helsinki metropolitan area.[1] Its Nokia Networks subsidiary provides telecommunications network equipment and services.[4] Its wholly owned subsidiary HERE provides free-of-charge digital map information and navigation services.[5]

As of 2013, Nokia employed 90,000 people across 120 countries, conducts sales in more than 150 countries and reported annual revenues of around €12.7 billion.[2] Nokia is a public limited-liability company listed on the Helsinki Stock Exchange and New York Stock Exchange.[6] It is the world's 274th-largest company measured by 2013 revenues according to the Fortune Global 500.[7]

In September 2013, Nokia sold what was once the world's largest vendor of mobile phones to Microsoft as part of an overall deal totaling €5.44 billion (US$7.17 billion). Stephen Elop, Nokia's former CEO, and several other executives joined the new Microsoft Mobile subsidiary of Microsoft as part of the deal, which closed on 25 April 2014.[8][9]

History[edit]

1865 to 1967[edit]

Fredrik Idestam, co-founder of Nokia.
Leo Mechelin, co-founder of Nokia.
Eduard Polòn portrait by Eero Järnefelt

The predecessors of the modern Nokia were the Nokia Company (Nokia Aktiebolag), Finnish Rubber Works Ltd (Suomen Gummitehdas Oy) and Finnish Cable Works Ltd (Suomen Kaapelitehdas Oy).[10]

Nokia Ab's history started in 1865 when mining engineer Fredrik Idestam established a ground wood pulp mill on the banks of the Tammerkoski rapids in the town of Tampere, in southwestern Finland (part of the Russian Empire).[11] In 1868, Idestam built a second mill near the town of Nokia, fifteen kilometers (nine miles) west of Tampere, by the Nokianvirta river, which had better hydropower resources.[12] In 1871, Idestam, with the help of close friend and statesman Leo Mechelin, renamed and transformed his firm into a share company, thereby founding Nokia Ab. The company's name came from the Nokianvirta river, nearby which the factories of Eduard Polón's company, Suomen Gummitehdas, were located a few years later.[12][13][14]

Eduard Polón (1861-1930), Nokia's founder, was a Finnish business leader.[15] He was founder, CEO, Chairman of the Board and the largest shareholder of the Suomen Gummitehdas ("Finnish Rubber Works"). He led the development of a new rubber industry in Finland. His group of companies built a modern wood and cable industry in Finland. Polón decided to use the name "Nokia", the town where his factories were based, as a brand name for his products to differentiate his products from Russian competitors.[citation needed] The legacy of Suomen Gummitehdas lives on in Nokian Tyres.

Although these three companies—Suomen Gummitehdas, Suomen Kaapelitehdas and Nokia Ab—were not formally merged, as the law did not allow it at the time, Polón continued to create a successful conglomerate that later became Nokia PLC. Polòn was the chairman, managing director, and the largest owner of the group for 30 years.[citation needed]

Towards the end of the 19th century, Mechelin sought to expand into the electricity business, but his aspiration was initially thwarted by Idestam's opposition. However, Idestam's retirement in 1896 allowed Mechelin to become the company's chairman (from 1898 until 1914), and he subsequently convinced shareholders.[12] In 1902, Nokia added electricity generation to its business activities.[11]

Industrial conglomerate[edit]

In 1898, Polón founded Finnish Rubber Works, manufacturer of galoshes and other rubber products, which later became Nokia's rubber business.[10] At the beginning of the 20th century, Finnish Rubber Works established its factories near the town of Nokia and began using its name as its product brand.[16] In 1912, Arvid Wickström founded Finnish Cable Works, producer of telephone, telegraph and electrical cables and the foundation of Nokia's cable and electronics businesses.[10] At the end of the 1910s, shortly after World War I, the Company was nearing bankruptcy.[17] To ensure the continuation of electricity supply from Nokia's generators, Finnish Rubber Works acquired the business of the insolvent company.[17] In 1922, Finnish Rubber Works acquired Finnish Cable Works.[18] In 1937, Verner Weckman, a wrestler and Finland's first Olympic Gold medalist, became president of Finnish Cable Works, after 16 years as its technical director.[19] After World War II, Finnish Cable Works supplied cables to the Soviet Union as part of war reparations. This gave the company a foothold for later trade.[19]

The three companies, jointly owned since 1922, were merged to form a new industrial conglomerate, Nokia Corporation, in 1967.[20] The new company was involved in many industries, producing at various times paper products, car and bicycle tires, footwear (including rubber boots), communications cables, televisions and other consumer electronics, personal computers, electricity generation machinery, robotics, capacitors, military communications and equipment (such as the SANLA M/90 device and the M61 gas mask for the Finnish Army), plastics, aluminum and chemicals.[21] Each business unit had its own director who reported to the first Nokia Corporation President, Björn Westerlund. As the president of the Finnish Cable Works, he had been responsible for setting up the company's first electronics department in 1960, sowing the seeds of Nokia's future in telecommunications.[22]

The company decided to exit consumer electronics in the 1990s and focused solely on the fastest growing segments in telecommunications.[23] Nokian Tyres, manufacturer of tires, split from Nokia Corporation in 1988[24] and two years later Nokian Footwear, manufacturer of rubber boots, was founded.[16] In 1989, Nokia also sold the original paper business; currently this company (Nokian Paperi) is owned by SCA. During the rest of the 1990s, Nokia divested itself of all other businesses.[23]

1967 to 2000[edit]

The electronics section of the cable division was founded in 1960 and the production of its first electronic devices began in 1962: a pulse analyzer designed for use in nuclear power plants.[22] In the 1967 fusion, that section was separated into its own division, and began manufacturing telecommunications equipment. A key CEO and subsequent chairman of the board was vuorineuvos Björn "Nalle" Westerlund (1912–2009), who founded the electronics department and let it run at a loss for 15 years. In the late 1960s and early 1970s Westerlund encouraged researchers to work on their own projects, which one top executive directly linked to the company's later expertise in mobile communications technologies.[25]

Networking equipment[edit]

A Nokia P30

In the 1970s, Nokia became more involved in the telecommunications industry by developing the Nokia DX 200, a digital switch for telephone exchanges. The DX 200 became the workhorse of the network equipment division. Its architecture enabled it to be developed into various switching products.[26] In 1984, development of a version of the exchange for the Nordic Mobile Telephony network was started.[27]

For a while in the 1970s, Nokia's network equipment production was separated into Telefenno, a company jointly owned by the parent corporation and by a company owned by the Finnish state. In 1987, the state sold its shares to Nokia and in 1992 the name was changed to Nokia Telecommunications.[28]

In the 1970s and 1980s, Nokia developed the Sanomalaitejärjestelmä ("Message device system"), a digital, portable and encrypted text-based communications device for the Finnish Defence Forces.[29] The current main unit used by the Defence Forces is the Sanomalaite M/90 (SANLA M/90).[30]

In 1998, Check Point established a partnership with Nokia, bundling Check Point's Software with Nokia's computer Network Security Appliances.[31]

First mobile phones[edit]

The Mobira Cityman 150, Nokia's NMT-900 mobile phone from 1989 (left), compared to the Nokia 1100 from 2003.[32] The Mobira Cityman line was launched in 1987.[33]

The technologies that preceded modern cellular mobile telephony systems were the various "0G" pre-cellular mobile radio telephony standards. Nokia had been producing commercial and some military mobile radio communications technology since the 1960s, although this part of the company was sold some time before the later company rationalization. Since 1964, Nokia had developed VHF radio simultaneously with Salora Oy. In 1966, Nokia and Salora started developing the ARP standard (which stands for Autoradiopuhelin, or car radio phone in English), a car-based mobile radio telephony system and the first commercially operated public mobile phone network in Finland. It went online in 1971 and offered 100% coverage in 1978.[34]

In 1979, the merger of Nokia and Salora resulted in the establishment of Mobira Oy. Mobira began developing mobile phones for the NMT (Nordic Mobile Telephony) network standard, the first-generation, Finland's first fully automatic cellular phone system that went online in 1981.[35] In 1982, Mobira introduced its first car phone, the Mobira Senator for NMT-450 networks.[35]

Nokia bought Salora Oy in 1984 and changed the company's telecommunications branch name to Nokia-Mobira Oy. The Mobira Talkman, launched in 1984, was one of the world's first transportable phones. In 1987, Nokia introduced one of the world's first handheld phones, the Mobira Cityman 900 for NMT-900 networks (which, compared to NMT-450, offered a better signal, yet a shorter roam). While the Mobira Senator of 1982 had weighed 9.8 kg (22 lb) and the Talkman just under 5 kg (11 lb), the Mobira Cityman weighed only 800 g (28 oz) with the battery and had a price tag of 24,000 Finnish marks (approximately €4,560).[33] Despite the high price, the first phones were almost snatched from the sales assistants' hands. Initially, the mobile phone was a "yuppie" product and a status symbol.[21]

Nokia's mobile phones got a publicity boost in 1987, when Soviet leader Mikhail Gorbachev was pictured using a Mobira Cityman to call from Helsinki to his communications minister in Moscow. This led to the phone's nickname of the "Gorba".[33]

In 1988, Jorma Nieminen, resigning from the post of CEO of the mobile phone unit, along with two other employees from the unit, started a notable mobile phone company of their own, Benefon Oy (since renamed to GeoSentric).[36] One year later, Nokia-Mobira Oy became Nokia Mobile Phones.

Involvement in GSM[edit]

Nokia was a key developer of GSM (Global System for Mobile Communications),[37] the second-generation mobile technology that could carry data as well as voice traffic. NMT (Nordic Mobile Telephony), the world's first mobile telephony standard to allow international roaming, provided expertise for Nokia in developing GSM, which was adopted in 1987 as the new European standard for digital mobile technology.[38][39]

Nokia delivered its first GSM network to Finnish operator Radiolinja in 1989.[40] The world's first commercial GSM call was made on 1 July 1991 in Helsinki, over a Nokia-supplied network, by then-Prime Minister of Finland Harri Holkeri, using a prototype Nokia GSM phone.[40] In 1992, the first GSM phone, the Nokia 1011, was launched.[40][41] The model number refers to its launch date, 10 November.[41] The Nokia 1011 did not yet employ Nokia's characteristic ringtone, the Nokia tune, which was introduced as a ringtone in 1994 with the Nokia 2100 series.[42]

GSM's high-quality voice calls, easy international roaming and support for new services like text messaging (Short Message Service) laid the foundations for a worldwide boom in mobile phone use.[40] GSM came to dominate mobile telephony in the 1990s, by mid-2008 accounting for about three billion subscribers, with more than 700 mobile operators across 218 countries and territories. Connections were growing at the rate of 15 per second, or 1.3 million per day.[43]

Personal computers and IT equipment[edit]

The Nokia Booklet 3G mini laptop.

In the 1980s, Nokia's computer division Nokia Data produced a series of personal computers called MikroMikko.[44] MikroMikko was Nokia Data's attempt to enter the business computer market. The first model in the line, MikroMikko 1, was released on 29 September 1981,[45] around the same time as the first IBM PC. However, the personal computer division was sold to the British ICL (International Computers Limited) in 1991, which later became part of Fujitsu.[46] MikroMikko remained a trademark of ICL and later Fujitsu. Internationally the MikroMikko line was marketed by Fujitsu as the ErgoPro.

Fujitsu later transferred its personal computer operations to Fujitsu Siemens Computers, which shut down its only factory in Espoo, Finland (in the Kilo district, where computers had been produced since the 1960s) at the end of March 2000,[47] thus ending large-scale PC manufacturing in the country.

Nokia produced high quality CRT and early TFT LCD displays for PC and larger systems applications. The Nokia Display Products' branded business was sold to ViewSonic in 2000.[48] In addition to personal computers and displays, Nokia used to manufacture DSL modems and digital set-top boxes.

Nokia re-entered the PC market in August 2009 with the introduction of the Nokia Booklet 3G mini laptop.[49]

Challenges of growth[edit]

The Nokia House, Nokia's head office located by the Gulf of Finland in Keilaniemi, Espoo, was constructed between 1995 and 1997. It is the workplace of more than 1,000 Nokia employees.[21]

In the 1980s under CEO Kari Kairamo, Nokia expanded into new fields, mostly by acquisitions. In the late 1980s and early 1990s, the corporation ran into serious financial problems, partly due to heavy losses in its television manufacturing division.[50] Kairamo committed suicide in 1988. After Kairamo's death, Simo Vuorilehto became Nokia's chairman and CEO. In 1990–1993, Finland underwent a severe recession,[51] which also struck Nokia. Under Vuorilehto's management, Nokia was severely overhauled. The company responded by streamlining its telecommunications divisions and by divesting itself of the television and PC divisions.[52]

Probably the most important strategic change in Nokia's history was made in 1992, however, when the new CEO Jorma Ollila made a crucial strategic decision to concentrate solely on telecommunications.[23] Thus, during the rest of the 1990s, the rubber, cable and consumer electronics divisions were gradually sold as Nokia continued to divest itself of all of its non-telecommunications businesses.[23]

As late as 1991, more than a quarter of Nokia's turnover came from sales in Finland. However, after the strategic change of 1992, Nokia sales to North America, South America and Asia became significant.[53] The worldwide popularity of mobile telephones, beyond even Nokia's most optimistic predictions, created a logistical crisis in the mid-1990s,[54] prompting Nokia to overhaul its entire supply chain.[55] By 1998, Nokia's focus on telecommunications and its early investment in GSM technologies had made the company the world's largest mobile phone manufacturer, a position it held until 2012. Between 1996 and 2001, Nokia's turnover increased almost fivefold from 6.5 billion euros to 31 billion euros.[53] Logistics continued to be a major advantages over rivals, along with greater economies of scale.[56]

2000 to 2010[edit]

The flagship Nokia store in São Paulo, Brazil

Product releases[edit]

Reduction in size of Nokia mobile phones. Left to right: Nokia 638 (1996; 19.06 cm height), Nokia 2160 EFR (1996; 16.42 cm), Nokia 5160 (1998; 14.84 cm), Nokia 6070 (2006; 10.5 cm)

Nokia launched the Nokia 3310 in late 2000 as the successor of the Nokia 3210. It has become one of the most popular devices of all time. The Nokia 1100 handset in 2003,[32] shipping over 200 million units, is the best-selling mobile phone of all time and the world's top-selling consumer electronics product, and contributed to the company's rise in developing markets.[57] Nokia was one of the first to recognize the market opportunity in combining a game console and a mobile phone (both of which many gamers were carrying in 2003) into the N-Gage. The N-Gage was a mobile phone and game console meant to lure gamers away from the Game Boy Advance, though it cost twice as much.[58]

Nokia Productions was the first mobile filmmaking project directed by Spike Lee. Work began in April 2008, and the film premiered in October 2008.[59]

In 2009, the company reentered the personal computing market, announcing a high-end Windows-based netbook called the Nokia Booklet 3G.[49] The company also entered the smartphone market.[60]

Symbian OS[edit]

Symbian was Nokia's main smartphone operating system until 2011.

Symbian was popular among the smartphone market during the 2000s. Some popular Symbian-powered devices include the Nokia 7650, the first S60 smartphone; Nokia N-Gage the first game-centric smartphone; Nokia 6600, the first Symbian smartphone to sold over a million unit with a soap-like design; Nokia 7610, the first Nokia with a megapixel camera; Nokia 6630 the first 3G Nokia smartphone; Nokia N90, the first camera-centric phone; Nokia N95, a popular slider; Nokia N82, with Xenon flash; Nokia E71, offering a full "qwerty" keyboard and premium build; Nokia 5800 XpressMusic the first full-touch smartphone; Nokia N97 with full-touchscreen and a side-sliding QWERTY keyboard; Nokia X6 the first capacitive touchscreen and the Nokia N8 with the newer Symbian^3 and 12 megapixel camera.

The 2012 Nokia 808 PureView had a record 41-megapixel camera, and represented the end of the Symbian platform after its replacement by Windows Phone.[61]

Linux devices[edit]

Nokia N9 running MeeGo Harmattan

Nokia's first Linux devices were the Nokia Internet tablets and the Nokia N900, which ran Debian-based Maemo.[62]

The Maemo project later merged with Intel's Moblin to create MeeGo.[63] The Nokia N9 was released before the project was abandoned in favour of Windows Phone. Development continued under the name Sailfish OS.[64][65]

The Nokia X family of devices running Android was Nokia's final sally in Linux-based smartphones.[66]

Series 40[edit]

Series 40 is a phone platform used in feature phones, mainly running Java-based applications.[67] It was once the world's most popular software of mobile phones.

Nokia acquired Smarterphone, a company making the Smarterphone OS for low end phones and merged it with Series 40 to form the Asha Platform, which also inherits some UI characteristics from Nokia's MeeGo platform. The Asha 501 was the first phone running the new OS.[68]

Reorganizations[edit]

Nokia opened its Komárom, Hungary mobile phone factory on 5 May 2000.[69]

In March 2007, Nokia signed a memorandum with Cluj County Council, Romania to open a plant near the city in Jucu commune.[70][71] Moving the production from the Bochum, Germany factory to a low wage country created an uproar in Germany.[72] Nokia later moved its North American Headquarters to Sunnyvale, California.

In April 2003, the troubles of the networks equipment division caused the corporation to resort to similar streamlining practices, including layoffs and organizational restructuring.[73] This diminished Nokia's public image in Finland[74][75] and produced a number of court cases and an episode of a documentary television show critical of Nokia.[76]

In June 2006, CEO Jorma Ollila left his position to become the chairman of Royal Dutch Shell[77] and to give way for Olli-Pekka Kallasvuo.[78]

In 2008, Nokia exited mobile phone distribution in Japan.[79]

In 2009, Check Point acquired Nokia's network security business unit.[80]

In February 2012, Nokia announced 4,000 lay-offs to move manufacturing from Europe and Mexico to Asia.[81]

In March 2012, Nokia laid off 1,000 employees from its Salo, Finland factory to focus on software.[82] In June 2012, research facilities in Ulm, Germany and Burnaby, Canada closed, costing more jobs. The company also announced 10,000 lay-offs globally by the end of 2013.[83]

In January 2013, Nokia terminated 1,000 employees from its IT, production and logistics divisions. The company planned to transfer about 715 jobs to subcontractors.[84]

Acquisitions[edit]

For a more comprehensive list, see List of acquisitions by Nokia.
The Nokia E55 from the business segment of the Eseries range

On 22 September 2003, Nokia acquired Sega.com, a branch of Sega to develop the Nokia N-Gage device.[85]

On 16 November 2005, Nokia agreed to acquire Intellisync Corporation, a provider of data and PIM synchronization software,[86] completing the acquisition on 10 February 2006.[87]

On 19 June 2006, Nokia and Siemens AG announced the companies would merge their mobile and fixed-line phone network equipment businesses, creating Nokia Siemens Networks.[88] Each company has a 50% stake in the infrastructure company, headquartered in Espoo, Finland. About 20,000 Nokia employees transferred to this new company.

On 8 August 2006, Nokia agreed to acquire online music distributor Loudeye Corporation for approximately US$60 million.[89]

In July 2007, Nokia acquired all assets of Twango, a comprehensive media sharing solution for organizing and sharing photos, videos and other personal media.[90]

In September 2007, Nokia agreed to acquire Enpocket, a supplier of mobile advertising technology and services.[91]

In 2007, Nokia agreed to acquire Navteq, a U.S.-based supplier of digital mapping data, for $8.1 billion[5][92] and finalized the acquisition on 10 July 2008.[93]

In September 2008, Nokia acquired OZ Communications, a privately held company with approximately 220 employees headquartered in Montreal, Canada.[94]

On 24 July 2009, Nokia agreed to acquire certain assets of Cellity, a privately owned mobile software company,[95] completed on 5 August 2009.[96]

In September 2009, Nokia acquired certain assets of Plum Ventures, Inc to complement Nokia's Social Location services.[97]

In March 2010, Nokia acquired Novarra, a mobile web browser firm.[98]

In April 2010, Nokia acquired MetaCarta, a local search technology firm.[99]

In 2012, Nokia acquired Smarterphone, a developer of an operating system for feature phones, and the imaging company Scalado.[100][101]

Loss of smartphone marketshare[edit]

Originally launched in 2007, Apple's iPhone continued to be outsold and unfavoured by Nokia smartphones, most notably the Nokia N95 for some time.[102] Symbian had a dominating 62.5% market share as of Q4 2007 – ahead of Microsoft's Windows Mobile (11.9%) and RIM (10.9%). However, with the launch of the iPhone 3G in 2008, Apple's year-over-year market share doubled by the end of that year and iPhone OS (now known as iOS) operating system market share pulled ahead of Windows Mobile. Although in Q4 2008, Nokia retained a 40.8% share, it saw a decline of over 10% from Q4 2007, replaced by Apple's increasing share.[103] The Nokia N96, released in late 2008, proved to be much less successful, although the Nokia 5800 XpressMusic was mainly considered to be the iPhone 3G's main rival. Despite the success of the Nokia E71,[104] it was not enough to stop Nokia's smartphone market slide. On 24 June 2008, Nokia bought the Symbian operating system and the next year made it open source.[105]

In early 2009, the Nokia N97 was released, a touchscreen device with a landscape QWERTY slider that focused on social networking. It was a commercial success despite its mainly mixed reception. The N97's closest competitor was the iPhone 3GS. In 2009 several devices were launched, such as the Nokia E52, which gained positive reception.[106][107] However, Symbian market share dropped from 52.4% in Q4 2008 to 46.1% a year later. RIM increased its share during the period from 16.6% to 19.9%, but Apple increased share from 8.2% to 14.4%. Android grew to 3.9%.[108]

2010 to 2013[edit]

In 2010 pressure on Nokia increased dramatically as Android and iOS continued to make gains.[109] Other Symbian makers including Samsung and Sony Ericsson chose to make Android-powered smartphones instead of Symbian,[110] and by mid-2010 Nokia was its only OEM outside of Japan. Nokia developed Symbian^3 to replace S60, but it never became popular.[111] By Q4 2010, Symbian's market share dipped to 32%, surpassed by Android at 30%.[112] Despite losing share, the smartphone unit was profitable and smartphone unit sales increased every quarter during 2010.[113] An estimated 4 million units were sold in Q4 2010.[114]

Awards and Accolades[edit]

In 2011, The Brand Trust Report, India Study,[115] awarded Nokia as India's Most Trusted Brand. The study was conducted by TRA Research,[116] a leading brand analytics company. Nokia also received the Most Trusted Brand in India accolade in the year 2012 and 2013. However Nokia's ranking on The Brand Trust Report fell in 2014 to India's fifth Most Trusted Brand.[117][118]

2011: Alliance with Microsoft, Windows Phone, and launch of Lumia[edit]

On 11 February 2011, Nokia's CEO Stephen Elop, a former head of Microsoft business division, unveiled a new strategic alliance with Microsoft, and announced it would shift its efforts to Windows Phone from Linux-based MeeGo and Symbian.[119] except for non-smartphones. Nokia invested in the Series 40 platform and released a single MeeGo product in 2011, the Nokia N9.[120]

As part of the restructuring plan, Nokia planned to reduce research and development, instead customising and enhancing the software line for Windows Phone 7.[121] Nokia's "applications and content store" (Ovi) became integrated into the Windows Phone Store, and Nokia Maps became the heart of Microsoft's Bing and AdCenter. Microsoft provided developer tools to Nokia to replace the Qt framework, which was not supported by Windows Phone 7 devices.[122]

After this announcement, Nokia's share price fell about 14%, its biggest drop since July 2009.[123] Nokia's smartphone sales, which had previously increased, collapsed.[124] From the beginning of 2011 until 2013, Nokia fell from #1 to #10 in smartphone sales.[125]

Amid falling sales, Nokia posted a loss of 368 million euros for Q2 2011, while in Q2 2010 realized a profit of 227 million euros. On September 2011, Nokia has announced it will end another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania.[126]

As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time,[127] it was suggested the alliance would help Windows Phone.[122] Nokia was overtaken by Apple as the world's biggest smartphone maker by volume in June 2011.[128] [129] In August 2011 Chris Weber, head of Nokia's subsidiary in the U.S., stated "The reality is if we are not successful with Windows Phone, it doesn't matter what we do (elsewhere)." He further added "North America is a priority for Nokia (...) because it is a key market for Microsoft.".[130]

Nokia reported "well above 1 million" sales for its Lumia line up to 26 January 2012,[131][132] 2 million sales for the first quarter of 2012,[133] and 4 million for the second quarter of 2012.[134] In this quarter, Nokia only sold 600,000 smartphones (Symbian and Windows Phone 7) in North America.[135] For comparison, Nokia sold more than 30 million Symbian devices world-wide in Q4 2010[136] and the Nokia N8 alone sold almost 4 million in its first quarter. In Q2 2012, 26 million iPhones and 105 million Android phones shipped, compared to only 6.8 million devices with Symbian and 5.4 million with Windows Phone.[137]

While announcing an alliance with Groupon, Elop declared "The competition... is not with other device manufacturers, it's with Google."[138]

In June 2012, Nokia chairman Risto Siilasmaa told journalists that Nokia had a back-up plan in the event that Windows Phone failed.[139][140]

2012: Financial difficulties[edit]

Market share of Symbian, Windows Mobile and Windows Phone 7 among US smartphone owners from Q1 2011 to Q2 2012 according to Nielsen Company.

On 8 February 2012, Nokia Corp. announced 4,000 layoffs at smartphone manufacturing plants in Europe by the end of 2012 to move assembly closer to component suppliers in Asia.[141]

On 14 June 2012, Nokia announced 10,000 layoffs globally by the end of 2013[142] and shut production and research sites in Finland, Germany and Canada in line with continuing losses and the stock price falling to its lowest point since 1996.[143]

In total, Nokia laid off 24,500 employees by the end of 2013.[144]

On 18 June 2012, Moody's downgraded Nokia's bond rating to junk.[145] Nokia CEO admitted that the company's inability to foresee rapid changes in the mobile phone industry was one of the major reasons for the problems.[146]

On 4 May 2012, a group of Nokia investors filed a class action against the company as a result of disappointing sales.[147] On 22 August 2012, it was reported that a group of Finnish Nokia investors were considering gathering signatures for the removal of Elop as CEO.[148]

In December 2012, Nokia announced that it would be selling its headquarters Nokia House for €170 million, and leasing it back in the long-term. This decision was taken to slash costs as the company was during a financial crisis of falling revenues.[149]

2013: New products, recovering market share, lack of profits[edit]

In January 2013, Nokia reported 6.6 million smartphone sales for Q4 2012 consisting of 2.2 million Symbian and 4.4 million sales of Lumia devices (Windows Phone 7 and 8).[150] In North America, only 700,000 mobile phones have been sold including smartphones.

In May 2013 Nokia released the Asha platform for its low-end borderline smartphone devices. The Verge commented that this may be a recognition on the part of Nokia that they are unable to move Windows Phone into the bottom end of smartphone devices fast enough and may be "hedging their commitment" to the Windows Phone platform.[151]

In the same month, Nokia announced its partnership with the world's largest cellular operator China Mobile to offer Nokia's new Windows-based phone, the Lumia 920, as Lumia 920T, an exclusive Chinese variant. The partnership was a bid by Nokia to connect with China Mobile's 700 million-person customer base.[152]

Following the second quarter of 2013, Nokia made an operating loss of €115m (£98.8m), with revenues falling 24% to €5.7bn, despite sales figures for the Lumia exceeding those of BlackBerry's handsets during the same period. Over the nine-quarters prior to the second quarter of 2013, Nokia sustained €4.1 billion worth of operating losses. The company experienced particular problems in both China and the U.S.; in the former, Nokia's handset revenues are the lowest since 2002, while in the U.S., Francisco Jeronimo, analyst for research company IDC, stated: "Nokia continues to show no signs of recovery in the US market. High investments, high expectations, low results."[153]

In July 2013, Nokia announced that Lumia sales were 7.4 million for the second quarter of the year – a record high.[154]

2013-present[edit]

Nokia X[edit]

Steven Elop unveiling the Nokia X in February 2014

In February 2014, Nokia unveiled the Nokia X family—a new line of low-end smartphones running a fork of the Android operating system oriented towards Nokia and Microsoft services, and with an interface inspired by the Asha and Lumia lines. Nokia aimed the devices specifically towards emerging markets.[155]

Sale of mobile phone business to Microsoft[edit]

On 2 September 2013, Microsoft announced that it would acquire Nokia's mobile device business in a deal worth €3.79bn, along with another €1.65bn to license Nokia's portfolio of patents for 10 years; a deal totaling at over €5.4bn. Steve Ballmer considered the purchase to be a "bold step into the future" for both companies, primarily as a result of its recent collaboration.[8][9][156][157] In an interview with Helsingin Sanomat, former Nokia executive Anssi Vanjoki commented that the Microsoft deal was "inevitable" due to the "failed strategy" of Stephen Elop.[158]

The deal was closed on 25 April 2014 for "slightly more" than the originally stated €5.44 billion.[159] Nokia's mobile phone assets became a part of Microsoft Mobile, a new subsidiary of Microsoft based in Finland.[160][161] The deal was originally expected to be closed in March 2014, but was delayed by a tax dispute involving a factory in India—officials claimed that Nokia had not properly paid taxes on devices that were produced at the plant, but sold domestically (exports are exempt from taxes). Indian governments had required that Nokia place money in escrow before it was allowed to transfer control of the factory to Microsoft. As a result, the plant will not be transferred to Microsoft, but will produce products on behalf of the company.[162][163][164]

As part of the deal, Microsoft acquired the Asha and Lumia brands, but only has a limited license to the Nokia brand. Microsoft can only use the Nokia brand to promote Lumia products for 18 months after the closure of the acquisition, X products through 31 December 2015, and feature phones such as the Series 30 and Series 40 series for 10 years. Microsoft will only use its own brand on new "product[s], applications and experiences". Microsoft also did not acquire any rights to the Nokia tune, which the company may only use on Nokia-branded devices, where it must be set as default. Nokia itself is also subject to a non-compete clause forbidding it from manufacturing any Nokia-branded phones until 31 December 2015.[165][166][167] Microsoft also took over Nokia's website and social media outlets following the closure of the deal; this arrangement will be in place for a minimum of one year after the closure.[160]

A number of Nokia executives joined Microsoft as a result; Stephen Elop became the head of Microsoft's devices team (which include products such as Xbox and Surface lines); Risto Siilasmaa replaced Elop as interim CEO, before the appointment of Rajeev Suri. Post-acquisition, Nokia now focuses on three core business units; its Here mapping service (which Microsoft will license for four years under the deal), its infrastructure division Nokia Solutions and Networks (NSN), and on developing and licensing its "advanced technologies".[8][8][9][156][157]

In July 2014, Microsoft announced a significant layoff of workers, including 12,500 workers from the former mobile phone group at Nokia.[168] It was also reported that Microsoft had ended future development of Nokia's feature phone and X lines in favor of focusing exclusively on Windows Phone.[169][170]

Post Devices & Services business sale[edit]

Nokia has been involved in the acquisition of other companies. These include Medio Systems by the HERE division.[171]

The Technologies division announced their first consumer product in June 2014, the Nokia Z Launcher, a home screen interface written for Google's Android OS.[172]

Operations[edit]

Nokia is a public limited-liability company listed on the Helsinki, Frankfurt, and New York stock exchanges.[6] Nokia plays a very large role in the economy of Finland.[173][174] It is an important employer in Finland and works with multiple local partners and subcontractors.[175] In 2009 Nokia contributed 1.6% to Finland's GDP, and accounted for about 16% of Finland's exports in 2006.[176]

Divisions[edit]

Since the Microsoft acquisition, Nokia comprises three business groups: Mobile Solutions, HERE, and Technologies.

On 1 April 2007, Nokia's Networks business group was combined with Siemens's carrier-related operations for fixed and mobile networks to form Nokia Siemens Networks, jointly owned by Nokia and Siemens and consolidated by Nokia.[177] Nokia bought the 50% share and took full control of the group on 3 July 2013.[178]

Markets[edit]

Markets is responsible for Nokia's supply chains, sales channels, brand and marketing functions of the company, and is responsible for delivering mobile solutions to the market.[179]

HERE[edit]

HERE is responsible for Nokia's suite of navigation services (formerly under the Ovi brand). [180]

HERE's map data originated in Navteq, a Chicago, Illinois-based provider of digital map data and location-based content and services for automotive navigation systems, mobile navigation devices, Internet-based mapping applications, and government and business solutions. Navteq was acquired by Nokia on 1 October 2007.[5] Navteq's map data became part of the HERE Maps online service where users can download maps, use voice-guided navigation and other context-aware web services.[179]

Nokia Networks[edit]

Main article: Nokia Networks

Nokia Solutions and Networks (NSN), previously known as Nokia Siemens Networks B.V. is a multinational data networking and telecommunications equipment company headquartered in Espoo, Finland. NSN was a joint venture between Nokia (50.1%) and Siemens (49.9%), but is now a wholly owned subsidiary of Nokia. It is the world's fourth-largest telecoms equipment manufacturer measured by 2011 revenues (after Ericsson, Huawei and Alcatel-Lucent).[181] NSN has operations in around 150 countries.[182]

The NSN brand identity was launched at the 3GSM World Congress in Barcelona in February 2007.[183] NSN provides wireless and fixed network infrastructure, communications and networks service platforms, as well as professional services to operators and service providers.[179] NSN focuses on GSM, EDGE, 3G/W-CDMA, LTE and WiMAX radio access networks; core networks with increasing IP and multiaccess capabilities and services.

In July 2013, Nokia bought back all shares in Nokia Siemens Networks for a sum of US$2.21 billion.[184]

Research[edit]

The Nokia Research Center, founded in 1986, is Nokia's industrial research unit consisting of about 500 researchers, engineers and scientists;[185][186] it has sites in seven countries: Finland, China, India, Kenya, Switzerland, the United Kingdom and the United States.[187] Besides its research centers, in 2001 Nokia founded (and owns) INdT – Nokia Institute of Technology, a R&D institute located in Brazil.[188] Nokia operates a total of 7 manufacturing facilities[6] located at Manaus, Brazil; Beijing and Dongguan, China; Komárom, Hungary; Chennai, India; Reynosa, Mexico; and Changwon, South Korea.[70][189] Nokia's industrial design department is headquartered in Soho in London, UK with significant satellite offices in Helsinki, Finland and Calabasas, California in the US.

Research cooperation with universities[edit]

Nokia is actively exploring and engaging in open innovation through selective research collaborations with major universities and institutions by sharing resources and leveraging ideas. Its major research collaboration is with Tampere University of Technology based in Finland. Current collaborations include:[190]

Corporate affairs[edit]

Corporate governance[edit]

The control and management of Nokia is divided among the shareholders at a general meeting and the Nokia Leadership Team (left),[192] under the direction of the board of directors (right).[193] The chairman and the rest of the Nokia Leadership Team members are appointed by the board of directors. Only the Chairman of the Nokia Leadership Team can belong to both the board of directors and the Nokia Leadership Team. The board of directors' committees consist of the Audit Committee,[194] the Personnel Committee[195] and the Corporate Governance and Nomination Committee.[196][197]

The operations of the company are managed within the framework set by the Finnish Companies Act,[198] Nokia's Articles of Association[3] and Corporate Governance Guidelines,[199] and related board of directors adopted charters.

Nokia Leadership Team (as of May 2014)[192]
Rajeev Suri (Chairman), b. 1967
President and CEO since 1 May 2014
Joined Nokia on 1995

Samih Elhage
Executive Vice President and Chief Financial and Operating Officer of Nokia Networks
Joined Nokia Networks 2012
Michael Halbherr, b. 1964
CEO of HERE
Joined Nokia 2006, Nokia Leadership Team member since 1 July 2011
Timo Ihamuotila, b. 1966
Executive Vice President and Group Chief Financial Officer
With Nokia 1993–1996, rejoined 1999, Nokia Leadership Team member since 2007
Henry Tirri, b. 1956
Executive Vice President and Acting Head of Nokia Technologies
Joined Nokia 2004, Nokia Leadership Team member since 22 September 2011
Board of directors[193]
Risto Siilasmaa (Chairman), b. 1966
Board member since 2008, Chairman of the board of directors since 3 May 2012
Chairman of the Corporate Governance and Nomination Committee
Founder and Chairman of F-Secure Corporation
Jouko Karvinen (Vice chairman), b. 1957
Board member since 3 May 2011, Chairman of the Audit Committee, Member of the Corporate Governance and Nomination Committee
CEO of Stora Enso Oyj
Vivek Badrinath, b. 1969

Deputy Chief Executive Officer, Accor Group
Bruce Brown, b. 1958
Board member since 3 May 2012, Member of the Personnel Committee
Chief Technology Officer of Procter & Gamble
Elizabeth Doherty, b. 1957
Board member since May 2013
independent director
Mårten Mickos, b. 1962
Board member since 3 May 2012
chief executive officer of Eucalyptus Systems, Inc.
Elizabeth Nelson, b. 1960
Board member since 3 May 2012, Member of the Audit Committee
Independent Corporate Advisor
Kari Stadigh, b. 1955
Board member since 3 May 2011, Member of the Personnel Committee
Group CEO and President of Sampo plc
Dennis F. Strigl, b. 1946

Retired CEO, Verizon Wireless, Author and Consultant

Former corporate officers[edit]

Chief executive officers Chairmen of the board of directors[200]
Björn Westerlund 1967–1977   Lauri J. Kivekäs 1967–1977  Simo Vuorilehto 1988–1990
Kari Kairamo 1977–1988 Björn Westerlund  1977–1979 Mika Tiivola 1990–1992
Simo Vuorilehto 1988–1992 Mika Tiivola 1979–1986 Casimir Ehrnrooth  1992–1999
Jorma Ollila 1992–2006 Kari Kairamo 1986–1988 Jorma Ollila 1999–2012
Olli-Pekka Kallasvuo  2006–2010
Stephen Elop  2010–2013

Stock[edit]

Nokia is a public limited liability company and is the oldest company listed under the same name on the Helsinki Stock Exchange, beginning in 1915.[21] Nokia has had a secondary listing on the New York Stock Exchange since 1994.[6][21] Nokia shares were delisted from the London Stock Exchange in 2003, the Paris Stock Exchange in 2004, the Stockholm Stock Exchange in 2007 and the Frankfurt Stock Exchange in 2012.[201]

In 2007, Nokia had a market capitalisation of €110 billion; by July 17, 2012 this had fallen to €6.28 billion.

Corporate culture[edit]

Nokia's official corporate culture manifesto, The Nokia Way, emphasises the speed and flexibility of decision-making in a flat, networked organization.[202]

The official business language of Nokia is English. All documentation is written in English, and is used in official intra-company spoken communication and e-mail.

In May 2007, Nokia redefined its values after initiating a series of discussions worldwide as to what the new values of the company should be. Based on the employee suggestions, the new values were defined as: Engaging You, Achieving Together, Passion for Innovation and Very Human.[202]

Logos[edit]

Controversies[edit]

NSN's provision of intercept capability to Iran[edit]

In 2008, Nokia Siemens Networks, a joint venture between Nokia and Siemens AG, reportedly provided Iran's monopoly telecom company with technology that allowed it to intercept the Internet communications of its citizens.[209] The technology reportedly allowed Iran to use deep packet inspection to read and even change the content of everything from "e-mails and Internet phone calls to images and messages on social-networking sites such as Facebook and Twitter". The technology "enables authorities to not only block communication but to monitor it to gather information about individuals, as well as alter it for disinformation purposes,". During the post-election protests in Iran in June 2009, Iran's Internet access was reported to have slowed to less than a tenth of its normal speeds, and experts suspected this was due to the use of the interception technology.[210]

The joint venture company, Nokia Siemens Networks, asserted in a press release that it provided Iran only with a 'lawful intercept capability' "solely for monitoring of local voice calls". "Nokia Siemens Networks has not provided any deep packet inspection, web censorship or Internet filtering capability to Iran," it said.[211]

In July 2009, Nokia began to experience a boycott of their products and services in Iran. The boycott was led by consumers sympathetic to the post-election protest movement and targeted at those companies deemed to be collaborating with the Islamic regime. Demand for handsets fell and users began shunning SMS messaging.[212]

Lex Nokia[edit]

In 2009, Nokia heavily supported a law in Finland that allows companies to monitor their employees' electronic communications in cases of suspected information leaking.[213] Contrary to rumors, Nokia denied that the company would have considered moving its head office out of Finland if laws on electronic surveillance were not changed.[214] The Finnish media dubbed the law Lex Nokia because it was implemented as a result of Nokia's pressure.

The law was enacted, but with strict requirements for implementation of its provisions. Until February 2013, no company had used its provisions. In 25 February the Office of Data Protection Ombudsman confirmed that city of Hämeenlinna had recently gave the required notice.[215]

Nokia–Apple patent dispute[edit]

In October 2009, Nokia filed a lawsuit against Apple Inc. in the U.S. District Court of Delaware claiming that Apple infringed on 10 of its patents related to wireless communication including data transfer.[216] Apple was quick to respond with a countersuit filed in December 2009 accusing Nokia of 11 patent infringements. Apple's General Counsel, Bruce Sewell went a step further by stating, "Other companies must compete with us by inventing their own technologies, not just by stealing ours." This resulted in an ugly spat between the two telecom majors with Nokia filing another suit, this time with the U.S. International Trade Commission (ITC), alleging Apple of infringing its patents in "virtually all of its mobile phones, portable music players, and computers."[217] Nokia went on to ask the court to bar all U.S. imports of the Apple products including the iPhone, Mac and the iPod. Apple countersued by filing a complaint with the ITC in January 2010.[216]

In June 2011, Apple settled with Nokia and agreed to an estimated one time payment of $600 million and royalties to Nokia.[218] The two companies also agreed on a cross-licensing patents for some of their patented technologies.[219][220]

Alleged tax evasion in India[edit]

Nokia's Indian subsidiary has been charged with non-payment of TDS and transgressing transfer pricing norms in India.[221] The unpaid TDS of INR30 billion, accrued during a course of six years, due to royalty paid by the Indian subsidiary to its parent company.[222]

See also[edit]

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Further reading[edit]

Title Author Publisher Year Length ISBN
The Decline and Fall of Nokia David J. Cord Schildts & Söderströms April 2014 304 pp ISBN 978-951-52-3320-2
Winning Across Global Markets: How Nokia Creates Strategic Advantage in a Fast-Changing World Dan Steinbock Jossey-Bass / Wiley May 2010 304 pp ISBN 978-0-470-33966-4
Nokia: The Inside Story Martti Häikiö FT / Prentice Hall October 2002 256 pp ISBN 0-273-65983-9
Work Goes Mobile: Nokia's Lessons from the Leading Edge Michael Lattanzi, Antti Korhonen, Vishy Gopalakrishnan John Wiley & Sons January 2006 212 pp ISBN 0-470-02752-5
Mobile Usability: How Nokia Changed the Face of the Mobile Phone Christian Lindholm, Turkka Keinonen, Harri Kiljander McGraw-Hill Companies June 2003 301 pp ISBN 0-07-138514-2
Business The Nokia Way: Secrets of the World's Fastest Moving Company Trevor Merriden John Wiley & Sons February 2001 168 pp ISBN 1-84112-104-5
The Nokia Revolution: The Story of an Extraordinary Company That Transformed an Industry Dan Steinbock AMACOM Books April 2001 375 pp ISBN 0-8144-0636-X

External links[edit]