Top 100 Brand in The World – Rank no. 57 – Nokia – Finland
|Founded||Tampere, Grand Duchy of Finland (1865)
incorporated in Nokia (1871)
|Services||Maps and navigation, music,messaging and media
(See services listing)
|Revenue||€30.176 billion (2012)|
|Operating income||€ -2.303 billion (2012)|
|Net income||€ -3.106 billion (2012)|
|Total assets||€29.949 billion (2012)|
|Total equity||€8.061 billion (2012)|
|Subsidiaries||Nokia Solutions and Networks
Nokia Corporation (Finnish: Nokia Oyj, Swedish: Nokia Abp; Finnish pronunciation: [ˈnokiɑ], English /ˈnɒkiə/) is a Finnishmultinational communications and information technology corporation that is headquartered in Espoo, Finland. Its principal products are mobile telephones and portable IT devices. It also offers Internet services including applications, games, music, media andmessaging, and free-of-charge digital map information and navigation services through its wholly owned subsidiary Navteq. Nokia owns a company named Nokia Solutions and Networks, which provides telecommunications network equipment and services.
As of 2012, Nokia employs 101,982 people across 120 countries, conducts sales in more than 150 countries, and reports annual revenues of around €30 billion. By the fourth quarter of 2012, it was the world’s second-largest mobile phone maker in terms of unit sales (after Samsung), with a global market share of 18.0%. Now, Nokia only has a 3% market share in smartphones. They lost 40% of their revenue in mobile phones in Q2 2013. Nokia is a public limited-liability company listed on the Helsinki Stock Exchangeand New York Stock Exchange. It is the world’s 274th-largest company measured by 2013 revenues according to the Fortune Global 500.
Nokia was the world’s largest vendor of mobile phones from 1998 to 2012. However, over the past five years its market share declined as a result of the growing use of touchscreen smartphones from other vendors—principally the iPhone, by Apple, and devices running on Android, an operating system created by Google. The corporation’s share price fell from a high of US$40 in late 2007 to under US$2 in mid-2012. In a bid to recover, Nokia announced a strategic partnership with Microsoft in February 2011, leading to the replacement of Symbian with Microsoft’s Windows Phone operating system in all Nokia smartphones. Following the replacement of the Symbian system, Nokia’s smartphone sales figures, which had previously increased, collapsed dramatically. From the beginning of 2011 until 2013, Nokia fell from its position as the world’s largest smartphone vendor to assume the status of tenth largest.
On 2 September 2013, Microsoft announced its intent to purchase Nokia’s mobile phone business unit as part of an overall deal totaling €5.44 billion (US$7.17 billion). Stephen Elop, Nokia’s former CEO, and several other executives will join Microsoft as part of the deal.
1865 to 1967
Nokia’s history started in 1865 when mining engineer Fredrik Idestam established a groundwood pulp mill on the banks of theTammerkoski rapids in the town of Tampere, in southwestern Finland in the Russian Empire and started manufacturing paper. In 1868, Idestam built a second mill near the town of Nokia, fifteen kilometres (nine miles) west of Tampere by the Nokianvirta river, which had better resources for hydropower production. In 1871, Idestam, with the help of his close friend statesman Leo Mechelin, renamed and transformed his firm into a share company, thereby founding the Nokia Company, the name it is still known by today.
Toward the end of the 19th century, Mechelin’s wishes to expand into the electricity business were at first thwarted by Idestam’s opposition. However, Idestam’s retirement from the management of the company in 1896 allowed Mechelin to become the company’s chairman (from 1898 until 1914) and sell most shareholders on his plans, thus realizing his vision. In 1902, Nokia added electricity generation to its business activities.
In 1898, Eduard Polón founded Finnish Rubber Works, manufacturer of galoshes and other rubber products, which later became Nokia’s rubber business. At the beginning of the 20th century, Finnish Rubber Works established its factories near the town of Nokia and they began using Nokia as its product brand. 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. At the end of the 1910s, shortly after World War I, the Nokia Company was nearing bankruptcy. To ensure the continuation of electricity supply from Nokia’s generators, Finnish Rubber Works acquired the business of the insolvent company. In 1922, Finnish Rubber Works acquired Finnish Cable Works. In 1937, Verner Weckman, a sport wrestler and Finland’s first Olympic Gold medalist, became president of Finnish Cable Works, after 16 years as its technical director. After World War II, Finnish Cable Works supplied cables to the Soviet Union as part of Finland’s war reparations. This gave the company a good foothold for later trade.
The three companies, which had been jointly owned since 1922, were merged to form a new industrial conglomerate, Nokia Corporation in 1967 and paved the way for Nokia’s future as a global corporation. The new company was involved in many industries, producing at one time or another 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. 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.
Eventually, the company decided to leave consumer electronics behind in the 1990s and focused solely on the fastest growing segments in telecommunications. Nokian Tyres, manufacturer of tires, split from Nokia Corporation to form its own company in 1988 and two years later Nokian Footwear, manufacturer of rubber boots, was founded. During the rest of the 1990s, Nokia divested itself of all of its non-telecommunications businesses.
1967 to 2000
The seeds of the current incarnation of Nokia were planted with the founding of the electronics section of the cable division in 1960 and the production of its first electronic device in 1962: a pulse analyzer designed for use in nuclear power plants. 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 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 modular and flexible architecture enabled it to be developed into various switching products. In 1984, development of a version of the exchange for the Nordic Mobile Telephonynetwork was started.
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.
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. The current main unit used by the Defence Forces is the Sanomalaite M/90 (SANLA M/90).
First mobile phones
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.
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, first fully automatic cellular phone system that went online in 1981. In 1982, Mobira introduced its first car phone, the Mobira Senator for NMT-450 networks.
Nokia bought Salora Oy in 1984 and now owning 100% of the company, 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). 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.
Nokia’s mobile phones got a big publicity boost in 1987, when Soviet leader Mikhail Gorbachev was pictured using a Mobira Cityman to make a call from Helsinki to his communications minister in Moscow. This led to the phone’s nickname of the “Gorba”.
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). One year later, Nokia-Mobira Oy became Nokia Mobile Phones.
Involvement in GSM
Nokia was one of the key developers of GSM (Global System for Mobile Communications), the second-generation mobile technology which could carry data as well as voice traffic. NMT (Nordic Mobile Telephony), the world’s first mobile telephony standard that enabled international roaming, provided valuable experience for Nokia for its close participation in developing GSM, which was adopted in 1987 as the new European standard for digital mobile technology.
Nokia delivered its first GSM network to the Finnish operator Radiolinja in 1989. The world’s first commercial GSM call was made on 1 July 1991 in Helsinki, Finland over a Nokia-supplied network, by then Prime Minister of Finland Harri Holkeri, using a prototype Nokia GSM phone. In 1992, the first GSM phone, the Nokia 1011, was launched. The model number refers to its launch date, 10 November. The Nokia 1011 did not yet employ Nokia’s characteristic ringtone, the Nokia tune. It was introduced as a ringtone in 1994 with the Nokia 2100 series.
GSM’s high-quality voice calls, easy international roaming and support for new services like text messaging (SMS) laid the foundations for a worldwide boom in mobile phone use. GSM came to dominate the world of mobile telephony in the 1990s, in mid-2008 accounting for about three billion mobile telephone subscribers in the world, with more than 700 mobile operators across 218 countries and territories. New connections are added at the rate of 15 per second, or 1.3 million per day.
Personal computers and IT equipment
In the 1980s, Nokia’s computer division Nokia Data produced a series of personal computers called MikroMikko. 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, 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. 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, thus ending large-scale PC manufacturing in the country. Nokia was also known for producing very high quality CRT and early TFT LCD displays for PC and larger systems application. The Nokia Display Products’ branded business was sold to ViewSonic in 2000. In addition to personal computers and displays, Nokia used to manufacture DSL modems and digital set-top boxes.
Challenges of growth
In the 1980s, during the era of its 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, a major reason being its heavy losses by the television manufacturing division and businesses that were just too diverse. These problems, and a suspected total burnout, probably contributed to Kairamo taking his own life in 1988. After Kairamo’s death, Simo Vuorilehto became Nokia’s chairman and CEO. In 1990–1993, Finland underwent severe economic depression, 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.
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. 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.
As late as 1991, more than a quarter of Nokia’s turnover still came from sales in Finland. However, after the strategic change of 1992, Nokia saw a huge increase in sales to North America, South America and Asia. The exploding worldwide popularity of mobile telephones, beyond even Nokia’s most optimistic predictions, caused a logistics crisis in the mid-1990s. This prompted Nokia to overhaul its entire logistics operation. 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 would hold for the next 14 consecutive years until 2012. Between 1996 and 2001, Nokia’s turnover increased almost fivefold from 6.5 billion euros to 31 billion euros. Logistics continues to be one of Nokia’s major advantages over its rivals, along with greater economies of scale.
2000 to present
Nokia launched its Nokia 1100 handset in 2003, with over 200 million units shipped, was the best-selling mobile phone of all time and the world’s top-selling consumer electronics product. Nokia was one of the first players in the mobile space to recognize that there was a 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. The N-Gage was not a success, and from 2007 and 2008, Nokia started to offer an N-Gage service on existing Symbian S60 smartphones to play games.
In 2009, the company announced a high-end Windows-based netbook called the Nokia Booklet 3G. On 2 September 2009, Nokia launched two new music and social networking phones, the X6 and X3. The Nokia X6 featured 32 GB of on-board memory with a 3.2″ finger touch interface and comes with a music playback time of 35 hours. The Nokia X3 was the first series 40 Ovi Store-enabled device. The X3 was a music device that comes with stereo speakers, built-in FM radio, and a 3.2-megapixel camera. In 2009, Nokia also unveiled the 7705 Twist, a phone sporting a square shape that swiveled open to reveal a full QWERTY keypad, featuring a 3-megapixel camera, web browsing, voice commands and weighting around 3.44 ounces (98 g).
On 9 August 2012, Nokia launched for the Indian market two new Asha range of handsets equipped with cloud accelerated Nokia browser, helping users browse the Internet faster and lower their spend on data charges.
Symbian was Nokia’s main smartphone OS until 2011.
In Q4 2004, Nokia released its first touch screen phone, the Nokia 7710.
In September 2006, Nokia announced the Nokia N95, a Symbian-powered slider smartphone. It was released in February 2007 as the first phone with a 5-megapixel camera. It became hugely popular. A 8 GB variant was released in October 2007.
In November 2007, Nokia announced and released the Nokia N82, its first Nseries phone with Xenon flash. At the Nokia World conference in December 2007, Nokia announced their “Comes With Music” program: Nokia device buyers are to receive a year of complimentary access to music downloads. The service became commercially available in the second half of 2008.
The first Nseries device, the N90, utilised the older Symbian OS 8.1 mobile operating system, as did the N70. Subsequently Nokia switched to using SymbianOS 9 for all later Nseries devices (except the N72, which was based on the N70). Newer Nseries devices incorporate newer revisions of SymbianOS 9 that include Feature Packs. The N800, N810,N900, N9 and N950 are as of April 2012 the only Nseries devices (therefore excluding Lumia devices) to not use Symbian OS. They use the Linux-based Maemo, except the N9(50), which uses MeeGo.
Nokia stated that Maemo would be developed alongside Symbian. Maemo had since (Maemo “6” and beyond) merged with Intel‘s Moblin, and became MeeGo. MeeGo was later canceled and a development is now continued under name Sailfish OS.
The Nokia N8, from September 2010, is the first device to function on the Symbian^3 mobile operating system. Nokia revealed that the N8 will be the last device in its flagship N-series devices to ship with Symbian OS.
The Nokia 808 PureView has a 41-megapixel camera, more than any other smartphone on the market. It was released in February 2012 and contains a 1.3 GHz processor. On 25 January 2013, Nokia announced this was the last Symbian smartphone the company would make.
The Nokia N95 released in March 2007, with a 5-megapixel camera and sliding multimedia keys. Often considered Nokia’s hero smartphone. (S60 3rd)
In March 2007, Nokia signed a memorandum with Cluj County Council, Romania to open a new plant near the city in Jucu commune. Moving the production from theBochum, Germany factory to a low wage country created an uproar in Germany. Nokia recently moved its North American Headquarters to Sunnyvale.
In April 2003, the troubles of the networks equipment division caused the corporation to resort to similar streamlining practices on that side, including layoffs and organizational restructuring. This diminished Nokia’s public image in Finland, and produced a number of court cases and an episode of a documentary television show critical of Nokia.
On February 2006, Nokia and Sanyo announced a memorandum of understanding to create a joint venture addressing the CDMA handset business. But in June, they announced ending negotiations without agreement. Nokia also stated its decision to pull out of CDMA research and development, to continue CDMA business in selected markets.
In May 2008, Nokia announced on their annual stockholder meeting that they want to shift to the Internet business as a whole. Nokia no longer wants to be seen as the telephone company. Google, Apple and Microsoft are not seen as natural competition for their new image but they are considered as major important players to deal with.
In November 2008, Nokia announced that it was ceasing mobile phone distribution in Japan. Following early December, distribution of Nokia E71 is cancelled, both from NTT DoCoMo and SoftBank Mobile. Nokia Japan retains global research & development programs, sourcing business, and an MVNO venture of Vertu luxury phones, using docomo’s telecommunications network.
In February 2012, Nokia announced that it was laying off 4,000 employees to move manufacturing from Europe and Mexico to Asia.
In March 2012, Nokia announced that it was laying off 1,000 employees from its Salo, Finland factory to focus on software. In June 2012, research facilities in Ulm, Germany andBurnaby, Canada were closed, resulting in the loss of further jobs. The company also announced its plan to lay off 10,000 jobs globally by the end of 2013.
In January 2013, Nokia announced the lay off of about 1,000 employees from its IT, production and logistics divisions. The company planned to transfer the jobs of about 715 employees to subcontractors.
On 16 November 2005, Nokia and Intellisync Corporation, a provider of data and PIM synchronization software, signed a definitive agreement for Nokia to acquire Intellisync. Nokia completed the acquisition on 10 February 2006.
On 19 June 2006, Nokia and Siemens AG announced the companies would merge their mobile and fixed-line phone network equipment businesses to create one of the world’s largest network firms, Nokia Siemens Networks. Each company has a 50% stake in the infrastructure company, and it is headquartered in Espoo, Finland. The companies predicted annual sales of €16 bn and cost savings of €1.5 bn a year by 2010. About 20,000 Nokia employees were transferred to this new company.
On 8 August 2006, Nokia and Loudeye Corp. announced that they had signed an agreement for Nokia to acquire online music distributor Loudeye Corporation for approximately US$60 million. The company has been developing this into an online music service in the hope of using it to generate handset sales. The service, launched on 29 August 2007, is aimed to rival iTunes. Nokia completed the acquisition on 16 October 2006.
In October 2007, pending shareholder and regulatory approval, Nokia bought Navteq, a U.S.-based supplier of digital mapping data, for a price of $8.1 billion. Nokia finalized the acquisition on 10 July 2008.
In September 2008, Nokia acquired OZ Communications, a privately held company with approximately 220 employees headquartered in Montreal, Canada.
On 24 July 2009, Nokia announced that it will acquire certain assets of Cellity, a privately owned mobile software company which employs 14 people in Hamburg, Germany.The acquisition of Cellity was completed on 5 August 2009.
On 11 September 2009, Nokia announced the acquisition of “certain assets of Plum Ventures, Inc, a privately held company which employed approximately 10 people with main offices in Boston, Massachusetts. Plum will complement Nokia’s Social Location services”.
On 28 March 2010, Nokia announced the acquisition of Novarra, the mobile web browser firm from Chicago. Terms of the deal were not disclosed. Novarra is a privately held company based in Chicago, IL and provider of a mobile browser and service platform and has more than 100 employees.
On 10 April 2010, Nokia announced its acquisition of MetaCarta, whose technology was planned to be used in the area of local search, particularly involving location and other services. Financial details of acquisition were not disclosed.
Loss of Market Share in Smartphones
Apple Inc. came into the smartphone market that would later put pressure on Nokia. Although originally launched in 2007, the iPhone continued to be outsold and unfavoured by Nokia smartphones, most notably the Nokia N95. Symbian had a dominating 62.5% market share as of Q4 2007 – ahead of its closest competitors Microsoft‘s Windows Mobile(11.9%) and RIM (10.9%). However, with the launch of the iPhone 3G in 2008, Apple’s market share doubled by the end of that year, YoY, and iPhone OS (now known as iOS) operating system market share pulled ahead of Windows Mobile. Although in Q4 2008, Nokia was still by far the largest smartphone maker with a 40.8% share, it had a decline of over 10% since Q4 2007, mirrored with Apple’s increasing share. The N95’s successor Nokia N96, released in late 2008, proved to be much less favorable, although the Nokia 5800 XpressMusic was mainly considered to be the iPhone 3G’s main rival. Despite the brilliant critical and commercial success of the Nokia E71, 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.
In early 2009, the Nokia N97 was released, a touchscreen device with a landscape QWERTY slider that focused on social networking. It was overall a commercial success despite its mainly mixed reception. The N97’s closest competitor was the iPhone 3GS. 2009 was a successful year for Nokia’s business smartphone market – several key devices were launched such as the Nokia E52 which gained positive reception. However, Symbian market share dropped from 52.4% in Q4 2008 to 46.1% a year later. RIM increased its share during the same period from 16.6% to 19.9%, but the big winner was once again Apple who increased the share from 8.2% to 14.4%. Android grew too but at 3.9% it was still a minor player.
2010 was a bad year for Nokia and Symbian, and a very successful one for Google. Pressure on Nokia increased dramatically as the Linux-based operating system Android continued to make extraordinary gains. Other Symbian makers including Samsung and Sony Ericsson chose to make Android-powered smartphones instead of Symbian,and by mid-2010 Nokia itself was the only OEM of the operating system outside of Japan. Nokia developed the next generation Symbian platform, Symbian^3, to replace S60. In April 2010, Nokia officially announced the Nokia N8 smartphone, packing a 12 megapixel camera with Xenon flash, a metal aluminium body, and the first device running Symbian^3. It was released in October. Despite several improvements in Symbian^3, it was still not favoured by the public. The Guardian for example, put the N8 review’s headline as Nokia N8 review: like hardware? You’ll love this. Like software? Ah…. ZDNet stated that the Symbian’s operating system is not as intuitive as Android and iOS. The Guardian said that despite Symbian’s touchscreen improvements over S60 5th Edition, it was still not a good experience. By Q4 2010, Symbian’s market share dipped to 32%, whereas Android made a major rise to 30%. Despite losing market share, the smartphone unit was profitable and smartphone sales increased in absolute numbers every quarter during the year 2010. It has been estimated that 4 million units of the Nokia N8 have been sold in Q4 2010.
Alliance with Microsoft
On 11 February 2011, Nokia’s CEO Stephen Elop, a former head of Microsoft business division, unveiled a new strategic alliance withMicrosoft, and announced it would replace Symbian and the MeeGo project with Microsoft’s Windows Phone operating systemexcept for non-smartphones. Nokia was also to invest into the Series 40 platform and release a single MeeGo product in 2011, which shipped as the Nokia N9.
As part of the restructuring plan, Nokia planned to reduce spending on research and development, instead customising and enhancing the software line for Windows Phone 7. Nokia’s “applications and content store” (Ovi) becomes integrated into the Windows Phone Store, and Nokia Maps is at the heart of Microsoft’s Bing and AdCenter. Microsoft provides developer tools to Nokia to replace the Qtframework, which is not supported by Windows Phone 7 devices.
Symbian became described by Elop as a “franchise platform” with Nokia planning to sell 150 million Symbian devices after the alliance was set up. MeeGo emphasis was on longer-term exploration, with plans to ship “a MeeGo-related product” later in 2012. Microsoft’s search engine, Bing was to become the search engine for all Nokia phones. Nokia also intended to get some level of customisation on WP7.
After this announcement, Nokia’s share price fell about 14%, its biggest drop since July 2009. Following the replacement of the Symbian system, Nokia’s smartphone sales figures, which had previously increased, collapsed dramatically. From the beginning of 2011 until 2013, Nokia fell from its position as the world’s largest smartphone vendor to assume the status of tenth largest.
As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time, it was suggested the alliance would make Microsoft’s Windows Phone 7 a stronger contender against Android and iOS. Because previously increasing sales of Symbian smartphones began to fall rapidly in the beginning of 2011, Nokia was overtaken by Apple as the world’s biggest smartphone maker by volume in June 2011.  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.“.
Nokia reported “well above 1 million” sales for its Lumia line up to 26 January 2012, 2 million sales for the first quarter of 2012, and 4 million for the second quarter of 2012. In this quarter, Nokia only sold 600,000 smartphones (Symbian and Windows Phone 7) in North America. For comparison, Nokia sold more than 30 million Symbian devices world-wide still in Q4 2010 and the Nokia N8 alone sold almost 4 million in its first quarter of sale. In Q2 2012, 26 million iPhones and 105 million Android phones have been shipped, but only 6.8 million devices with Symbian and 5.4 million with Windows Phone.
While announcing an alliance with Groupon, Elop declared “The competition… is not with other device manufacturers, it’s with Google.”
European carriers have stated that Nokia Windows phones are not good enough to compete with Apple iPhone or Samsung Galaxy phones, that “they are overpriced for what is not an innovative product” and that “No one comes into the store and asks for a Windows phone”.
Amid falling sales, Nokia posted a loss of 368 million euros for Q2 2011, while in Q2 2010 had still a profit of 227 million euros. On September 2011, Nokia has announced it will lose another 3,500 jobs worldwide, including the closure of its Clujfactory in Romania.
On 8 February 2012, Nokia Corp. said to cut around 4,000 jobs at smartphone manufacturing plants in Europe by the end of 2012 to move assembly closer to component supplier in Asia. It plans to cut 2,300 of the 4,400 jobs in Hungary, 700 out of 1,000 jobs in Mexico, and 1,000 out of 1,700 factory jobs in Finland.
On 14 June 2012, Nokia announced to cut 10,000 jobs globally by the end of 2013 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. Today, Nokia’s market value is below $10 billion.
In total, according to actualized and planned laid-offs Nokia will have laid off 24,500 employees by the end of 2013. Nokia has already laid off 7,000 employees in the first stage: 4,000 staff and transferred also 3,000 to services firm Accenture. Nokia also closed its factory in Cluj, Romania that decreased the workforce by 2,000 employees, and restructured the Location & Commerce business unit that decreased the workforce by 1,200 employees. In February 2012, Nokia unveiled a plan to cut 4,000 more jobs at its plants in Finland, Hungary and Mexico as it moves smartphone assembly work to Asia. The most recent plan is to cut further 10,000 jobs globally by the end of 2013. Nokia had 66,267 personnel in its Devices&Services, NAVTEQ and Corporate Common Functions units combined, this has been calculated by subtracting the personnel of Nokia Siemens Networks from the total personnel of Nokia Group based on the full year report of 2010. Therefore, the personnel would decrease by approximately 36 percent by the end of 2013 when compared to the end of 2010 that best depicts the lay-offs that have resulted from the strategy change in February 2011 and competition in the central mobile phone business units recently.
On 18 June 2012, Moody’s downgraded Nokia rating to junk. Nokia CEO admitted on 28 June 2012 that company’s inability to foresee rapid changes in mobile phone industry was one of the major reasons for the problems company was facing.
On 4 May 2012, a group of Nokia investors filed a class action against the company as a result of disappointing sales of Nokia phones running on the Windows Phone platform.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.
On 29 October 2012, Nokia said its high-end Lumia 820 and 920 phones, which will run on Microsoft‘s Windows Phone 8 software, will reach first operators and retail outlets in some European markets including France and Britain and later in Russia and Germany as well as other select markets.
On 5 December 2012, Nokia introduced two new smartphones, the Lumia 620 and Lumia 920T. The 620 was released in January 2013.
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). 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.
In December 2012, Nokia announced that it would be selling its headquarters Nokia House for €170 million. 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.
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.”
In July 2013, Nokia announced that Lumia sales were 7.4 million for the second quarter of the year – a record high. On 2 September 2013, Kantar stated that Windows Phone had a new high 8.2% market share in Europe, with over 85% of the sales accounting for Nokia’s Lumia line.
Acquisition of mobile phone business by Microsoft
On 2 September 2013, Microsoft, the producer of the Windows Phone operating system that has powered all of Nokia’s recent smartphone products, 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 US$7.17bn.Steve Ballmer considered the purchase to be a “bold step into the future” for both companies, primarily as a result of its recent collaboration. Following the sale, Nokia will focus 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”. Pending regulatory approval, the acquisition is expected to close in early 2014. As part of the deal, a number of Nokia executives will join Microsoft, and Stephen Elop will step down as CEO of Nokia and become the head of Microsoft’s devices team; Risto Siilasmaa will replace Elop as interim CEO.
While Microsoft will license the Nokia brand under a 10-year agreement, the company will be unable to use the name on smartphones, and Nokia will be subject to a non-compete clause preventing it from producing any mobile devices under the Nokia name through 31 December 2015. Microsoft will acquire the rights to the Asha and Lumia brands as part of the deal.
In 2011, Nokia had 130,000 employees in 120 countries, sales in more than 150 countries, global annual revenue of over €38 billion, and operating loss of €1 billion. It was the world’s largest manufacturer of mobile phones in 2011, with global device market share of 23% in the second quarter.
The Nokia Research Center, founded in 1986, is Nokia’s industrial research unit consisting of about 500 researchers, engineers and scientists; it has sites in seven countries: Finland, China, India, Kenya, Switzerland, the United Kingdom and the United States. Besides its research centers, in 2001 Nokia founded (and owns) INdT – Nokia Institute of Technology, a R&D institute located in Brazil. Nokia operates a total of 7 manufacturing facilities located at Manaus, Brazil; Beijing and Dongguan, China;Komárom, Hungary; Chennai, India; Reynosa, Mexico; and Changwon, South Korea. 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.
Nokia is a public limited-liability company listed on the Helsinki, Frankfurt, and New York stock exchanges. Nokia plays a very large role in the economy of Finland. It is an important employer in Finland and several small companies have grown into large ones as its partners and subcontractors. In 2009 Nokia contributed 1.6% to Finland’s GDP, and accounted for about 16% of Finland’s exports in 2006.
Since 1 July 2010, Nokia comprises three business groups: Mobile Solutions, Mobile Phones and Markets. The three units receive operational support from the Corporate Development Office, led by Kai Öistämö, which is also responsible for exploring corporate strategic and future growth opportunities.
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. Nokia bought the 50% share and took full control of the group on 3 July 2013.
Mobile Solutions is responsible for Nokia’s portfolio of smartphones and mobile computers, including the more expensive multimedia and enterprise-class devices. The team is also responsible for a suite of internet services (formerly under the Ovi brand), with a strong focus on maps and navigation, music, messaging and media. This unit is led by Anssi Vanjoki, along with Tero Ojanperä (for Services) and Alberto Torres (for MeeGo Computers).
Mobile Phones is responsible for Nokia’s portfolio of affordable mobile phones, as well as a range of services that people can access with them, headed by Mary T. McDowell. This unit provides the general public with mobile voice and data products across a range of devices, including high-volume, consumer oriented mobile phones. The devices are based on GSM/EDGE, 3G/W-CDMA, HSDPA andCDMA cellular technologies.
At the end of the year 2007, Nokia managed to sell almost 440 million mobile phones which accounted for 40% of all global mobile phones sales. In 2011, Nokia’s market share in the mobile phone market had dropped to 27% (417 million phones).
Anssi Vanjoki resigned a few days before Nokia World 2010 and under new leadership team Jo Harlow will look into the affairs of Smartphones portfolio.
On 27 April 2011, The Register reported that Nokia was secretly developing a new operating system called Meltemi aiming at the low-end market. It was believed it would be replacing the S30 and S40 operating systems. Due to low-end market customers’ demand of having smartphone features in their feature phone, the OS would have included some features exclusive to high-end smartphones. On 26 July 2012, it was announced that Nokia had abandoned the Meltemi project as a cost-cutting measure.
Markets is responsible for Nokia’s supply chains, sales channels, brand and marketing functions of the company, and is responsible for delivering mobile solutions and mobile phones to the market. The unit is headed by Niklas Savander.
Nokia has numerous subsidiaries. The largest in terms of revenues is 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. Navteq’s map data is part of the Nokia Maps online service where users can download maps, use voice-guided navigation and other context-aware web services.
Until 2008 Nokia was the major shareholder in Symbian Limited, a software development and licensing company that produced Symbian OS, a smartphone operating system used by Nokia and other manufacturers. In 2008 Nokia acquired Symbian Ltd and, along with a number of other companies, created the Symbian Foundation to distribute the Symbian platform royalty free and as open source.
Nokia Solutions and 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). NSN has operations in around 150 countries.
The creation of NSN was announced on 19 June 2006, when Nokia and Siemens announced that they would merge their mobile and fixed-line phone network equipment businesses. The NSN brand identity was subsequently launched at the 3GSM World Congress in Barcelona in February 2007. NSN provides wireless and fixed network infrastructure, communications and networks service platforms, as well as professional services to operators and service providers. NSN focuses on GSM, EDGE, 3G/W-CDMA, LTE and WiMAX radio access networks; core networks with increasing IP and multiaccess capabilities and services.
The control and management of Nokia is divided among the shareholders at a general meeting and the Nokia Leadership Team (left), under the direction of the board of directors (right). 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, the Personnel Committee and the Corporate Governance and Nomination Committee.
The operations of the company are managed within the framework set by the Finnish Companies Act, Nokia’s Articles of Association and Corporate Governance Guidelines, and related board of directors adopted charters.
Former corporate officers
|Chief executive officers||Chairmen of the board of directors|
|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|
Nokia is a public limited liability company and is the oldest company listed under the same name on the Helsinki Stock Exchange, having been listed since 1915. Nokia has had a secondary listing on the New York Stock Exchange since 1994. 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.
In 2007, Nokia had a market capitalisation of €110 billion; by May 2012 this had fallen to €14.8 billion.
In addition, Nokia’s stock raised around 39% on the 3rd of September 2013 after Microsoft bought Nokia.
For fiscal Q2 2011 ending in June 2011, Nokia reported a net loss of €492 million, despite a €430 million payment from Apple. Nokia cited decline in its mobile phone business as the primary cause of the loss.
In Q1 2012 results were bleak. Nokia lost €1.34 billion. Revenue is down almost a third from a year ago. By May 2012, Nokia share price had fallen 37.5 percent since the beginning of the year, and was down 61 percent in the last year.
Nokia’s official corporate culture manifesto, The Nokia Way, emphasises the speed and flexibility of decision-making in a flat, networked organization, although the corporation’s size necessarily imposes a certain amount of bureaucracy.
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.
Originally, the Nokia Values were customer satisfaction, respect for the individual, achievement and continuous learning. Then until May 2007, the Nokia Values were Customer satisfaction, Respect, Achievement, and Renewal. 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.
.mobi and the Mobile Web
Nokia was the first proponent of a Top Level Domain (TLD) specifically for the Mobile Web and, as a result, was instrumental in the launch of the .mobi domain name extension in September 2006 as an official backer. Since then, Nokia has launched the largest mobile portal, Nokia.mobi, which receives over 100 million visits a month. It followed that with the launch of a mobile Ad Service to cater to the growing demand for mobile advertisement.
Ovi, announced on 29 August 2007, was the name for Nokia’s “umbrella concept” Internet services. Centered on Ovi.com, it was marketed as a “personal dashboard” where users can share photos with friends, download music, maps and games directly to their phones and access third-party services like Yahoo’s Flickr photo site. It has some significance in that Nokia is moving deeper into the world of Internet services, where head-on competition with Microsoft, Google and Apple is inevitable.
The services offered through Ovi included the Ovi Store (Nokia’s application store), the Nokia Music Store, Nokia Maps, Ovi Mail, the N-Gage mobile gaming platform available for several S60 smartphones, Ovi Share, Ovi Files, and Contacts and Calendar. The Ovi Store, the Ovi application store was launched in May 2009. Prior to opening the Ovi Store, Nokia integrated its software Download! store, the stripped-down MOSH repository and the widget service WidSets into it.
Nokia discontinued the Ovi brand in 2011, continuing to offer its services under the main brand.
Nokia offers a free personalised service to Nokia owners called My Nokia (located at my.nokia.com). Registered My Nokia users can get free services as follows:
- Tips & tricks alerts through web, e-mail and also mobile text message.
- My Nokia Backup: A free online backup service for mobile contacts, calendar logs and also various other files. This service needs GPRS connection.
- Ringtones, wallpapers, screensavers, games and other things can be downloaded free of cost.
Comes With Music
In 2007 Nokia set up their “Nokia Comes With Music” service, in partnership with Universal Music Group International, Sony BMG, Warner Music Group, EMI, and hundreds of independent labels and music aggregators, to allow 12, 18, or 24 months of unlimited free-of-charge music downloads with the purchase of a Nokia Comes With Music edition phone. Files could be downloaded on mobile devices or personal computers, and kept permanently.
In January 2011 Nokia withdrew this program in 27 countries, due to its failure to gain traction with customers or mobile network operators; existing subscribers could continue to download until their contracts ended. The service continued to be offered in China, India, Indonesia, Brazil, Turkey and South Africa where take-up had been better.
On 13 August 2008 Nokia launched a beta release of “Nokia Email service”, a push e-mail service, since incorporated into Nokia Messaging.
Nokia Messaging operates as a centralised, hosted service that acts as a proxy between the Nokia Messaging client and the user’s e-mail server. The phone does not connect directly to the e-mail server, but instead sends e-mail credentials to Nokia’s servers. IMAP is used as the protocol to transfer emails between the client and the server.
Electronic products such as cell phones impact the environment both during production and after their useful life when they are discarded and turned into electronic waste. Nokia is listed in Greenpeace‘s Guide to Greener Electronics that scores leading electronics manufacturers according to their policies on sustainability, climate and energy and how green their products are. In November 2011 Nokia ranked 3rd out of 15 listed electronics companies, falling two places due to its weaker performance on the Energy criteria and scoring 4.9/10.
All of Nokia’s mobile phones are free of toxic polyvinyl chloride (PVC) since the end of 2005 and all new models of mobile phones and accessories launched in 2010 are on track to be free of brominated compounds, chlorinated flame retardants and antimony trioxide.
Nokia’s voluntary take-back programme to recycle old mobile phones spans 84 countries with almost 5,000 collection points. However, the recycling rate of Nokia phones was only 3–5% in 2008, according to a global consumer survey released by Nokia. The majority of old mobile phones are simply lying in drawers at home and very few old devices, about 4%, are being thrown into landfill and not recycled.
All of Nokia’s new models of chargers meet or exceed the Energy Star requirements. Nokia aims to reduce its carbon dioxide emissions by at least 18 percent in 2010 from a baseline year of 2006 and cover 50 percent of its energy needs through renewable energy sources. Greenpeace is challenging the company to use its influence at the political level as number 85 on the Fortune 500 to advocate for climate legislation and call for global greenhouse gas emissions to peak by 2015.
Nokia is researching the use of recycled plastics in its products, which are currently used only in packaging but not yet in mobile phones.
Since 2001, Nokia has provided eco declarations of all its products and since May 2010 provides Eco profiles for all its new products. In an effort to further reduce theirenvironmental impact in the future, Nokia released a new phone concept, Remade, in February 2008. The phone has been constructed of solely recyclable materials. The outer part of the phone is made from recycled materials such as aluminium cans, plastic bottles, and used car tires. The screen is constructed of recycled glass, and the hinges have been created from rubber tires. The interior of the phone is entirely constructed with refurbished phone parts, and there is a feature that encourages energy saving habits by reducing the backlight to the ideal level, which then allows the battery to last longer without frequent charges.
NSN’s provision of intercept capability to Iran
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 to an unprecedented degree. The technology reportedly allowed it 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,” expert insiders told The Wall Street Journal. 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.
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.
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.
In 2009, Nokia heavily supported the passing of a law in Finland that allows companies to monitor their employees’ electronic communications in cases of suspected information leaking. 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.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 has used its provisions. In 25 February the Office of Data Protection Ombudsman confirmed that city of Hämeenlinna has informed that it has made the notice required by a law recently.
Nokia–Apple patent dispute
In October 2009, Nokia filed a lawsuit against Apple Inc. in the U.S. District Court of Delaware citing Apple infringed on 10 of its patents related to wireless communication including data transfer. 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.” 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, the details of which are yet to be confirmed.
In June 2011, Apple settled with Nokia and agreed to an estimated one time payment of $600 million and royalties to Nokia. The two companies also agreed on a cross-licensing patents for some of their patented technologies.
Alleged tax evasion in India
Nokia’s Indian subsidiary has been alleged for non-payment of TDS and transgressing transfer pricing norms in India. The unpaid TDS of 30 billion, accrued during a course of six years, due to royalty paid by the Indian subsidiary to its parent company for incorporating its software.
Research cooperation with universities
Nokia is actively exploring and engaging in open innovation through selective research collaborations with major universities and institutions by sharing resources and leveraging ideas. Major research collaboration is with Tampere University of Technology based in Finland. Current collaborations include:
- Aalto University, Finland
- Beijing University of Posts and Telecommunications, China
- Massachusetts Institute of Technology, United States
- Stanford University, United States
- Tampere University of Technology, Finland
- Tsinghua University, China
- University of California, Berkeley, United States
- University of Cambridge, United Kingdom
- University of Tampere, Finland
- Singularity University, United States
- Ad hoc On-Demand Distance Vector Routing
- Gnokii − A suite of programs for communicating with mobile phones.
- Jolla – Continuer of MeeGo through Nokia’s Bridge program.
- List of Nokia products
- Nokia PC Suite − A software package, slated to be replaced by Nokia Ovi Suite.
- Nokia Software Updater − Mobile device firmware updater.