Nokia: From a paper mill, to the world’s biggest mobile company to being acquired by Microsoft
Recently, Microsoft completed the acquisition of Nokia’s smartphone business bringing an end to an era, which has seen plenty of ups and an equal number of downs. Let’s take a look at the brief history of the company that started out as a paper mill in small village in Finland.
THE EARLY YEARS
In the year 1865 Fredrik Idestam built a paper manufacturing mill in Southern Finland and followed it up by launching a second mill in the nearby town of Nokia in 1868. Three years later Idestam transformed his company to a share company and the Nokia company was formed.
Nokia kept growing through the 19th century and in the 1960s the company branched out into electronics. In the next two years it developed a host of electronic devices including radio telephones for the army. In 1979 Nokia took its first steps into telephony by creating Mobira Oy in a JV with Finnish TV maker Salora, and they created the Nordic Mobile Telephone (NMT) service. This was the world’s first international cellular network and in the 80s, Nokia launched its first car phone called the Mobira Senator.
Five years later Nokia launched the Mobira Cityman, the first mobile phone that would run on the company’s NMT network. At 800 grams and priced at $6,308, it may be heavy and pricey by today’s standards, but the device soon hit cult status when Mikhail Gorbachev was photographed using the device.
THE GLORY YEARS
The 90s were the glory years for the Finnish company. In 1994, Nokia launched the 2100 with the now iconic Nokia ringtone. Three years later it launched Snake, one of the most widely recognized mobile games of all time. The Nokia 2100 was such a big hit that it went on to sell more than 20 million handsets worldwide, much higher than what the company had predicted.
In 1997, Nokia also launched the Communicator, which 11 years before the first iPhone was considered to be much ahead of its time. The device not only looked cool, but also offered features like email, fax, calendar and a massive display.
The same year, Nokia also launched the 6110 and the 5110 two more devices, which were way ahead of their time and competition. These devices offered a much sleeker way of text messaging, a beautiful menu system customization options like multiple color snap-on covers. These devices were followed by the 7110, which offered basic web functions, the 7650, with a built-in camera and the 6650, the company’s first 3G enabled smartphone.
By 1998, Nokia had firmly established itself as the global leader. Where its rivals like Apple, Sony and Siemens had failed to predict the global demand, Nokia sailed through these years with a turnover that increased 500 percent from $ 8.9 billion to $42.8 billion.
There is an old Finnish tale, which talks about Sampo, an engine of eternal wealth created by the poor people of Kalevala. Sampo essentially grinds out gold, salt and wheat from three horns, day and night, but as nothing good lasts forever, one day Sampo drowns to the bottom of the lake and the people of Kalevala are returned to their gloom and poverty.
As is with old tales, one can easily relate Nokia to the Sampo. After the glorious 90s, in 2007 things began to go downhill — and rapidly. In the year 2009, Nokia posted its first quarterly loss in more than a decade. This was largely due to HTC developing a smartphone running on the yet new Google Android operating system. With the iPhones and various Android smartphones taking the market by storm, Nokia failed to keep up with them. Instead of joining the horde of Android adopters, Nokia’s new CEO Stephen Elop joined hands with Microsoft to develop smartphones running on the Windows Phone platform.
Though the partnership saw the development of Nokia’s popular Lumia series of smartphones, Nokia wasn’t able to rekindle its glory days.
END OF AN ERA
On September 3, 2013, Nokia announced that its hardware department would be acquired by Microsoft in a deal worth $7.2 billion. After eight months, the deal was completed today and with it came the end of an era.
t is official: Nokia’s shareholders have signed off on the $7.2 billion acquisition of the company’s handset division by Microsoft. The Financial Times reports that 99.7 percent of the investors at a general meeting in Helsinki voted in favor of the deal.
The investors who approved the deal hold nearly four-fifths of Nokia’s total shares. The meeting is expected to continue for quite some time, however, “as various small Finnish shareholders vent their anger over the deal” and Stephen Elop’s hefty payday. Ever since the deal was announced, Nokia has been on something of a rebound, surpassing Motorola to become the fourth-largest smartphone vendor in the U.S. and moving a record number of Lumia smartphones. Once the venting has ended and the meeting adjourns, Nokia will be one step closer to becoming a subsidiary of Microsoft.
Nokia and Microsoft today announced that the acquisition of Nokia’s devices and services unit is finally expected to close on April 25. While the deal is almost done, the fate Nokia’s Chennai manufacturing facility, which is also one of its largest, hangs in a state of limbo. The plant is in the centre of a tax row and has been frozen by Indian authorities.
“The situation is a complicated one, and Nokia is continuing to weigh its options. As there is still time before the closing of the deal, we cannot speculate on possible outcomes at this point. With Chennai, it is worth remembering that we have said we will consider a services agreement with Microsoft should our Indian assets not be able to transfer at the close of the global deal,” a Nokia spokesperson told BGR India.
Microsoft too announced that there were a few adjustments made from the original deal that was announced on September 3, 2013.
As with any multinational agreement of this size, scale and complexity, our two companies have made adjustments to the original deal throughout the close preparation process. We’ve entered into numerous agreements to address items ranging from manufacturing to IT. These include the following:
· While the original deal did not address the management of online assets, our two companies have agreed that Microsoft will manage the nokia.com domain and social media sites for the benefit of both companies and our customers for up to a year.
· The original deal had all employees in Nokia’s Chief Technology Office continuing with Nokia. We’ve adjusted the agreement so the 21 employees in China working on mobile phones will join Microsoft and continue their work.
· The original deal had Microsoft acquiring Nokia’s Korean manufacturing facility. The agreement was adjusted and Microsoft will not acquire the facility.
End of an era: Nokia to be renamed Microsoft Mobile after acquisition
Nokia’s handset and services business will be known as Microsoft Mobile Oy, Nokia said in a mail sent out to existing users with a Nokia account. Microsoft and Nokia are expected to close the $7.2 billion acquisition before the end of this month, which would mark the end of Nokia as we know it. However, Nokia will continue to exist with its telecom networks and infrastructure business NSN, its mapping and location based services HERE and its Advanced Technologies business that handles its IP and patents. Microsoft Mobile Oy will become a subsidiary of Microsoft Corp.
“With the completion of this sale, the Nokia Devices & Services business will be part of this Finnish entity, Microsoft Mobile Oy, a subsidiary of Microsoft Corp,” the letter said.
Nokia’s handset and services business is expected to run as usual after Microsoft acquires it. Stephen Elop, who was the CEO and President of Nokia before the acquisition deal was announced will head the division under Microsoft.