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.
THE DOWNFALL
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.
:
