How The Past Keeps Nokia Afloat

Fredrik Idestam and Leo Mechelin (Image: Public Domain)
The man who helped give Finland the world's first universal adult franchise also co-founded it's most well-known company - Nokia.

Paper, the universal right to vote, and the urban legend of the unbreakable 3310. What do these three have in common?

At one point, they were all made a reality by the people and products of a Finnish company named Nokia. The brand we know best for its cellphones started out as a paper pulp manufacturer in the late 19th century. In 1865, Fredrik Idestam started a paper mill in the Southwest of Finland in Tampere – then a part of the Russian Empire. It did well enough to warrant making the second one.

In 1871, he met with Leo Mechelin and founded Nokia Ab. It got its name from the Nokiavirta river that ran through the Tampere. Mechelin later helped Finland gain its independence from Russia and turned the country into the world’s first democracy with a universal adult franchise.

Nokia, in the beginning, focussed solely on paper, but then diversified gradually into electrical power after Idestam’s death. They merged with the Finnish Rubber Works, and Finnish Cable Works and an old forestry business to become a three-firm coalition. Nokia was now making rubber boots – something they still do to this day.

Finland played an important role in the Eastern Front of the Second World War – despite facing impossible odds, they held the Soviet invaders back and caused heavy casualties. They fought the Soviets again alongside the Axis powers, before breaking ranks and fighting the Germans as well. Nonetheless, for supporting the Axis side, Finland ended up paying reparations to the Soviet Union after the war.

Nokia grew their business dramatically in alleviating reparations, selling electrical equipment and cable machinery to the Soviet Union. This helped develop them into a tech company.

By 1971, they were developing their own computers, and it was then that they first entered the telephone exchange business. But from 1980, they pivoted again, purchasing major television manufacturers and becoming a giant through acquisitions. This was the first time that they made most of their revenues through consumer electronics.

During the cold war, Nokia was under the scanner of US intelligence services for its dealings with the USSR. Things got tricky when the Finnish company wanted to export electronics with American components to the USSR – but Nokia had a deal with the Pentagon which allowed them to do this. By fuelling the import market to the USSR, the Pentagon was able to monitor the advancement of technology in the Soviet Union.

1985. The year Nokia sold the first compact mobile phone – the Mobira Cityman 900, weighing 900 grams and costing $5,456. In an unlikely act of brand placement, the Cityman was photographed in the hands of Michael Gorbachev – leading to its nickname ‘The Gorba’.

From the 1990s, Nokia began to think of themselves as a mobile phone company – and sold stakes in much of its power, television, tyre and cable units. They were at the forefront of the cellphone revolution – the first GSM call was made with a Nokia.

The mid-to-late 90s became the heyday for iconic Nokia devices – 1100, 3210 and N9000 communicator (a 1996 ‘smartphone’ that could make calls, browse the web and send emails). In 1998, Nokia sold 40 million units and iNokia’s dominance over the market continued until 2008 and the dawn of Android and the iPhone. Everything about Nokia grew synonymous with the mobile revolution. It’s ringtone – Grans Vals – was taken from a composition written in 1902, and is perhaps the most memorable ringtone today. The first popular mobile game, snake, was shipped with Nokia phones from 1998. From 1998-2007, Nokia alone contributed up to three-quarters of Finnish growth.

But the dawn of the touchscreen smartphone changed everything.

Unlike in the past, Nokia did not adapt quick enough to the two new dominant operating systems in the market. They tried to keep their s60 OS alive – and failed. They were spurred back into competition after Microsoft acquired their cellphone division – but this too failed to make a dent. They were swamped by the competition but managed to hang in, thanks to a diversified presence in a more reliable market – network technology. Rajeev Suri managed to turn a loss-making venture with Siemens into a profitable one – and in 2014, he was made Nokia’s CEO.

When Nokia’s fortunes declined, it was a major blow to Finland’s economy. The company was their most well-known export. But the next big thing from Finland also turned out to be from the mobile world – the hyper-popular games Angry Birds and Clash of Clans. Spurred by this, Finnish entrepreneurs kept the engine running despite Nokia’s downturn.

Nokia’s past continues to be relevant to the company today. At a time when its phone dominance was swamped by the new players in the touchscreen space, they century-old rubber business was outperforming their electronics department. Selling tyres turned out to be as profitable in the 21st century as it was in the 20th century, as Russia developed an appetite for the SUV.

Having a history of diversification paid off for Nokia. The tech world is unforgiving when it comes to displacing competition for good, but Nokia has managed to hang on with a foot in the door. It’s strong presence in the undersea cables segment – with over 575,000 km of cable – through Alcatel-Lucent Submarine Networks is a throwback to its cable-manufacturing days, and it keeps the company relevant to the information revolution.

This year, Nokia returned to the smartphone battlefield with its first flagship Android phone. Memes about the indestructibility of Nokia phones like the 3310 continue to be popular – especially in the wake of their competition’s phones either exploding or having their screens crack too easily.

The story of how a paper mill turned into the connecting thread of globalisation is Nokia’s greatest strength today.

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