Current location: home > ecks > rants > 3 >

Site navigation

Fall of the Titan

Today the world was shocked by a quite a notable acquisition — Microsoft bought the Finnish Nokia. I'm sure y'all are familiar with both companies, so I'm not going to contextify those. Now, Nokia hasn't been that much on the wall lately, but it's still one of the largest cellphone makers in terms of sold handsets. You might also know that Nokia is from Finland, my home country, so this has really affected me.

Nokia's phone department was sold for about EUR 5.5 billion, which is really little. To put it in perspective, in 2000, Nokia was worth $183 billion. Today, the whole thing was estimated to be worth $11 billion. That's quite a drop. How come the unthreatened market leader of the early 2000s was able to fall this low?

When the iPhone was released in 2006-2007, it was a really unprecedented device. And Nokia failed to properly react to it, feeling their superior market dominance was sufficient. But it wasn't. History repeats itself. With the rise of the smartphone, iOS and Android emerged as a duopoly. Nokia's Symbian wasn't enough to compete. While Nokia still dominated the lower-end markets, this wasn't a sustainable long-term solution. In short, everything was slowly going towards hell. Which is when former Microsoft executive Steven Elop took over as CEO of Nokia.

Even back then, in 2010-2011, some people were suggesting Elop was a trojan horse from Microsoft. When Elop decided to dispose of Symbian and replace it with the brand new, zero-marketshare Windows Phone, it seemed even more evident Elop was still loyal to his old employer. While Symbian definitely needed a replacement, terminating it before WP was finished was a poor move, as was not investing in the Linux-based MeeGo, which had succeeded quite well in Nokia's N9 handset. However, considering the circumstances, Nokia had little options. Trying to maintain a third ecosystem by themselves was overwhelming, so their options were to try gain Android marketshare or go with WP. Elop's Nokia chose the latter. Even in hindsight, it's hard to judge whether Nokia would've succeeded had they chosen Android.

As an owner of the first generation Nokia Lumia 800, running Windows Phone 7.x, it's a solid piece of hardware and software. WP is quite nice to use, except for the lack of proper app ecosystem. Nokia has a great build quality and the handsets have every chance of succeeding. Uptake wasn't so great, but WP was slowly gaining marketshare, with Nokia as the dominant hardware manufacturer. Nokia made some really nice products, such as the Lumia 1020, boasting a 41 megapixel camera, but WP still struggled, as did Nokia, having dedicated their smartphone business to WP handsets only. At the same time, the featurephone OS, Asha, was losing marketshare to cheap Android phones in non-Western markets.

Then Microsoft suddenly buys Nokia's phone division and Elop emerges as a strong candidate to succeed Steve Ballmer as Microsoft's CEO. This is really fishy. First Elop decides to take the chance and use WP, and simultaneously manages to lower Nokia's share value with 80%. That is, perfectly prepare Nokia for an acquisition. Nokia has a big patent portfolio and a large distribution chain, which will help Microsoft compete with Google/Android and Apple. While I would normally accept this as a fact of business life, this case is really disturbing. It appears Elop was working for Microsoft all along, with his purpose to destroy Nokia to accommodate for a cheap purchase.

Nokia is a part of Finnish culture, and something every Finn is proud of. That's why the newspaper comment fields are filled with enraged commentators. By destroying what was remaining of Nokia, Elop slapped the entire Finnish people in the face. Nokia is our only really world-wide famous brand, and something we've been able to brag with. Nokia was and still is a huge employer in Finland, and at one point made up 20% of the "community tax". In short, Nokia is (was) a huge thing in Finland. And we feel betrayed. Nokia will still continue to exist as a software and networking company (and it'll actually be profitable), but the phone division was the famous one. Nobody cares what goes on behind the scenes. Sony Ericsson was once among the largest in the phone branch, and is currently huge in the networking branch... but really, how famous is Ericsson compared to Nokia, let alone Samsung? By selling and therefore ending Nokia's phone production, a part of our national identity has been ripped off. This might come across as a bit dramatic, but that's how many feel.