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Finns, roamers, Nokia: So long, and thanks for all the phones

The rise and fall of the great Finnish phonemaker

The Fall

During the first part of the new millennium arrogance and complacency began to become noticeable. Ollila was a formidable intellect, and the successful management team of the early 1990s had penned such doctoral dissertations with titles such as as "Ownership Strategy and Competitive Advantage" (Timo Koski) and "The Internationalization of Industrial Systems Suppliers" (from corporate planner, Mikko Kosinen). Ollila was also drawn to theory, not always wisely.

Nokia’s rapid decline is well documented, not least here, and can be encapsulated in a single sentence: it failed to respond as the market demand changed. But it’s more complicated and agonising than that. Many companies fail to anticipate such a change, while others over-estimate the appeal of their existing products As a result, when the wind changes, they have no Plan B. The wealthy ones can buy their way out of trouble, but most cannot.

Nokia filed this patent for a Communicator device in 1991

What's singular about Nokia's fall was that it had not only anticipated this change in the market, but spent years preparing for it. It had a Plan B - it was just too slow bringing it to market.

Former Nokians cite the Ollila’s 2004 "matrix reorganisation" as critical in the company’s fate. This had two consequences: one was that internal teams were competing against each other in ways which the consensus management could not adequately resolve. Another was that it emphasised Nokia’s weaknesses rather than its strengths.

The reorg established software development as a kind of factory production line from which product managers could pick and choose what they needed. It looked great on paper, but Nokia was never very good at writing software once the requirements for that software became remote from the needs of the punter.

You can, perhaps, argue that this happens whenever the spec is poor, or vague. But it made product managers far more remote from their own supply chain. The entrepreneurial flair of the 1990s gave way to factional in-fighting and dozens of lost opportunities. For more on this matrix reorg, see El Reg's "When Dilbert Came To Nokia", from 2010.

“Everyone at Nokia had read The Inventor’s Dilemma in 1998”, one former Nokian told me, referring to Clayton Christensen’s management book about how successful companies fail to adapt to change.

So, from 2002 Nokia began preparing for the day when mobile computers with some telephony integrated took over from telephones with some computer-like aspects... which began to happen when Apple announced the iPhone. Nokia had embarked on a mobile Linux which it finally revealed in May 2005, a touchscreen "Wi-Fi tablet" with three hours battery life, called the Nokia 770 Internet Tablet. Hardly anybody bought one, but Nokia kept plugging away. Subsequent iterations gained VoIP, and eventually full telephony. It was perfect for the post-iPhone world.

To ease the transition out of Symbian – the popular mobile OS used by many of the big names across the noughties – and attract more developers, Nokia needed a much easier cross-platform API, and it bought the best, Trolltech’s Qt.

Anssi Vanjoki, the popular executive who devised Nokia’s successful 1990s branding strategy and helped choose the segment of the Spanish guitar waltz Gran Vals to become the Nokia ringtone, declared that everything had been part of a deliberate process, and the next version, the fifth, would become Nokia’s mass-market platform.

"A true platform for the next generation of computers... We have what we believe is the platform that defines what computers have become," said Vanjoki. Nokia’s Plan B was perfect.

The problem was, he was saying this in 2009, not 2007.

Nokia Media Terminal.

"Nokia Media Terminal" - such a flair for names.
A Linux-based set top box from 2000

Apple didn't actually know how to make phones, and had to learn. Its very slow and gradual evolution of the iPhone – for two years it maintained carrier exclusives – gave Nokia every opportunity to regroup and respond. But the Linux platform still didn’t appear in a consumer smartphone for another two years. By which time, Vanjoki had gone, Nokia had ‘burned’ its platforms, torching almost all internal platform software development, and tying its fortune to Windows Phone.

It’s very tempting to speculate what might have been, if Nokia had revealed a competitive Qt-based Linux-based OS in 2008 and made the radical move of giving it away with no licensing fees – daring rivals to compete on design, on scale, and against Nokia’s formidable logistics and distribution operation. This would have been a bold leap as daring as Olilla’s gambit back in 1992, of betting the company on a mobile phone technology that didn’t really work at the time, of shrinking the company to give it focus and the chance to survive.

It’s possible that the technically crude and grossly inefficient Java-based system touted by a rather sinister American advertising company - Android - would never have gained much traction. Who knows? With an "Open Maemo" powering half the market, it might be Google who today is shopping around in desperation for a faded hardware OEM.

Perhaps. Or perhaps it wouldn’t have mattered. Nokia tried and failed to interest potential partners in the Linux platform – but by then Android was irrepressible. The entire industry from telcos to retailers were demanding something competitive to go up against the iPhone, which lacked decent competition. Android filled the vacuum.

But we do know today why Nokia was so slow – via Taskamuro, which we translated and summarised here. It was in-fighting and bureaucracy, and an indecisive consensus management that lacked leadership and urgency. Nokia had “wasted 2,000 man years on UIs that didn’t work” – and do read this for a sense of the chaos at the organisation. Ollila had hoped the Darwinian competition introduced in the 2004 reorg would prevent the creation of a bureaucracy. It didn’t.

Wierdly, Nokia also anticipated social media. In late 2002 it helped host a private "social software summit" with Clay Shirky – an event full of the anti-human robot sociology now synonymous with Shirky, but Nokia was at least shrewdly anticipating future uses of mobile devices. It failed to start a social network, buy into one, or even support them well with its Symbian phones. Another lost opportunity.

The couple of years that followed after Ollila was succeeded by CFO Olli-Pekka Kallasvuo ("OPK") were really the years of madness. Nokia had completely lost the plot. At times Nokia resembled a very earnest NGO. It started a banking service for people in India who didn't have bank accounts. Attendees to its annual partner event, Nokia World, had to get used to hearing New Age whale song.


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