EMSE 6005.10 – Organizational Behavior For The Engineering Managers
Nokia was founded by Fredrik Idestam, a mining engineer in 1865. The name Nokia was decided in 1871 when he opened his second paper mill on the bank of Nokianvirta river. Nokia started out with making paper which incidentally was one of the very first technologies used for communications. Fredrik Idestam was the chairman of the company till 1896 when he retired, and Leo Mechelin took over as the chairman.
Under Mechelin, Nokia started a new business unit of electricity generation. In 1898, Eduard Polon founded the Finnish Rubber Works, which later became Nokia’s rubber business. They were making everything from galoshes to tires. In 1912, Finnish Cable Works was established by Arvid Wickstrom, which later became Nokia’s cable and electronic business.
In 1967, all three of these jointly owned companies came together to form the Nokia corporation. Nokia’s first thrust in telecommunications came when they began developing radio telephones for the army and emergency services. During this period, the company was involved in many businesses including paper products, tire manufacturing, footwears, communication cables, televisions , electricity generation machinery, robotics , chemicals, plastics and many more. By 1987,, Nokia became one of the leading manufacturers of TV in Europe. By 1990, Nokia decided to concentrate its efforts on the fastest growing business of telecommunications & leave all other companies behind. They sold out all other business divisions.
An Era of Communication
Nokia was not a new player in telecommunication field when they started concentrating on it in 1990’s. Instead, they had the ball rolling from 1979 when they created a radio telephone company Mobira Oy as a joint venture with one of the leading TV maker Salora in Finland. They started with the Nokia DX 200 which was a digital switch for telephone exchanges. They worked on the development of a version of exchange & Nordic Mobile Telephony network was born.
In 1987, GSM (Global System for Mobile communications) is adopted as the European standard for digital mobile technology. This new technology revolutionized the telecommunication industry with its high-quality voice calls, international roaming and support for text messages.
The Growth of a Mobile Giant
Nokia truly entered a new age GSM cell phone time with their Nokia 1011 model which was launched in 1992. During this time, Finland was undergoing a severe economic meltdown and Nokia was also in a severely crunched economic situation. In 1994, Nokia launched their 2100 series phones which were the first phones with the now famous Nokia ringtone in them. Nokia had planned a target to sell 400,000 of these phones which was a big number at that time, but they got lucky and it turned out to be such a huge success that they sold over 20 million devices worldwide. This was truly the start of the ride for Nokia atop the cellphone business.
Source: ETLA – The Research Institute of the Finnish Economy
As the graph, clearly depicts, Nokia was the clear the gorilla in the cellphone market in 1990’s, with almost 100% market share. As the time, moved towards the next century competition for Nokia grew but still they were able to hold onto their market leader position. From 1996 to 2001, Nokia’s turnover increased almost fivefold from EUR 6.5 billion to EUR 31 billion.
With the start of the next century Nokia just kept on growing bigger & bigger becoming the leader in the mobile technology. In 1999, Nokia launched the Nokia 7110 which was the first phone capable of rudimentary web-based functions including emails. Within 2 years Nokia launched its first phone with a built-in camera and again in September 2002 they came out with a phone capable of capturing videos i.e. the Nokia 3650. During this time, there was a huge number new patented