Nokia History

Early hiccups and the epic fall

It was the year 2001, when Nokia’s profits first crumbled after becoming the top phone maker in the world. This was primarily due to a slowdown in mobile phone market. That downfall turned out to be short-lived, but three years later, in 2004, the company again reported that it’s market share is sliding, despite still leading with the solid 35%.

Another hiccup came in 2007, when the company had to recall a whopping 46 million faulty cell-phone batteries. What’s even worse was that the batteries – which were manufactured between 2005-end and 2006-end – appeared in a wide range of Nokia phones, which meant that a large part of the company’s device portfolio was affected.

In 2008 – the same year when the Android version 1.0 was launched – Nokia’s Q3 profits nosedived 30%, while sales decreased 3.1%. On the other hand, iPhone sales sky-rocketed by around 330% during the same period.

The year 2009 saw Nokia laying off 1,700 employees worldwide. Later in the year, the struggling Finnish company finally acknowledged that it was slow to react to the change in the market, which was now slowly being taken over by the likes of Apple and BlackBerry, and influenced by newcomers like Samsung, HTC, and LG.

The following year, Stephen Elop – who was previously head of Microsoft’s business software division – was appointed as Nokia’s new CEO. He was also the first non-Finnish leader of the company. Although 2010 saw a rise in profits for the company, job cuts continued.

Elop became famous for a speech that he delivered to Nokia employees in early 2011, wherein he compared the company’s market position to a man standing on a “burning platform.” Quite evidently, the company’s situation was going from bad to worse.

Desperate to come out of the ongoing crisis and better compete with competitors, Nokia announced a strategic partnership with software giant Microsoft to make the latter’s Windows Phone its primary mobile OS.

Following the announcement, there were rumors that Microsoft is in talks to acquire the struggling Finnish giant. However, at that point in time, Elop rubbished them as “baseless.” Meanwhile, Apple overtook Nokia in smartphone sales in Q2, 2011.

The first fruit the partnership between Nokia and Microsoft bore were the Lumia 800 and Lumia 710 smartphones, which were announced later in 2011. While the former (shown below) targeted the higher end of the market, the latter was aimed at lower end-customers.

Although the company managed to beat market expectations by selling over a million units of these devices in just a few months, job cuts continued. Meanwhile, in an effort to save more expenses, the company also announced that it will close its oldest factory in Finland and shift its manufacturing to Asia, which had become its largest market by then – all of this happened in early 2012.

Despite decent sales, the new Windows Phone devices couldn’t do much for Nokia in Q1, 2012, when the company suffered an operating loss of a whopping €1.3 billion. This was followed by another round of job cuts, affecting around 10,000 employees this time.

Later that year, the company launched Windows Phone 8-powered Lumia 920 flagship, which received mixed reviews – mainly criticized for its large size and bulkiness. In November 2012, the smartphone became best-selling phone of the week on Amazon, and also topped Expansys’ chart in the UK during the same period – still it never quite reached the blockbuster sales the company needed to return to profitability.

Finally, the year 2013 brought some good news as Nokia returned to profit six quarters of bleeding money. However, revenue dropped considerably owing to the company’s failure to make any dent in the smartphone market.

In September that year, Nokia announced it’s selling its Devices & Services division to Microsoft.

The deal, which saw CEO Stephen Elop return to Microsoft, also included the Finnish company’s patents and mapping services, although it excluded the Nokia’s Chennai factory in India as well as the Masan factory in South Korea. The sale officially completed in April 2014.