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Knock, Knock, Nokia's Heavy Fall...

Nokia has lost its way. What on earth happened to the mobile phone pathfinder?

Knock, Knock, Nokia's Heavy Fall...
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By Mikko-Pekka Heikkinen
      The scent of a freshly-baked apple pie wafts through the apartment kitchen. A clock ticks on the wall, and a decorative glass angel hangs in front of the window.
      Outside through the window is the vista of a small Finnish city.
      The woman who pours the coffee has asked that her name and location not be published in this article.
      The subject around the coffee table is the handset manufacturer Nokia, the woman's former employer. She worked for Nokia for more than 25 years, but is now retired.
Nokia is not doing too well. The company's stock has taken a huge hit, competitors are making finer phones that are finding their way into more pockets, and Nokia's Finnish CEO was given his marching orders last month.
      What on earth has happened to the company?
      It is a sensitive subject, and hence the plea for anonymity.
      The woman cuts the apple pie. During her working career she worked at a Nokia production plant where mobile phone handsets were assembled.
In a vast hall, processor, memory, microphone, battery, keyboard, and all the bits and pieces were packed by hand into mobile phones.
      Finally, the shell of the newly-minted phone was snapped shut, and the employee moved on to the next one.
      The woman reports that a change began to take place within Nokia five years ago, and it was visible all the way to the factory floor.
The change began when Olli-Pekka Kallasvuo became the Nokia President and CEO.
      He was appointed in 2005 and took up residence in his office from June 2006.
      During Kallasvuo's tenure, the Nokia plant became a colder, harder place. Employees were not trusted as much as they had been, but rather their work began to be strictly monitored.
      Line supervisors were controlling even the grip that was to be used when assemblers fitted the components into the handset shells.
In the view of the woman, a kind of "me-me-me spirit" has swept through Nokia.
      This has paralysed creativity and displaced the strong sense of "us" solidarity that lifted the company in the 1990s onto the global mobile phone throne.
      The feeling of working together towards a common end has been eroded for instance by the fact that the senior management have no longer been witnessed chatting with Nokia staff.
      This was by no means uncommon during the term of Jorma Ollila (Nokia's President and CEO from 1992-1999, Chairman and CEO from 1999-2006).
      "Ollila came to the plant several times a year. He never announced when he would be dropping in. He didn't want any red carpet treatment or special preparations put in place for his visits", says the woman.
Ollila would stroll around on the factory floor, going from one assembly point to the next and stressing that he was "Just Jorma, please".
      "He might just stop at one employee's side and ask how he or she was getting on, what's the work like, and is there anything that is ticking you off", the woman goes on, and offers up another slice of pie.
      And if there were problems in the company or at the plant, Ollila knew how to gee people up.
      He spoke rousingly about "us" and delivered his message to the whole complement at the plant, and not just to a small group as was Kallasvuo's way.
      Sometimes Ollila was accompanied by two of the most senior members of the Executive Board at that time - Pekka Ala-Pietilä and Matti Alahuhta.
      "They had a quite phenomenal ability to get people forged together behind the same cause. They created confidence and trust."
The woman pours more coffee. She notes that the apples in the pie have come from a relative's own orchard.
      Out of the window we can see an empty yard.
      The clock on the wall continues its steady beat.
Since his departure, the management skills of the deposed Nokia CEO Olli-Pekka Kallasvuo have been the subject of direct, even blunt criticism.
      But can Nokia's recent decline be laid exclusively at Kallasvuo's door?
      No, it cannot.
      In years gone by a number of far-reaching decisions were made within Nokia. They had their own impact on the recent past, and on the fact that Nokia's achievements of late have remained so thin on the ground.
      The decisions were taken at the beginning of the century, in other words years before Kallasvuo got the keys to the CEO's office.
      The power in Nokia at that time rested with Chairman and CEO Jorma Ollila.
Nokia is still the world's largest manufacturer of mobile phone handsets, and by a country mile.
      One in every three mobile phones sold worldwide has the Nokia logo on it. Nokia sells more than a million handsets a day.
      From the 1990s to the early years of the new century, Nokia grew to quite mind-boggling dimensions and numbers.
      In 2000, the company's market capitalisation value was a dizzying EUR 300 billion.
In many markets, "Nokia" was at one time a direct synonym for the words "mobile phone" - it was the de facto term of choice, like "Hoover" for vacuum cleaner or "Xerox" for photocopies.
      The firm was the economic and technological miracle and stealth weapon with which Finland overcame the rest of the world, and above all the Swedes.
      Our beloved neighbour's own mobile phone giant Ericsson was steamrollered by the onrushing Nokia juggernaut.
      Finland rose phoenix-like from the ashes of the early 1990s recession with the help of Nokia's stunning growth figures.
In those days, Nokia was the pioneering name in mobile phones.
      As early as 1996, the company launched on the world a revolutionary device whose direct descendants are known today as smartphones.
      The Nokia 9000 Communicator became a watchword, with any number of affectionate nicknames.
      The clamshell device opened up to reveal an integrated QWERTY keyboard, and it came with a browser that even allowed rudimentary surfing of the Internet.
      This was an earth-shaking new breakthrough at the time.
      The Communicator was among the first attempts at putting the Net into our pocket, albeit a bulging pocket.
In the first decade of the 21st century, the marrying of the mobile phone handset and the Net has become the decisive battle for hearts and minds in the mobile branch.
      It is no longer sufficient that a phone can be used to make calls or send SMS messages on the fly, but it must now enable the user to surf the Net, to Google all manner of human knowledge, and to regularly update his or her Facebook status.
      And in this battle, once-mighty Nokia has taken a pounding.
The Finnish giant's phones are bulging with attractive properties, to be sure, but making use of them seems to require the smarts of a fully-fledged computer nerd.
      Even the very basic functions were hidden behind a complex and unwieldy menu structure.
      If, for instance, the owner of a Nokia E51 (launched in 2007) wanted to change the ringtone on his phone, he would have to wade through five or six layers and screens of menu to perform this relatively rudimentary task.
In some cases, complete duds have been allowed to reach the retailers' shelves.
      Nokia has itself admitted that the N97 unleashed on the public last year was a work in progress.
      According to one former Nokia manager, the devices in the N-series were made "like Ferraris with a Fiat engine under the hood".
      Early models of these complex smartphones were released with far too little by way of RAM or free disk space, and they performed accordingly.
The mobile phone should not simply work, but it should also evoke warm feelings in the user.
      One executive who designed user interfaces for Nokia in the 1990s and into the new century stresses that a mobile is not a basic consumer durable like a washing machine or a fridge-freezer, but "a device towards which people have a very strong emotional attachment".
      "Devices like this should be made with the heart and in some fashion as hand-crafted items", he says.
      In the years of its pomp, Nokia and its engineer-powered machinery swelled to colossal proportions.
      According to the former manager, there was an adverse consequence to this unbridled expansion:
      "The hand-crafted sense of the products melted away."
      In the second part of this lengthy article, a challenger to Nokia's hegemony arrives from across the Atlantic with a product that changes everything. Please click on the link below to continue.
Helsingin Sanomat / First published in the Kuukausiliite monthly supplement for October 2010.

More on this subject:
 Knock, Knock, Nokia's Heavy Fall... (Part II)
 Knock, Knock, Nokia's Heavy Fall... (Part III)
 Knock, Knock, Nokia's Heavy Fall... (Part IV)

Previously in HS International Edition:
  Nokia issues 2Q profit warning, leading to crisis of confidence among investors; weak sales in smartphones to blame (17.6.2010)
  N8 not likely to solve all of Nokia´s problems, analysts believe (9.9.2010)
  Nokia begins shipments of N8 smartphone (30.9.2010)
  Nokia´s distress is likely to last a while (18.6.2010)

See also:
  Embattled Kallasvuo steps down - Nokia appoints Stephen Elop as new President and Chief Executive Officer (10.9.2010)
  Analysts: Nokia has wasted 3 years trying to come up with challenger to iPhone (30.4.2010)


  5.10.2010 - THIS WEEK
 Knock, Knock, Nokia's Heavy Fall...

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