The Rise and Fall of Nokia (and the CEO that Destroyed the Company)

The Rise and Fall of Nokia (and the CEO... Written by Luis Burgos and Alex Jankovic

It was 2007, and 'old-but-true' Nokia had solidified itself as the market leader for mobile phone sales for almost a decade. 53% of worldwide phones that were sold were Nokia, and 60% of phone handset revenue was landing in Nokia's pockets. 

This feat can be blamed on former Nokia CEO, Jorma Ollila. Ollila had pushed the old company's mobile phone division, and within his tenure between 1999 and 2006, the once obscure Finnish company, known for producing toilet paper, became the leader in mobile phones and telecommunication services. Meet Olli-Pekka Kallasvuo, his successor, and the man, who in just four short years, mostly undid any success that Ollila had achieved, and destroyed the Nokia company.

If you watch the Apple Keynote in 2007, you might notice him in the crowd. Invited to attend the conference by Steve Jobs himself, Kallasvuo was exactly one year in his tenure as Nokia's CEO, and watched sneeringly as the first generation iPhone was revealed to the public. When the conference was over, Kallasvuo was not particularly impressed, stating in a conference call:

"I don’t think that what we have seen so far [from Apple] is something that would any way necessitate us changing our thinking when it comes to our software and business approach."

Unfortunately, unbeknownst to Kallasvuo, June 2007 marked the beginning of the end for Nokia. With the release of the iPhone, everything had changed. Nokia failed to see this, believing their devices to be superior due to longer battery life, more compact dimensions and being more traditional in form factor for the time. They also believed the iPhone’s web browser and multimedia features were not credible, as other Nokia executives doubted the validity of Apple’s June showcase. 

And indeed they seemed to be right, at least for a time. Nokia initially failed to feel any pain as the iPhone was in limited release. Initially, the iPhone was only sold in the United States, then later in the UK, Germany, Ireland, Austria and Portugal in November. Even as the iPhone sales numbers crept to 6.1 million units, the Finnish company was still unconvinced of the new unconventional design. The iPhone's lack of 3G was a dealbreaker for many customers who little interest in reverting back to 2G, the iPhone's poor camera and battery life further cemented in Nokia’s mind that its phones were superior and there was no need to change them.

It was now June 2010, three years after the announcement of the first iPhone. Steve Jobs was now announcing the iPhone 4, which was overkill for Nokia. Nokia was unprepared. It’s N97 had released to combat the 3GS, but had sold poorly by comparison and was riddled with software issues and bugs. It’s N900 too failed to capture audiences due to poor marketing, internal fighting between Maemo and Symbian engineers and a user experience muddled in confusion and disarray. Its Ovi Store, intended to compete with the App Store and Android Market paled by comparison in terms of app selection and App support. In the Keyote, Jobs announced Apple that had sold 120 million iOS devices to roaring cheers from the crowd, but one person was noticeably absent. 

Android at the time had heavy hitters like Samsung, HTC and LG who had huge funds to spend on advertising and product development. They also offered features that Nokia simply could not compete with at the time such as larger displays and for the first time, 4G connectivity. Nokia's phones looked old by comparison. A couple months later Nokia tried to combat these challenges by releasing the N8, a phone that it believed would be able to compete with Android and iOS devices that were currently saturating the market. 

In September 2010, three months following the iPhone 4 announcement, Nokia fired Kallasvuo. a decision which saw its stockprice jump by 5.8%. Under his tenure, Nokia's worldwide mobile marketshare had shrunk from 53% in 2007 to just 27% in 2010. It was a decision that was rejoiced by investors, but particularly by one person, Jorma Ollila, Nokia's former CEO. One Nokia Chairman, Siilasma recounts the conversations he had with Ollilia during Kallasvuo's tenure; 

“Our conversation followed the usual pattern: I tried to be polite; [Ollila] exploded and yelled that [we] had ruined his legacy.”

Nokia’s hopes and dreams failed to come to fruition as the phone displays they offered were lower resolution, it's Symbian operating system was long in the tooth, its App Library underwhelming and it’s web browser comparatively slow and poorly optimised. Although Nokia had tried to modify Symbian to run on touch screen devices it was clear the OS was a fish out of water. With function menus on the sides, and a user interface that barely had any transitions or design flare to warrant its lagginess. One former Nokia employee at the time states:

"We were saying and messaging [Kallasvuo] in 2007 to drop the Symbian software and adopt Android. It was his indecision and dilly dally that caused many people to lose their jobs."

Today, Nokia’s marketshare is less than a percent, a far cry from what it was. Microsoft’s acquisition of the company didn't buy it any favours, as the company focused on Windows Phone, a failed OS which they would later discontinue. Nokia was then dumped by Microsoft onto HMD Global in 2016, where it now focuses on producing budget Android phones, running on name recognition alone. 

Nokia failed to take into consideration changing user trends and the new role Smartphones had in this old industry. Smartphones were now digital cameras, e-readers, video and music players, portable game consoles and foremost entertainment devices. And that’s why Nokia failed, under Kallasvuo's control, it just never seemed to realise phones were more than just the ability to call and make texts, they were now also venues for entertainment and consumption.  

So what happened to Kallasvuo? In 2013, Kallasvuo became a chairman of the board for Zenterio AB, a Swedish software company. Six years after joining the company, it declared bankruptsy. Kallasvuo is now being sued for $6.28 million by its owner for making poor investments without his consent.