A former leader in the mobile phone sector, Finland’s Nokia encountered problems after the 2007 launch of smartphones, particularly Apple’s iPhone, as well as devices running on Google's Android operating system. In February 2011, Nokia formed a strategic partnership with Microsoft, with Nokia smartphones replacing Nokia’s traditional Symbian operating system with a mobile system from Microsoft. Microsoft bought Nokia's handset business for 5.44 billion euros in September 2013.
Nokia's loss is phone users' gain
Having stood at the top of the world, a precipitous fall is all the more shocking. Nokia, the pride of Finland, was worth €100 billion only five years ago. Now its market value is just about €15 billion, and that's only after a hefty share price boost following its announcement that it is selling its mobile phone unit to Microsoft. It is, however, keeping its brand name as well as its network equipment and mapping businesses.
The fall from grace of what was until last year the world's largest handset maker has been a long time coming. But in retrospect, it was almost inevitable once its mobile phone business was left in the dust, first by Blackberry, itself another fallen mobile phone giant, and more crucially, by Apple. The cruel irony is that Nokia pioneered the touch-screen technology back in 2003, yet never capitalised on it. Apple did - with its ubiquitous iPhone. The final nail in the coffin was when it decided against developing Google's Android operating system for its phones. Instead, rival Samsung adopted Android for its smartphones and never looked back. The operating system now has a market share of more than 66 per cent in phone operating software and the Korean giant has been the world's No 1 maker of mobile phones since last year.
Nokia's full marriage with Microsoft today also dates back to that fateful decision: instead of Android, it adopted the Windows operating system, which even today has less than 3 per cent of the market. Most apps designers nowadays develop their products - a key market in mobile computing - for the Android and/or Apple's iOS operating systems. By selling its phone unit to Microsoft, Nokia is acknowledging defeat. By buying it, Microsoft is betting it can still compete despite being left so far behind.
No matter: Nokia investors and Finns might have had their pride and wallets hurt. But consumers have benefited through an ever greater choice of handsets and services from the versatile, highly competitive mobile-computing business.