Nokia's line to the top slot

Finland's mobile maker is set to pass Motorola, writes Jonas Dromberg

TWENTY years ago, Nokia was a brand name found on Finnish feet and in Nordic bathrooms. Today, it is in the pockets of talkative people across the globe.

The former rubber-boot and toilet-paper maker took a gamble when it switched to telecommunications. The bet paid off: Nokia is about to eclipse Motor- ola as the world's number one mobile-phone maker and its stock is up 133 per cent this year. Motorola's stock is down 8 per cent.

In a fast-growing industry that is defined by new products and high technology, Nokia has stayed ahead of the competition by releasing sleeker, smaller phones with functions - including Internet access - that its competitors lack.

"Nokia had a vision," said Jukka-Pekka Leppae, a fund manager at Arctos Funds in Helsinki. "It understood what it was getting into."

Phone sales at the Finnish company, whose new glass-fronted headquarters make visitors feel like they have walked into the 21st century, soared 50 per cent in the second quarter. Swedish rival Ericsson's mobile phone sales rose 1 per cent, while Motorola, based in Schaumburg, Illinois, saw cellular products sales fall 1 per cent.

Sales may grow even faster in years to come. Nokia expects the number of users worldwide will more than double to 600 million in 2001, and Ericsson expects 830 million users in 2003. Seven years ago, only 15 million people around the world had mobile phones.

Even the most saturated markets are still gathering steam. For the first time, Finland - where almost half of the population owns a mobile phone, the highest penetration rate of any country - has seen more sales generated from cellular calls than fixed-line calls this year.

In a country with only 5 million people, Finnish companies learned early on that growth must come from abroad. Two decades ago, as Sony Corporation was introducing its revolutionary Walkman palmtop tape deck, Nokia's then- chairman and chief executive, Kari Kairamo, decided to enter the electronics industry. Nokia began making televisions, computer screens - and mobile phones.

"The whole business was different then," said a Nokia spokesman. In 1982, Nokia's first "portable" phone, the Nokia Senator, weighed almost 22 pounds - or as much as a year-old baby.

By 1987, Nokia released its first phone that could be held to the ear, the Mobira Cityman 900. Though it had to be recharged every six hours, the 790-gram Cityman became a status symbol for securities traders and others after it appeared in popular movies such as Wall Street.

By comparison, one of Nokia's newest models, the 6110, weighs only 137 grams - about as much as a McDonald's Quarter Pounder - and with an extended- life battery can go for more than two weeks without recharging.

Still, Nokia's success came at a price. Mr Kairamo, the mentor of the current chief executive officer, Jorma Ollila, shot himself in 1988 when the Soviet Union was beginning to unravel, sending Finland into its deepest recession since the Second World War. That prevented phone sales from taking off as he expected.

The Finnish company was propelled into the top ranks of mobile phone makers when Europe adopted a common technology standard for mobile phones - a standard which relied on digital technology. While Motorola concentrated on developing phones for the US based on the analog technology adopted there, Nokia and Ericsson had all of Europe to themselves.

Both companies boomed, led by Nokia with its stylish, rugged and technically advanced models. Shares followed sales: Nokia's stock, adjusted for splits, has risen 86-fold in six years, to 433 markkaa ($80.47) Thursday from as low as 5 markkaa in 1992.

"Innovation is much higher at Nokia," said Markus

Pfeffer, a fund manager at Oppenheim Kapitalanlagesellschaft in Germany. "The only way to be first is to develop stronger models."

With digital technology now set to become the global standard, Nokia is poised to overtake Motorola as the world's premier mobile phone maker, analysts say. Last year, Nokia had 21 per cent of the worldwide market; Motorola had 22 per cent and Ericsson 16 per cent.

Part of Nokia's success has been in its ability to deliver products attractive to young people, building brand loyalty. Notably, Nokia, whose employees average 32 years in age, equips its newest phones with games that owners can play alone or with other Nokia owners through an infrared link. The 6110 model, for example, can also request and receive weather reports, stock and bond prices, and sports scores.

"All young people want a game," said Mr Leppae, "and when they get it they'll probably stick with Nokia."

While Nokia has sold its computer and television businesses to focus on mobile phones and equipment for telephone networks, experience gained in PCs and TVs will help it as technology blurs divisions between cellular phones, television and computers.

The PC and television businesses gave Nokia a "customer-oriented approach and exper- ience in volume products," said Dennis Exton, an analyst at Nikko Securities International.

Nokia introduced the first mobile phone that can access the Internet, the 9000 Communicator. It can also perform simple computer tasks, such the diary and address-book functions like the Palm Pilot and Psion's Series 3 palmtop computers.

The 9000 Communicator and its successor, the 9110 Communicator, not only lets its owner retrieve information from the -Internet, but also to send and receive electronic mail and faxes.

"Nokia has done a great job in integrating mobile communication with the Internet," said Dennis Gross, an analyst at Williams de Broe. "The Communicator is the key to the future evolution" of phones.

Suggested Topics
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
David Moyes and Louis van Gaal
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
A cabin crew member photographed the devastation after one flight
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Life and Style
food + drink
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Liam Payne has attacked the media for reporting his tweet of support to Willie Robertson and the subsequent backlash from fans
peopleBut One Direction star insists he is not homophobic
Life and Style
healthFor Pure-O OCD sufferers this is a reality they live in
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Sexual health charities have campaigned for the kits to be regulated
healthAmerican woman who did tells parents there is 'nothing to be afraid of'
Life and Style
Arts and Entertainment
The John Peel Lecture has previously been given by Pete Townshend of The Who, Billy Bragg and Charlotte Church
musicGodfather of punk will speak on 'free music in a capitalist society'
peopleAt least it's for a worthwhile cause
Shoppers in Covent Garden, London, celebrate after they were the first to buy the iPhone 6, released yesterday
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments