Wednesday 21 February 2018

Time to praise Nokia as a true champion of European tech

Nokia was Europe's only real stab at global tech leadership
Nokia was Europe's only real stab at global tech leadership

Leonid Bershidsky

Now that Microsoft has written down its entire investment in Nokia's mobile handset business - little more than a year after acquiring it - and the operation in Finland is all but shutting down, it may be time for a eulogy.

Nokia was Europe's only real stab at global tech leadership, and there have been no new attempts to build something as big.

For most of the 1990s, Motorola, the US-based company that's said to have invented the mobile phone, led the market.

At the time, the market was dominated by companies that produced equipment for the mobile networks. Motorola, with half the handset market in the mid-'90s, was perhaps the most visionary.

It began to think about a mobile internet long before such a thing was practical. But it missed Nokia's consumer- pleasing moves, the first of which, in 1997, was the introduction of a phone that could be used to play a game. (The game was Snake, and you can still play a version of it.)


That same year, Nokia also became the industry's most aggressive marketer, introducing 31 phone models. In 1998, it followed up with 17 more - and overtook Motorola. In 1999, its first phone with an internet browser (a WAP browser, to be precise) hit the market.

And in 2000, Richard McCaffery wrote on the Motley Fool: "I see Nokia as kind of a combination of Apple Computer and Dell, with Apple's marketing and design sense, and at least some of Dell's building efficiency." Let's start with its design edge.

Nokia's trademark curved shape, and other features such as removable covers, designer models (think of a credit card with your favourite football team's logo on it), and personalised tones came from its early recognition that mobile phones weren't just a niche product, but a mass-market phenomenon.

The Finnish company's next bold move was to enter into an alliance with other handset producers to create an operating system - first Ericsson and Motorola and later Siemens and Matsushita, owner of the Panasonic brand. Together, they invested in a London-based startup called Symbian. By aligning Symbian with the three (later five) largest handset makers, they also hoped to limit Microsoft's eventual market share.

Besides, in 1999, Western Europeans bought 32pc of all mobile phones sold, well ahead of the US with 17pc.

It was a European-driven market ruled by a Finnish company.

Fast forward to the late 2000s - and, all of a sudden, Apple is better than Nokia at design and, arguably, at building production chains. Not long thereafter, Samsung and Chinese phone makers were production leaders and Google had the dominant operating system, surpassing Microsoft in installed base across all types of devices.

Nokia had tarried, rested on its laurels, taken wrong turns and finally sold itself to Microsoft. By the time of its surrender, however, Microsoft was no longer top of the pile in operating systems, and few buyers were interested in Windows Mobile.

Nokia's troubles and its resounding defeat at the hands of American companies in a market that it had wrested from them and dominated for a decade appear to have destroyed the European tech industry's confidence.

One could say that's how the market works, and the US simply has the best entrepreneurs and the best support network for them.


"The confluence of a large pool of capital, world-class talent, vibrant support infrastructure and a risk-loving culture has bred a self-fulfilling cycle of innovation and entrepreneurship," is how Frenchman Nicolas Brusson, co-founder of BlaBlaCar, the global leader in long-distance car sharing, put it in a recent column.

Yet Europe can't really be satisfied with this answer.

US tech leadership comes with an increased risk of US spying, which is rather unpopular in Europe. Besides, American companies are good at avoiding European taxes. Nokia was a conscientious taxpayer, in its heyday contributing up to 23pc of Finland's corporate tax revenue.

There is a nostalgia for a local champion. There is still a market for a major European phone maker or two, and perhaps for European global leaders in more niches of the app market. And it's easy to see the European Union tampering with the market to help them emerge.

Nokia lost its leadership position through its own mistakes. That doesn't mean other European companies can't and won't make it to the top, and it shouldn't be too surprising if European regulators will keep looking for ways to enable such a breakthrough.

Leonid Bershidsky is a columnist with Bloomberg View

Irish Independent

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