Nokia Corp - Focus On Telecommunications

FOCUS ON TELECOMMUNICATIONS

Sales in 1993 reached $2.1 billion. Ollila sold off the firm's cable manufacturing operations. Nokia released its blockbuster 2100 mobile phone series that year, selling 20 million units. To raise capital, the firm listed its shares on the New York Stock Exchange in 1994. The tire division was spun off into a separate company in 1995, and in 1996 television operations were brought to a halt. By 1996, Nokia had become the second-largest maker of mobile phones. In fact, roughly 70 percent of annual sales came from telecommunications operations. Employees totaled 32,000, and operations spanned 40 countries. Despite efforts to diversify, European sales still accounted for roughly 70 percent of total revenues.

Thailand's Total Access Communications Inc. awarded Nokia a $30 million contract in 1997 to build a fiber optic transmission system named SYNFONET, as well as a network management system, and to provide technical support services. Sales grew to $8.7 billion. Capturing a 25-percent share of the market, Nokia surpassed Motorola Corp., which had a 20-percent share, as the leading mobile phone maker in 1998. That year, Ericsson, Nokia, and Motorola created Symbian, a company focused on developing wireless technology with messaging, information access, and Internet capabilities. In 1999, sales grew 48 percent, nearing the $20 billion mark, and earnings jumped 57 percent to nearly $4 billion. IBM Corp. and Nokia forged an alliance to hasten the growth of the wireless Internet. The two companies agreed to work together to develop enterprise wireless application protocol (WAP) solutions that would allow customers to immediately begin extending e-business beyond the PC to a variety of mobile devices. With the cellular phone markets in many nations nearing saturation, Nokia had started looking to the Internet as a way to ensure future sales, believing that wireless devices would replace PCs as the most popular method for accessing the Net.

In September of 2000, Nokia released a WAP-enabled mobile phone. The firm also established a systems integration center in France to support mobile Internet applications for its business and individual customers. Nokia and RealNetworks Inc. began working together to develop technology designed to deliver Internet audio and video content to future mobile devices. According to a May 2000 article in Fortune, "To achieve its goal of brining the Internet to our pockets, Nokia is taking off in many directions. It isn't just making wireless application protocol (WAP) phones that can surf an abridged version of the Internet; it's also making the WAP servers upon which that abridged Net will run. It's building wireless Internet connections for cars; developing products for Bluetooth, a new standard for high bandwidth wireless connections inside a house or office; and working on wireless videophones and all sorts of other gee-whiz stuff." To oversee its wide range of Internet products, the firm created Nokia Internet Communications.

Telecommunications spending slowed dramatically as economies in both North America and Europe slumped in late 2000 and continued their downturns in 2001. As a result, spending on the new general packet radio networks, known as 2.5G and 3G, that Nokia was relying upon for its wireless Internet products came to a near halt. According to a June 2001 BusinessWeek Online article, "with nearly three-quarters of its revenues coming from handsets, Nokia had big hopes that existing customers would upgrade their phones to get speedier Internet access complete with services from mobile air ticketing to driving directions. But as Europe's phone companies have been forced to scale back spending on 2.5G and 3G networks, the resultant delays are cooling a once torrid market." Despite the slowdown, Nokia continued to develop its wireless Internet devices.