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Mark học AINokia's phone business · 2007–2013 · sold to Microsoft
Source: Nokia Q4 2007 results release (24 Jan 2008, Form 6-K); Microsoft, Form 8-K and press release of 3 Sep 2013.
Source: Nokia releases of 24 Jan 2008 and full-year 2012 results (24 Jan 2013); Stephen Elop's memo of 8 Feb 2011 as published by Engadget (secondary source); Vuori & Huy, Administrative Science Quarterly 61(1), 2016.
The company that sold more phones than anyone, with great engineers and plenty of cash: why did it have to sell its phone business only six years after the iPhone? The familiar answer is "arrogance". The records and the research point to something more uncomfortable: leaders saw the threat, but could not hear the truth about themselves.
Source: Microsoft press release, 3 Sep 2013; Vuori & Huy (2016).
The rise and fall, using the numbers Nokia itself published.
Source: Nokia 6-K of 24 Jan 2008; Nokia Form 20-F 2010 (CEO); Elop memo of 8 Feb 2011 as published by Engadget (secondary source); Nokia 6-K of 11 Feb 2011; Nokia Q4 2012 results (24 Jan 2013); Microsoft 8-K and press release of 3 Sep 2013; Nokia release of 25 Apr 2014 and 20-F 2014; Microsoft 8-K exhibit 99.1, 8 Jul 2015.
14 things often said about Nokia, checked against Nokia's reports, Microsoft's SEC filings and peer-reviewed research. Click each line for the reasoning.
Nokia estimated its Q4 2007 device market share at 40%, with 133.5 million units sold in the quarter (release of 24 Jan 2008, Form 6-K). Market research firms give slightly lower full-year figures (IDC, Gartner, secondary sources).
Microsoft press release of 3 Sep 2013 and Form 8-K: EUR 3.79 billion for Devices & Services, EUR 1.65 billion to license patents. Nokia's 2014 20-F gives a total of EUR 5,440 million.
Microsoft, Form 8-K exhibit 99.1 (8 Jul 2015). Plus restructuring charges of USD 750–850 million.
Nokia 6-K of 11 Feb 2011 and Form 20-F 2010. Symbian became a "franchise" platform, MeeGo a longer-term project.
The main finding of Vuori & Huy (2016), in a leading peer-reviewed management journal. Note: it is a qualitative study based on recollections after the fact, not a measurement.
The memo leaked on 8 Feb 2011. Engadget published the full text and later wrote "it's real" based on multiple sources. This piece has not seen a version published by Nokia itself, so it is treated as a secondary source.
The line is very widely shared online (for example Korea Times, Apr 2016, citing a LinkedIn post). No press release, press-conference transcript or video containing it was found. Some versions even date it wrongly to 2014.
The source is one former manager, Ari Hakkarainen, quoted by the New York Times (Sep 2010, secondary source). A prototype may well have existed, but one account is not enough to say "Nokia already had the iPhone".
Elop's own memo names Android too (overtaking Nokia in smartphone volumes in early Feb 2011) and low-cost phones. Vuori & Huy point to internal causes.
This is speculation; no regulator or court has found it. What is true: Elop was a former Microsoft executive; Nokia's documents for shareholders (Sep 2013) disclosed a change-of-control payment of about EUR 18.8 million to Elop, 70% borne by Microsoft (TechCrunch, Computing, secondary sources). The payment drew criticism in Finland.
Nokia Group net sales had already fallen from EUR 51.1 billion (2007) to EUR 30.2 billion (2012) before the sale. But after buying, Microsoft itself wrote off most of the deal's value (2015). Both share the story.
Vuori & Huy (2016): top managers feared outside competitors, Apple included. The 2011 memo admitted the gap bluntly. The problem was not failing to see, but not knowing precisely how weak they were, because bad news was filtered. There may have been public remarks downplaying the iPhone, but that is not the main explanation.
Nokia sold more smartphones than anyone until early 2011, according to Elop's own memo ("this week they took our leadership position in smartphone volumes"). In Q4 2012 Nokia still sold 2.2 million Symbian phones.
Nokia sold only its device business (closed 25 Apr 2014). The company carries on, mainly in network infrastructure (Nokia 20-F 2014). Nokia never filed for bankruptcy.
Source: Nokia 6-K of 24 Jan 2008, 6-K of 11 Feb 2011, 20-F 2010 and 2014, release of 25 Apr 2014, 2012 results; Microsoft 8-K of 3 Sep 2013 and 8 Jul 2015; Vuori & Huy (2016); Engadget 8 Feb 2011, New York Times Sep 2010, Korea Times Apr 2016, TechCrunch and Computing Sep 2013 (secondary sources).
Scores are Mark's assessment based on the sources in Part 8, not figures from a study.
Nokia did not lose because it could not see the future. It lost because it could not hear its own present.
Unlike cases with an official investigator, such as Knight Capital, no one required Nokia to publish what went wrong inside. The financial reports tell us what happened, not why. The "why" in this piece rests mainly on one academic study that interviewed insiders after the fact.
Recollections after the fact can be bent by memory and self-interest. So this piece uses the study for the overall picture, not to blame any individual.
The "More" section is Mark's comment.
If bad news can't reach the top, leaders are blind. For team leads, project managers, and the people who write the reports.
1. Last month, did anyone say "this isn't OK yet" in a meeting with the boss present?
2. Does your weekly report have a real "risks" section, or does it always say "none"?
3. The last time someone brought bad news, what happened to them afterwards?
4. What does your boss believe about the product that the hands-on people disagree with?
5. If a competitor launched something far better tomorrow, who on the team would dare to say so first?
Two or more answers of "I don't know" or "no" is a sign that bad news is getting stuck.
Primary documents first: Nokia's SEC filings, Microsoft's SEC filings, peer-reviewed research. Secondary sources are labelled.