Death of a Ringtone: The Rise and Fall of Nokia

It defined the look and tech of the early mobile boom. Now Finland's most famous company is powering down.

Not so long ago, the 13-note ringtone of a Nokia handset was the de facto soundtrack of the mobile revolution. The world's largest cell phone maker for more than a decade, the company was a leading innovator in both design and technology that helped bring wireless life to American high schoolers and rural Africans alike.

These days, though, it seems as if that iconic jingle is in danger of being switched to silent. Nokia announced yesterday that it would cut 10,000 jobs following one of its worst quarterly results in company history. Moody's has downgraded its bond to junk status. Samsung passed it in sales last month. And Business Insider's Henry Blodget had begun speculating that Nokia might face bankruptcy in the near future.

It's a sad state of affairs for the pride of corporate Finland. But perhaps the most fascinating thing about Nokia's rise and fall isn't so much what comes next, but rather how it demonstrates history's habit of repeating itself in the worlds of business and technology.  


Before it became a dominant player in mobile, Nokia was a shapeless conglomerate that had manufactured everything from paper pulp to rubber boots to cables. In the 1980s, its CEO decided to try and latch onto the boom in consumer electronics, including handsets, which led it to team up with a pair of Finnish telecoms on an undertaking that would change its fortunes, as well as the future of the cellular industry.

That project was the first digital telecommunications network, known as the GSM. At the time, Europe was dominated by a balkanized mess of analog mobile networks that varied country to country. This setup presented a logistical nightmare for companies in the business of making phones, which would have to build different models to meet the specifications of each individual market. As far back as 1982, engineers had been trying unsuccessfully to unify the continent under a single system. Nokia and its partners managed to get the network up and running in Finland by 1991. That year, the country's prime minister used a Nokia phone to place the first ever call on a commercial GSM Network.

"When Nokia poured its resources into GSM, it was a moderately successful company from a small country betting against billions of dollars of entrenched infrastructure and a widely accepted standards," Wired noted in 1999. "GSM took off -- not only all over Europe but also in Asia, Latin America, and elsewhere."

All of this might just sound like neat history for tech nerds. But the change to digital had profound impact on phone technology. Perhaps most importantly: It enabled text messaging. Because Nokia had invested so much money and research into digital networks, it was ready to dominate markets where it was adopted. The old mobile champion, Motorola, had grown up in the analog era and was caught flat-footed by the switch. By 1998, Nokia was the leading handset maker in the world, with more than 22 percent of the global marketplace. It would peak at around 40 percent in 2008.

Nokia's success was aesthetic, too. A 1999 New York Times profile of its design chief, Frank Nuovo, credited him with the idea of "turning cell phones into fashion statements." It's otherwise plain 5100 and 6100 series phones came with easy to swap face plates that owners could change to "match a shade of nail polish." It's sleek 8860, designed to look like a chrome cigarette lighter, retailed for $799, and was given out as a favor to guests at the Emmys.


At the same time, the company also had a deep sense for the importance of basic form and usability. Here was how it explained the candybar-shaped 5100 and 6100 phones:

They are what designers call a monoblock form, as opposed to a flip phone like the Motorola StarTac. They are small, light and sturdy. ''There are no complex moving parts,'' Mr. Nuovo said, ''and you feel right away that this is a solid product and very comfortable in the hand. We were after a very robust, simple form.'' Another important ingredient, he said, has been the phone's large screen, which lent itself immediately to data services, like text messaging and caller ID.

They could have been describing the iPhone. Perhaps could have built the iPhone once. But they didn't.

Nokia won by offering customers phones that were more advanced and better dressed than their competition's. Unfortunately for them, they weren't ready to do the same when it came time for the next transformation of the mobile industry -- when Apple convinced customers they should all carry small computers in their pockets instead of boring handsets.

It's tempting to try and characterize Nokia's failure as a classic instance  of the "innovators dilemma" -- the theory that path-breaking companies often focus so hard on protecting the market which made them successful that they miss the next big thing that will disrupt the market. And to some degree, Nokia was guilty of sitting on its laurels. For instance, it missed out on the flip phone trend that helped revive Motorola's fortune early in the aughts. But it wasn't late to the smart phone game. As early as 1998, the company was talking about "putting the internet in every pocket." And in 2007, the year Steve Jobs unleashed the iPhone on the world, Nokia fans lined up outside stores to buy the company's new N95 smart phone.

The execution simply wasn't there. The design wasn't as appealing to shoppers. The operating system, Symbian, was clunky. Apple got the formula right, creating a phone that not only doubled as a fashion accessory, but also became the defining consumer item of its age. Samsung followed suit with its hot-selling Droid-powered models. Nokia, in turn, focused more and more on selling commoditized phones in developing countries, which increased their market share, but did little to improve their long-term outlook as more of the world embraced iPhone-style devices.

Nokia's Lumia 900, which runs on Microsoft's Window's 7 mobile operating system, seems to have recaptured that combination of elegant function and design that once defined their best products. But sales have been slow, and it may not be enough to save the company from its immediate problems.

But even if Nokia doesn't survive in he long run, we'll probably always remember that ring tone.