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By Edwin Lane Business reporter, BBC World Service, Finland
18 March 2016
On the face of it the small Finnish town of Nokia looks wholly unremarkable. A
few squat blocks of flats are nestled in the winter snow, and along the heavily
gritted main road is a small strip of shops, restaurants and a discount
supermarket.
There's little sign that this quiet backwater once gave its name to the company
that revolutionised the mobile phone industry in the late 1990s and helped turn
Finland's economy into one of the most prosperous in the world.
At its peak in the early 2000s Nokia supplied 40% of the world's mobile phones,
creating Finland's first globally recognised consumer brand.
At home its impact was even greater. According to the Research Institute of the
Finnish Economy it contributed a quarter of Finland's growth between 1998 and
2007 - a period Finnish finance minister Alexander Stubb calls an "economic
miracle".
But as quickly as it emerged, Nokia's dominance of the mobile phone market came
crashing down, hitting Finland's economy hard and coinciding with the longest
recession in the country's history.
"Nokia was huge in Finland by all indicators, and when that was scaled down we
were horrified about the possible consequences," says Kari Kankaala, director
of economic and urban development for the city of Tampere.
'Backbone of everything'
Tampere is about 15 minutes down the road from the town of Nokia, and the site
of the company's biggest research and development site, at its peak employing
4,000 high-tech, skilled workers.
The city's old redbrick smokestacks tell the story of its 19th Century
industrial past, but the rise and fall of Nokia's mobile phone business has
dominated its more recent history.
"It was the backbone of everything here," says Mr Kankaala. "The universities
relied on collaboration with Nokia, the subcontractors depended on Nokia, the
kids relied on being employed by Nokia."
"Now we have an horrendous unemployment situation of the order of 14-15%."
Other high-tech firms have since moved in to fill the void. And Nokia's
separate networks business, focusing on telecoms infrastructure, remains a
successful Finnish enterprise. But a wider economic malaise in Finland means
fewer people are hiring now.
Finland: The sick man of Europe?
In Tampere former Nokia employees still ponder how the company went from world
leader in mobile phones as recently as 2007 to the struggling takeover target
for Microsoft in 2014.
"I think one of the high points was when we'd shrunk the mobile phones smaller
than Motorola," says Mika Grundstrom, a former senior manager at Nokia's R&D
site in Tampere. "That was around 1997-1998. It was kind of an engineering
dream."
The iPhone effect
For Mika the brief in the early days was simple - make the phone with the best
battery life in the smallest case possible.
But then all that changed with the rise of the smartphone, and in particular
the launch of Apple's iPhone in 2007.
"Things became much more complex. We were not so sure anymore what we should
actually target. Is it ease of use, is it battery life, is it size?" he says.
"If you think about the battery life - we had devices that could last for a
week. Then you have this new device, it's excellent but you need to charge it
every day. Ok so how do you actually sell that to the customer?"
Nokia played catch-up in the smartphone market until 2014, when its mobile
phone business was sold to Microsoft and the Nokia name was removed from its
devices altogether.
But despite its effective demise, many Finns say there is a positive legacy to
appreciate.
"Giving Nokia shares to workers made it accepted that your next door neighbour
could be a millionaire," says Kari Kankaala. He says Nokia's biggest impact was
to revolutionise Finland's business culture.
"That acceptance that someone can actually make money, combined with the new
approach to entrepreneurship - that was a major change."
Start-up legacy
Two hours to the south in Helsinki there are already signs of that new business
culture taking hold in the post-Nokia world.
Tuomas Kytomaa is a software engineer who spent most of his career working for
Nokia, including stints in the US and Germany.
Last year he returned to Finland to work for the online retailer Zalando and
set up a tech hub on the site of an old cable factory in the Finnish capital,
now converted into trendy office space.
For him Nokia's legacy is a wealth of talent and expertise waiting to be
tapped.
"The talent hasn't really gone anywhere," he says. "The sheer magnitude of
Nokia in Finland means that there's a pool of tech talent that has deep
specialised knowledge."
"Finland's buzzing with high-tech skills and start-ups."
Whatever the future of Finland's tech industry, few believe that a company of
Nokia's size and influence will appear again.
"When Nokia was a dominant player in this business, there were a lot of good
things that happened in Finland," says Seppo Haataja, another former manager at
Nokia's research and development site.
"Now the situation is changing. the innovations are not coming through the big
companies - it's small companies, the start ups."