How giving up mobile phones saved Nokia – and why it’s ready to take over the world again


The future of the internet is the future of Nokia

Text: Oskari Onninen
Photography: Juha Törmälä
Translation: Simo Vassinen

The move was the finest one yet in the history of Finnish business, though no-one would believe it.

Nokia issued a press release on the first of July in 2013. It had acquired the 50-percent share of Nokia Siemens Networks previously owned by Siemens.

On the third of September another press release was issued: Microsoft would acquire a significant part of Nokia’s Devices & Services business area. In other words, the mobile phones.

A black day, everything had vanished into thin air. The whole country of Finland seemed to have lost its balance. The journal Suomen Kuvalehti ran a cover with an old Nokia 3310 phone as a tombstone in sand.

Was Stephen Elop just a mole sent by Microsoft? the Finnish daily, Helsingin Sanomat, asked in an analysis.

No. No he was not. He was, however, a useful idiot. Nokia’s switch to Windows operating systems in spring 2011 had been a risky move, with no guarantees of success. A decision just as grim would have been to hop on the Android train too late. Teaming up with Windows would at least guarantee that Nokia phones had a buyer.

A year and a half later, on 15 April 2015, a new press release arrived: Nokia and Alcatel-Lucent would merge to “create an innovation leader in next generation technology and services for an IP connected world”.

Nokia had acquired new networks and the legendary Bell Labs research organisation for 15 billion euros. Not that interesting, since who was interested in network technology or nostalgia surrounding support station models anyhow.

The deal was, however, a high-five worth a billion euros following years of haziness. Nobody could any longer claim that Finland did not have well-managed companies.

Nokia had acquired the underpriced networks of Siemens, sold its mobile phones to Microsoft at an overvalued figure and now Alcatel-Lucent had become the highest-valued acquisition in Finnish history.

Having decimated the Finnish economy with its downfall just a few years earlier, Nokia found its share value almost quadrupled compared to its 2012 rock-bottom figures. The company is now the largest manufacturer of 4G networks in the world, the second-biggest network manufacturer, only a couple of percentage points behind Ericsson, and most importantly, a new Nokia is the “New Nokia.”

In the aftermath of the collapse of Nokia’s mobile phone business, Finns had set out to find what they coined the “New Nokia” – an ongoing mantra for the search of the next national success story. The “New Nokia” was not unlike the Holy Grail: like Wired pointed out, in its peak years, Nokia had “accounted for 70% of Helsinki’s stock exchange market capital, 43% of corporate R&D, 21% of total exports and 14% of corporate tax revenues.” For a country with only 5 million inhabitants, it was difficult to bounce back from that kind of an economic loss.

At the end of January, the news that everyone was waiting for arrived.

Apple reported that during the fourth quarter of last year, the growth of iPhone sales halted for the first time ever. Still, profits from iPhone sales were 15-fold compared to the runner-up, Samsung. The smart phone had become an object among other objects – as always happens to revolutionary technology.

When a new product hits the market – be it a television or a mobile phone – all the manufacturers have a slightly distinguishing version of the same device. When the first one gains a foothold, others start to shift into copying it, with margins dropping and at the end there is no difference between a Philips, Samsung or LG television – the difference is in what programmes are being watched instead.

Nokia mobile phones became the standard in their heyday. Then smart phones quickly started to resemble iPhones. Now all phones are fairly similar and the business battle is fought in the fields of Facebook, WhattsApp and Snapchat.

This does not mean, however, that devices are not as important. The device market is facing even bigger competition.

Nokia’s current CEO Rajeev Suri can still walk the streets of Finland like any other random businessman. But soon his name and face will be recognized everywhere.

“We are planning to dramatically increase our investment in 5G this year and unleash the power of our massive innovation engine”, was the picture painted by Suri at the Mobile World Congress held in Barcelona in February.

“We are already at the forefront of making 5G a reality and enabling massive capacity and massive connectivity – this is an integral part of our vision.”

This business jargon translates as: Nokia is a forerunner by letting go of mobile phones, since soon nobody else will be interested in them either. Instead, Nokia will lead the way in creating a world where its slogan ‘connecting people’ gains a whole new meaning.

Because the future of the internet is also the future of Nokia, and vice versa.

Let us dive into the year 2020-something, a point in time not far from today. Our every day might well resemble Minority Report, a scenario that is actually quite likely knowing that the technology companies of today are aiming for a world where technology solves even the most minor problems, and where the internet no longer lives on a four-inch smart phone screen, but rather stretches out over the whole home and shared public space.

Funded by the Finnish Funding Agency for Innovation Tekes and run by VTT Technical Research Centre of Finland and Nordic think tank Demos Helsinki, the research consortium discusses a hyper-connected society and a so-called naked approach. King’s College London’s professor of wireless technologies Mischa Dohler uses the term tactile internet. The line of thought is the same: The digital world is bare and tangible. Sensors connected to the internet are everywhere and people no longer need a device to immerse themselves in the internet. The vision requires that sky-rocketing energy consumption is no longer a concern. The sensors act like plants: they gather their own energy from radio waves, light, changes in temperature and movement.

It is a fine time to start listing all our wildest sci-fi fantasies and see them all as possible scenarios, although not certain ones.

Finland could be a place where the current concept of “bio-hacking” becomes the new norm. When you walk up the stairs and point at a smart wall, it shows your pulse and step count. Virtual goggles offer an ad nauseam stream of idyllic Instagram experiences, and a bottle of wine can be enjoyed while enjoying a digital sunset. Facebook sends an alarm for a heart attack about to take place.

When you call a friend, you are greeted by their hologram. (Nokia published a camera for filming virtual reality at the end of the year. The current price is set at 60 000 dollars.)

Or we can go even further.

Everything has been streamlined to the max, ownership has lost its meaning. No car has to stand around unused, but can rather drive itself around offering rides around the city and beyond. (The more adventurous ones can substitute the word ‘car’ here with even more personal devices.)

There is no need for voting because data knows you so well that it finds you your candidate automatically.

All work is completed following the rules of platform technology, through devices tracking supply and demand.

When you need a place to stay, you wind up in an empty house. Especially in cities, Airbnb and similar platforms have been optimised with usage to perform at their peak levels.

Ikea sells self-powered stickers for 50 cents that can be tagged on any “old school” device to connect online. (Much like cargo containers are now being tracked.)

You can choose your meal and a restaurant through services resembling Tinder: there are so many options that they need to be swiped with a yes or a no. Another alternative is to choose a fitting personality stereotype with pre-fixed consumption choices based on profile data.

All technology is interconnected, and major companies are following suit. Construction companies buy into the energy business by filling their lots with solar panels. Tech companies use waste heat from their immense data centres for the same purpose.

No smart phones, no smart walls, no smart homes, but a smart everything where objects and the internet stop existing and become a part of sensorial experiences.

The internet of things becomes the internet of no things, a world where the digital and the physical impact one another so much that their border dissolves. To give birth to this world, even the most everyday objects and materials must find a digital shape. At some point it will happen, when processors can be 3D-printed and become smaller and smaller, finally turning into nothing but smart dust.

The baseline for all of this is the 5G network, which is the reason why Nokia’s Suri brought it up. As now have Nokia’s main competitors, Ericsson and Huawei.

And Microsoft, Google, Facebook, Apple and Amazon. The Big Five, who all want every person in the world to be in their ecosystem.

There is one reason behind all of it: data.

The 4G network has now spread to most of the Western world. With a bandwidth of about one-hundred megabytes, its biggest manufacturer is Nokia.

In the 5G world, or the programmable world, as coined by Nokia, up to 10 000 times more data travels in the air as the amounts of both devices and support stations is manifold. Support stations are also needed because high speed requires higher frequencies that do not always penetrate walls or people.

On the other hand, networks should always be switched on and be extremely reliable: otherwise self-driving cars or, alas, brain surgeries performed through digitally transferred touch would not work out.

South Korea has announced that they want to have a running 5G network by the Winter Olympic Games, which will be held in the country in 2018, and indeed networks are estimated to become common at the turn of the next decade. During the current decade alone, some 1.7 trillion dollars, or, 1 700 billion dollars, will be invested in network development. Such a construction mega-project is a victory in itself, but also a moneymaker in years and decades to come, as once built, a network is not replaced by another one soon.

Networking giant Cisco has estimated that in the 5G world, at least 50 billion devices will be connected to the internet. This means seven devices per every inhabitant of the world.

Quite the contrary to how digital consultants tend to explain it, the internet of things is not a smart refrigerator having a chat with a smart toaster, but instead a collection of hundreds and hundreds of sensors picking up information, forming a system that grabs all the possible data it can, and then offers it to people, or in exchange for money, for all kinds of services.

“The genuine internet of things wants to invade that refrigerator, measure it, instrument it, monitor any interactions with it; it would cheerfully give away a fridge at cost. Amazon dominates shopping by selling at almost no profit, while deftly seizing digital control of the entire logistics of retail”, writes science fiction writer and futures researcher Bruce Sterling in his e-book, The Epic Struggle for the Internet of Things.

The arrival of 5G is a certainty, but the societal scenarios belong to futurism. In theory, pretty much everything should be possible. Gordon E. Moore, founder of processor manufacturer Intel, made an observation now called Moore’s Law which states that the number of transistors on a processor doubles every two years. Meaning that computers are 256 times faster today compared to the year 2000.

Until now, the general law has been more or less a valid one, and might continue to be so, if we were not looking at a more relevant issue.

“Particularly as we look at the internet of things, the focus will move from speed improvements to dramatic reductions in power”, commented Intel’s technology director William Holt in February and he is absolutely right.

Currently the battery technology is lagging behind Moore’s Law: even a highly futuristic device does not come with a sensible running time.

This is why devices must take care of their own energy. But once this is solved, the problems only start.

If and when the hyper-connected society proceeds as has been predicted, an emphasis must be placed on the latter part, society.

It is already clear that digitalisation first clears up all bureaucracy, then the inefficiency sheltered by it, and finally optimises all waste usage.

Revolutionary? No, except in a very traditional sense.

“A book dealing with the Soviet Union called Mathematics and Computers in Soviet Economic Planning was published in 1967 and includes all the same things that are discussed today about how computers and data can optimise everything”, says Vili Lehdonvirta. He is an economic sociologist researching the platform economy at Oxford University.

To the middle class and the working class, digitalisation is, of course, a source of terror.

If the Nordic model of work with its generally binding agreements has previously been quite a socialist model, in the platform economy it shifts into the political right as it becomes faster, easier and cheaper to tender out labour costs as transaction costs sink. This is why start ups want to be profiled as the Ubers of different fields and shake up the labour market one sector at a time. But this kind of platform economy – temp jobs run on apps – fits mostly meanial, faceless jobs. The barrier to hiring a random, well-scored nanny or nurse, not to even mention robots, is high.

“The platform economy doesn’t work in the cases where networks and long term relationships are important. In the US, the Homejoy cleaning service start up had to be shut down after everyone had personally hired the cleaner they’d found through its service and then stopped using the app”, Lehdonvirta says.

He feels the most pressing change comes from working life trying to cut itself free from geographical constraints. Lehdonvirta himself now has a virtual assistant in the Philippines.

“I’m not familiar with Philippine labour law, nor is my assistant familiar with the Finnish one. It would be hard to take problems into court. It is easier if I treat an employee badly and don’t pay, that I would then be given bad feedback.”

For the mobile-urban elite, who would already be ready to move around the world for work, this is an opportunity, whereas for the locally-bound, non-multilingual population it is a threat. Especially when there are no guarantees as to how fairly the uberised society will treat its members or what sort of timeframe is needed to create even some form of a basic income system.

In the United States, this threat is already visible in the popularity of self-proclaimed socialist, presidential candidate Bernie Sanders. According to the polls, half of the Republicans under the age of 30 also view that company profits are too big.

Another alternative is that the growth of profitability goes so far that there simply will not be enough work for everyone on our current standards. This is, of course, a utopia with deep-rooted history. Already in 1930, John Maynard Keynes suspected that the working week would shrink to 15 hours in the century following. The economist Jeremy Rifkin had visions of the end of work in his 1995 book carrying that very same title.

“No one in their wildest imagination, including economists and business people, ever imagined the possibility of a technology revolution so extreme in its productivity that it could actually reduce marginal costs to near zero, making products nearly free, abundant and absolutely no longer subject to market forces”, Rifkin announced in the Guardian in autumn 2014.

As the economy is inserted into the internet of things, the futuristic baseline is straight from the 19th century: the plummeting of production costs would realise the Marxist dream. When all data can be copied and all work is automatised, the relationship of power created by labour would crumble. Or at least it would remain a duty of the state to organise labour-like tasks for people. Capitalism would be replaced by several new systems, self-organised by people through barters run through applications.

When futurism is shed of utopistic romanticism, technology is there for very ordinary tasks, albeit more easily than in the past. As long as the masses of people stay content, the market economy will not crash and not everything will be uberised. Even if technology can make anything possible, people do not necessarily want that.

Smack in the middle of nowhere, in Espoo’s Karakallio district, the Nokia campus is at the moment a very Finnish version of the Google campus: more reminiscent in its bare feeling of the 90s than the future. As if to accentuate the ruggedness, the sky is shooting down huge undercooled raindrops like pieces of styrofoam. To each his own Silicon Valley.

But there is no sense in mocking it. In 2014, Nokia had a 0.5 percent impact on the Finnish gross domestic product, but the next five years this can all shift and the record high 2.4 percent of 2000 can be a reality again.

Nokia’s chairman of the board, Risto Siilasmaa, is not one to be escorted to, instead he comes down to the lobby in person, joined by corporate responsibility director Minna Aila. Siilasmaa’s presence contradicts the usual business director stereotype. He does not rocket through the hallways like a bowling ball, but walks around in his basic jeans as if in slow motion. The engineer-like nerdiness persists even as one of Finland’s leading executives. Quite a stevejobs.

Siilasmaa and corporate responsibility director Aila put down their iPads and iPhones on the table. One Finnish taboo has been broken: they don’t use Nokias.

Siilasmaa then goes on to explain in an overly calming voice the three stages of the internet of things. Here and there, he looks directly in the eye and sometimes stares at the floor.

The first stage includes a huge amount of devices that collect data, but that data is kept apart. In the next stage, this data can be connected. In the third stage, the data increasingly affects the surrounding world.

“The analysis currently run in separate individual clouds provides information that is splintered. When data collected by different services becomes compatible, we can reach a whole new level. It offers a chance for people to own their own information, contrary to what happens now.”

This would, in turn, require new laws and regulations which should be pursued head first, if we want to be smart about it.

“If you were to pursue such a cause, I would vote for you to join the parliament! It would be a huge shake-up and a revolution, if lawmakers would turn their heads from blockers to enablers.”

If and when everything goes as planned, the basic freedoms of people would be widened, Siilasmaa says.

“A right to safety, a right to health, a right to learning. All three will fundamentally change through technological services.”

That is a promise for a welfare state like no other. Even now all the Googles and Facebooks of the world know more than a thing or two about their users, but keep the benefits for themselves. So why should we believe that we could gain power over our data when we do not have that power now?

“If there are a hundred cloud services and all of these come with snippets with data related to you, then the only connection point is you. That’s why it is more likely that you would own all information that you can then grant to third parties and in return receive services regarding your health, for instance”, says Siilasmaa.

“And then you pay for your services with money or data. If you use only money, it is more expensive, and if you use both, you grant some type of licence, and if you pay with data only, you are granting a wide access. Free services take the wide access as a payment, and then there are other types of service providers who don’t want a data access out of principle, and therefore send a bill.”

A new type of service provider can be pinpointed between the lines in Siilasmaa’s talk: an entity that helps people control their data. When the role of mobile phones becomes less significant in the 5G world, networks gain momentum over devices and what was that company again providing these networks?

And when there are free-of-charge networks and paid networks, Siilasmaa’s background at [cyber security company] F-Secure has taught him that Nokia could find business in selling premium products to people who are interested in the safety of their own data – and who are willing to pay for it.

The clean North, clean water, clean air, clean data, he unravels his vision.

“I don’t wish to paint a threatening picture, but if we consider cyber crime, about what Snowden disclosed and what is happening in the world, that could lead us to think that an operator would run marketing saying that become our customer, our network is based on Nokia. It would be the same as Intel Inside, but just Nokia Inside.”

The New Nokia could, however, be toppled over by the one who benefits most from it: Finland.

In the data society, it might be useless to own anything else than your own data. Personal data would be so valuable but also so complicated to measure, that it would not turn into a currency.

In that sense, a justice-driven, Finnish Nokia could help consumers to manage all their data.

It could create 5G support stations with in-built personal data management, a MyData service, VPN protection built together with F-Secure, and a local cloud for files and back-ups.

And if this data protection was secure enough, it could be charged with a monthly fee. Then Nokia would climb up the value chain from a hardware provider to more of a service provider, just like Ericsson.

The only problem is that companies do not have much objection if the national security machinery wanted to run a mass inquiry, says Jaakko Lindgren from Dottir, a law firm specialised in IT.

“When a network operator starts off in a country, military and civilian intelligence comes in and takes over the monitoring of the data centre, and there is no opposing that.”

The current cyber laws in Finland are firm, which makes it attractive for companies from, for example, the United States. This is the reason why Turing Robotic Industries, maker of highly protected and durable smart phones, announced its landing in Salo, Finland.

The situation is growing all the more tense. The government is in the middle of the twists and turns of a law that could grant the Finnish Security Intelligence Service wide access alongside the Finnish Defence Forces to cyber espionage without a search warrant. Meanwhile, Britain is banning the use of encryption systems by private individuals.

“Due to the Holocaust, Europe has had a strict view over privacy, but the current situation is a paradox. On the one hand, Europe says that we need privacy, and on the other hand that there are all these muslim terrorists arriving so we need mass surveillance on WhattsApp.”

This is what tech companies are strongly opposing. In February, the FBI has tried to pressure Apple into unlocking the iPhone of the terrorist who killed 14 people in San Bernardino – in vain.

“I believe that once the international situation calms down, we will try to reach a similar agreement on personal data as we have with copyrights. It’s a little bit comical that we’ve been able to agree on the rights of books, but not on personal data”, Lindgren says.

Unless a worldwide agreement on digital privacy is reached, the end result can be just about anything. A central bank system for data, for instance. Or corporate giants, Nokia included, could build their own data ecosystems where everyone could pick their level of privacy and pay for it.

Or then trust has geographical borders: the European internet would become heavily regulated but safe, the American one would be free but prone to court cases – and the Russian and Chinese could be anything.

The near future is overestimated, the far future is underestimated, are the first two notions in communications researcher Osmo A. Wiio’s Laws of Future and Technology from 1970-73.

Since the 1920s, it has been believed that the future is made of cars and cities built on different levels, machines for living in, to quote Swiss architect Le Corbusier. Then we went on to build urban neighbourhoods made up of grey boxes.

Our imagination stayed in flying cars and mega high-rises, even if the world took different turns; the vision of Le Corbusier became a lost future.

Technocracy often walks hand-in-hand with futurism. Instead of technology, it is humans who block progress by chronically attaching the wildest of threats to technology. Regardless of this, the fourth Law of Future and Technology reads as follows: We tend to believe that technology changes basic human behaviour.

Mega high-rises are now on the drawing table only in Dubai. The future hype du jour lies in hyper-connected smart cities in a highly optimised world that has managed to rid itself of fossil fuels and climate change.

“But we have all the reason to believe that this will happen because: your guess is as good as mine”, Risto Siilasmaa says.

The Alcatel-Lucent acquisition transferred the noteworthy Bell Labs research organisation to Nokia, known for birthing, among other innovations, the world’s first transistor, laser and tele-communications satellite. Nokia now runs very Silicon Valley-esque product development at Bell Labs: a revolutionary innovation is the only type worth pursuing.

As with the Old Nokia, the current monopoly status of the current giants is unlikely to last forever, even if it feels like it.

“The risk and hindrance that we have now experienced over individual companies growing huge can be felt on a significantly smaller scale. We might see services combining Facebook, Apple, Google and Alibaba in a new way”, Siilasmaa says.

“The operating field that we now consider ever-lasting will surely change in the next five years. Now, the ones who seem the most vulnerable will seem like mortals. This is why we have to widen our vision and think on a longer term about possible futures.”

Smart phones might not have many top business years left, which was already proven by Apple’s falling results. The device will become everyday just like everything else and the profits will sink, as has always happened.

So is Nokia then not in a most delicious position?

“Value is created in the customer and consumer interfaces through branded services. The service providers, all the high rollers like Google, Facebook and Amazon are doing exactly that. When we look at market value, at profitability, it is typically very good”, Siilasmaa says.

“Before it was the mobile phone manufacturers who had the lead in high profits. Now they have come down, which is what I foresee happening to these current service providers.”

One thing that does not require a crystal ball is which company gets the closest to people in Siilasmaa’s plans, to where the data is.

“That a company happens to be in the right place at the right time is more a sum of random occurrences than that the company would have deliberately sought this out. I call it the lottery winner syndrome”, Siilasmaa says.

“Let’s think about it, if you would win the lottery and we would then praise you as being the smartest guy in the world for knowing those numbers right.”

But as we already know: nothing is as smart as an engineer.”


The text is a translation by Simo Vassinen from a story written by Oskari Onninen for a Finnish magazine Image-lehti. The text was edited and contextualized to an English reader by Kalle Mattila. Background research for this article also included an interview with Demos Helsinki associate Airi Lampinen from Stockholm University’s Mobile Life Centre.