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Nokia Corporation (ADR) (NOK) & The Nokianvirta

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On this day in economic and business history …

Fredrik Idestam began building a wood-pulp mill to make paper on the banks of a Finnish river on May 12, 1865. Three years later, demand was high enough to build a second mill, on a different river. That second river, the Nokianvirta, gave its name to the company he helped create, when it went public in 1871: Nokia Corporation (ADR) (NYSE:NOK). This was also the first year of a century-plus streak of uninterrupted dividend payments. At this point, Nokia had another manager, Leo Mechelin, who helped build the company into Finland’s preeminent paper maker, and under the duo’s leadership Nokia Corporation (ADR) (NYSE:NOK) became a leader of the emerging Finnish paper-products cartel.

Nokia Corporation (ADR) (NYSE:NOK)

Idestam’s retirement in 1896 was fortuitous for Mechelin, who’d pushed his partner to enter the electricity-generation business only to be rebuffed. The way was now clear to diversify, and over the following 15 years two other companies also arose on the banks of the Nokianvirta that would soon become part of Nokia Corporation (ADR) (NYSE:NOK)’s expanding enterprise. By 1922, Nokia was the corporate parent of three jointly owned lines of business: the original pulp mill (now with electricity), a rubber manufactory, and a cable manufacturer — the latter of which formed the foundation of Nokia Corporation (ADR) (NYSE:NOK)’s eventual mobile empire.

The three subsidiaries merged into the modern Nokia Corporation in 1967, and 12 years later the groundwork was laid for a mobile phone industry leader when Nokia formed a joint radio-telephone venture with a fellow Finnish electronics manufacturer. The 1981 launch of Nordic Mobile Telephone (the first international cellular network) precipitated the launch of Nokia Corporation (ADR) (NYSE:NOK)’s first car phone in 1982. It wasn’t quite “mobile,” but Nokia was on its way.

The 1980s and early 1990s brought great changes to the venerable company, which emerged from a Finnish recession determined to concentrate on the electronics business. By this point, Nokia had to play catch-up with Motorola Solutions Inc (NYSE:MSI), which had for several years been leading the charge toward smaller, cheaper, and more accessible true mobile phones. The challenges of rapidly adapting and scaling up to meet the needs of millions — and eventually billions — around the world forced Nokia to undergo a dramatic transformation, but by the latter half of the 1990s it had cemented its claim to the mobile space. The list of best-selling mobile phones of all time soon began to look like a greatest-hits list for the Finnish company. Nokia’s 3210, launched in 1999, became the first 100-million model, with 160 million sold. The 3310, launched a year later, enjoyed 135 million sales. The 1110, launched in 2005, was Nokia Corporation (ADR) (NYSE:NOK)’s greatest success story, becoming the best-selling mobile model of all time, with 250 million lifetime sales.

But Nokia stumbled badly. The era of smartphones, first hinted at by the business-focused RES.IN MOT.DBA BLACKBERRY (FRA:RI1), was brought to full flower by Apple Inc. (NASDAQ:AAPL) when it launched the iPhone in 2007. It didn’t have to be that way. A 2012 Wall Street Journal article reveals Nokia’s advanced phone plans, in development since before the iPhone was a gleam in Steve Jobs’ eye:

More than seven years before Apple Inc. (NASDAQ:AAPL) rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button. The device was shown locating a restaurant, playing a racing game, and ordering lipstick. In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen — all features today of the hot-selling Apple Inc. (NASDAQ:AAPL) iPad. …

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