Nokia’s history starts in 1865, when engineer Fredrik Idestam established a wood-pulp mill in southern Finland and started manufacturing paper. Due to the European industrialization and the growing consumption of paper and cardboard Nokia soon became successful.
Nokia’s products were exported first to Russia and then to the UK and France. The Nokia factory attracted a large workforce and a small community grew up around it. A community called Nokia still exists on the riverbank of Emäkoski in southern Finland.
The Nokia Community
The hydroelectricity (from the river Emäkoski) which the wood-pulp mill used also attracted the Finnish Rubber Works to establish a factory in Nokia. In the 1920s, the Rubber Works started to use Nokia as their brand name. In addition to footwear (galoshes) and tires, the company later went on to manufacture rubber bands, industrial parts and raincoats.
Expanding into Electronics
After World War II the Finnish Rubber Works bought the majority of the Finnish Cable Works shares. The Finnish Cable Works was a company that had grown quickly due to the increasing need for power transmission and telegraph and telephone networks. Gradually the ownership of the Rubber Works and the Cable Works companies consolidated. In 1967 the companies were merged to form the Nokia Group. The Finnish Cable Works had manufactured cables for telegraph and telephone networks and in the 1960 they establishmed the Cable Works´Electronics department. At this time the seeds of Nokia’s global success in telecommunications were planted. In 1967, when the Nokia Group was formed, Electronics generated three percent of the Group’s net sales and provided work for 460 people.
The Journey into Telecommunications
Nokia´s Cable Work’s Electronics department started to conduct research into semiconductor technology in the 1960´s. This was the beginning of Nokias journey into telecommunications. In the early 1970s, the majority of telephone exchanges were electro-mechanical analog switches. Nokia began developing the digital switch (Nokia DX 200) which became a success. Nokia DX 200, which was equipped with high-level computer language and Intel microprocessors gradually evolved into the multifaceted platform that is still the basis for Nokia’s network infrastructure today. At the same time, new legislation allowed the Finnish telecommunications authorities to set up a mobile network for car phones that was connected to the public network. The result was Nordic Mobile Telephony (NMT). Opening in 1981, NMT was the world’s first multinational cellular network. During the following decade, NMT was introduced in many other countries and launched the rapid expansion of the mobile phone industry. At the end of the 1980s a common standard for digital mobile telephony was developed. This standard is known as GSM (Global System for Mobile Communications). In 1991 Nokia made agreements to supply GSM networks to nine European countries and by August 1997 Nokia had supplied GSM systems to 59 operators in 31 countries.
During the 1980s, Nokia’s operations rapidly expanded to new business sectors and products. The strategy was to expand rapidly on all fronts. In 1988, Nokia was a large television manufacturer and the largest information technology company in the Nordic Countries.
Focusing on Telecommunications
During the deep recession in Finland at the beginning of the 1990s, the telecommunications and mobile phones divisions were the supporting pillars of the Nokia. Despite the depth of the recession, Nokia came to its feet quickly as the company started streamlining its businesses. In May 1992 Nokia made the strategic decision to divest its non-core operations and focus on telecommunications. The company’s 2100 series phone was an incredible success. In 1994, the goal was to sell 500,000 units. Nokia sold 20 million.
It has been rumored that a group of businessmen tried to offer Nokia to the swedish telecom company Ericsson during the recession (1990´s)!