Nokia: a metaphor for Europe’s technological future?
In 1999, Nokia was Europe’s largest company by market capitalization, and close to joining the global top 10, surpassing corporations such as BP, AT&T, AOL, and Coca-Cola. The Finnish company was the jewel in Europe’s crown; the company that sold more devices than any other, and leader in a market that had the analysts hungry for more. In 2007, the year the iPhone was launched, Nokia’s share of the burgeoning smartphone segment was almost 50 percent. Europe led the roll out of 3G, and was a global trendsetter.
Last week, US company Microsoft bought Nokia’s telephone division for less than four billion dollars, plus an additional payment for the use of the company’s intellectual property rights. Microsoft funded the operation with the tax savings it had made by not repatriating profits on its overseas activities, taking over the company that sold 80 percent of the devices that use its operating system. Stephen Elop, the former Microsoft senior executive that had been running Nokia since September 2010, returns triumphant to Microsoft just in time to position himself among the frontrunners to take over from Steve Ballmer, who had been invited by the board to retire. Elop’s management of Nokia, characterized by a halt to R+D and a narrow focus on a minority system like Windows Phone, was the perfect way to prepare the company for its fire-sale price to Microsoft: Elop is a latter day Trojan Horse if ever there was one.
The sale of Nokia sets Europe back in an area that will set the future agenda of technology. Already behind in rolling out 4G, the old continent can now only stand by and watch as technological innovation shifts to Asia and the United States, flourishing in environments that self-fertilize: virtuous circles where the growing number of technology companies create hubs that in turn attract qualified workers, university research departments, and financing. While Asia believes in its own talent and ability to drive economic growth—South Korea’s economy is about the same size as Spain’s, and shows what can be done when a country invests in technology rather than relying on construction. At the same time, the United States is building a mecca for technology that is attracting entrepreneurs, researchers, and qualified workers from all over the globe.
Europe is showing some very worrying symptoms of old age: structural defects that are preventing it from working as real single market; lobbies that have penetrated government; protection of dinosaurs; and a total lack of initiative. Meanwhile, on the other side of the Atlantic, we find an environment that encourages innovation, that generates added value, and with an entrepreneurial culture that is rooted in the national gene pool; whereas in Europe entrepreneurs are still made to feel that they are fighting against the elements.
It’s not impossible that the sale of Nokia will have some positive effects: talent that has been cultivated in the company, including its star designer, Marko Ahtisaari, will perhaps set up their own companies. Jolla, for example, is a project recreated by ex-employees on the basis of MeeGo, the system that the company abandoned in 2011. Berlin, London, and other cities are beginning to gather some entrepreneurial momentum, and that incites some hope for the future. Will we ever match the United States in terms of creating an environment that feeds the development of new ideas? Or would they be destined to failure, or to be bought out by US giants?
After having been tremendously successful, Nokia became tangled in red tape, lost its advantage, and ended up being bought out. The question we have to ask ourselves is whether Nokia is a metaphor for Europe’s technological future.
This article was published in the September 7 edition of El País, Spain’s leading newspaper.
