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Nokia: From Paper Mill to 5G Titan — The 160-Year Reinvention Machine
In the frost-bitten industrial heartland of Finland, where rivers carved through forests of spruce and birch, a mining engineer named Fredrik Idestam stood watching wood pulp tumble through the machinery of his new mill in 1865. The Russian Empire still controlled this Nordic territory. Telephones hadn't been invented. The concept of wireless communication existed only in science fiction. Yet this modest paper mill on the banks of the Tammerkoski rapids would eventually become one of the most recognizable brands in human history—and then, spectacularly, almost cease to exist entirely.
The Nokia story is not merely a corporate history; it is a 160-year masterclass in reinvention, a cautionary tale of hubris, and now, potentially, a resurrection story for the artificial intelligence age. How did a Finnish pulp manufacturer become the dominant force in mobile phones, lose 90% of its value in six years, sell its crown jewels to Microsoft, and emerge today as a telecommunications infrastructure giant securing billion-dollar partnerships with NVIDIA?
As of December 2025, Nokia has a market capitalization of approximately $33.66 billion. The market cap has increased by 36.56% over the past year, a remarkable turnaround from the company's nadir in the early 2010s. But this number tells only a fraction of the story. At its peak in 2000, Nokia commanded a market value exceeding $300 billion—larger than the GDP of many countries. Understanding how it fell, and how it has climbed back, requires understanding not just technology shifts but the human dynamics of innovation, fear, and organizational dysfunction.
This is the story of the world's greatest corporate phoenix—told in full.
I. Origins: A Paper Mill in the Russian Empire (1865-1966)
The town of Nokia sits in southwestern Finland, where the Nokianvirta river flows from Lake Pyhäjärvi toward larger waterways. In the 1860s, this region was part of the autonomous Grand Duchy of Finland under Russian imperial rule, but Finnish entrepreneurs were building the foundations of what would become one of the world's most innovative economies.
Fredrik Idestam was a Finnish-Swedish mining engineer who had studied the revolutionary papermaking techniques emerging from Germany. In 1865, he established a ground wood pulp mill on the Tammerkoski rapids in Tampere. Three years later, in 1868, he built a second mill near the small town of Nokia, drawn by the river's superior hydropower resources. In 1871, Idestam and his partner Leo Mechelin transformed these enterprises into a public limited company called Nokia Ab.
The name "Nokia" comes from the Finnish word nokianvirta, which itself derives from an old Finnish word for a dark, marten-like animal that once inhabited the river's banks. This company produced paper products—nothing more, nothing less. No one could have imagined its eventual transformation.
Meanwhile, two other Finnish companies were being born that would eventually merge with Nokia Ab. In 1898, Eduard Polón founded Suomen Gummitehdas Oy—Finnish Rubber Works—which manufactured galoshes and other rubber products. In the early 1900s, Finnish Rubber Works established factories near Nokia and began using the town's name in its branding. Separately, in 1912, Arvid Wickström founded a cable company that produced telephone, telegraph, and electrical cables.
These three companies—paper, rubber, and cables—would coexist as independent businesses for decades. After World War I, Nokia Ab faced near-bankruptcy and was acquired by Finnish Rubber Works. In 1932, Finnish Rubber Works also acquired Finnish Cable Works. The three companies operated as a loose confederation, each maintaining its distinct identity while sharing common ownership.
Finland's geopolitical position shaped Nokia's early corporate culture in subtle but important ways. Situated between Western Europe and the Soviet Union, Finland maintained a delicate neutrality during the Cold War. Finnish businesses learned to operate across ideological divides, building commercial relationships with both NATO countries and the Soviet bloc. This ability to navigate between worlds, to adapt to different political and economic systems, would become part of Nokia's institutional DNA.
By the 1960s, the conglomerate that would eventually become Nokia Corporation was producing an astonishing array of products: paper, rubber boots, bicycle tires, power cables, televisions, and even toilet paper. It was, in essence, a typical mid-century industrial conglomerate with no particular strategic focus.
The transformation that would eventually make Nokia a household name began with an obscure division focused on electronics and telecommunications equipment. Finland's telecommunications infrastructure was developing rapidly, and the cable business had expertise in transmission technologies. But no one—not even Nokia's own management—could have predicted that this small electronics division would eventually consume the entire company and reshape global communications.
II. The Conglomerate Era & Birth of Mobile (1967-1991)
On January 1, 1967, the three companies—Nokia Ab, Kaapelitehdas (Finnish Cable Works), and Suomen Gummitehdas (Finnish Rubber Works)—officially merged to create Nokia Corporation. The new entity was restructured into four major businesses: forestry, cable, rubber, and electronics. This diversified conglomerate manufactured everything from "paper items, car and bicycle tires, rubber boots, communications cables, televisions, personal computers, generators, robotics, capacitors, military technology and equipment, plastics, aluminum and chemicals."
The diversity was bewildering. Imagine a company that simultaneously sold Wellington boots to farmers and cutting-edge military electronics to the Finnish Defense Forces. Yet this sprawling structure would prove surprisingly fertile ground for innovation.
The Soviet Connection played a crucial role in Nokia's growth. After Finland's trade agreement with the Soviet Union in the 1960s, Nokia expanded into the massive Soviet market. By the late 1970s, the Soviet Union had become a major customer, yielding high profits. Nokia sold cables, electronics, and telecommunications equipment across the Eastern Bloc—experience that would later prove valuable when the company sought to build global supply chains and navigate complex regulatory environments.
The transformative figure of this era was Kari Kairamo, who became CEO in 1977. Kairamo was a visionary who saw the future in electronics and telecommunications. He transformed Nokia through a series of aggressive acquisitions. In 1984, Nokia acquired Salora, a Finnish television manufacturer. In 1985, it purchased Luxor Ab, a Swedish electronics and computer maker. In 1987, it absorbed Oceanic, a French television company.
Most critically, Nokia acquired Mobira, a mobile phone maker that would help the company usher into its golden era. With Mobira, Nokia launched its first mobile phone—the Mobira Senator—in 1982. This device was the size of a briefcase and weighed nearly 10 kilograms, but it represented Nokia's entry into a market that would define its future.
In 1981, Mobira had launched the Nordic Mobile Telephone (NMT) service—the world's first international cellular network and the first to allow international roaming. This was a revolutionary moment in telecommunications history, and Nokia was at its center. The NMT network was a Nordic cooperation project, but Finnish companies including Nokia played a central role in developing both the network infrastructure and the handsets.
Kairamo's vision was prescient, but his tenure ended in tragedy. On December 11, 1988, Kari Kairamo committed suicide. The reasons remain unclear, though the immense pressure of running a diversifying conglomerate through economic turbulence surely played a role. He was replaced by Simo Vuorilehto, who faced the unenviable task of steering Nokia through a severe economic recession.
The early 1990s were a crisis period. Finland's economy contracted sharply after the Soviet Union's collapse eliminated a major trading partner. Nokia's diverse businesses were dragging each other down. Vuorilehto responded with a major restructuring, divesting industrial units he deemed unstrategic. Nokian Tyres, which had been a division of Finnish Rubber Works since 1932, was spun off in 1988 (it would eventually become a successful independent company focused on winter tires).
The most consequential decision of this era was Nokia's choice to focus on telecommunications. The company began shedding its rubber boots, paper mills, and television sets to concentrate on mobile communications. This was not an obvious bet at the time—mobile phones were still niche products used mainly by business executives and wealthy consumers. But Nokia's leadership saw the potential for mobile communications to become ubiquitous.
By the year 2000, Nokia would account for an astonishing 4% of Finland's entire GDP—a testament to both the company's growth and Finland's relatively small economy. But more importantly, Nokia's decision to focus on telecommunications set the stage for one of the most remarkable corporate ascents in business history.
III. The Golden Era: Mobile Phone Domination (1992-2007)
The year 1992 marked a turning point in telecommunications history. The Global System for Mobile Communications (GSM) standard was being adopted across Europe, creating for the first time a unified mobile network that would allow phones to work across national borders. Nokia was ready.
In 1992, Nokia launched the Nokia 1011—the world's first GSM phone. This was not a prototype or a limited release; it was a mass-market product that would help establish GSM as the global standard for digital mobile communications. Nokia's early products and services, including its development of GSM technology, set industry standards and facilitated the global expansion of mobile networks.
Nokia's rise from mid-tier electronics company to global mobile phone leader occurred with breathtaking speed. In 1996, Nokia launched the Communicator—arguably the world's first smartphone, combining a mobile phone with PDA functionality. In 2001, the company released its first camera phone. Each innovation built on the last, establishing Nokia as the company that defined what a mobile phone should be.
The numbers tell a dramatic story. In 1998, Nokia overtook Motorola to become the world's best-selling mobile phone company—a position Motorola had held since essentially inventing the mobile phone industry. By 1999, Nokia's profit reached $4 billion. The Nokia 1100, launched in 2003, sold over 250 million units, making it the best-selling phone—and indeed, the best-selling consumer electronics product—in history.
At its peak, Nokia achieved a milestone that companies only dream of: in 2007, it captured 49.4% of the global mobile phone market share. Nokia rapidly grew to have one of the most recognizable and valuable brands in the world, commanding a global market share of over 40% for several years running.
What explained Nokia's dominance? Several factors converged.
First, hardware excellence. Nokia phones were renowned for their durability—the Nokia 3310 became an internet meme for being virtually indestructible. But this durability was not accident; it reflected meticulous engineering and quality control. Nokia invested heavily in materials science, testing, and manufacturing processes.
Second, global supply chain mastery. Nokia built one of the most sophisticated supply chains in consumer electronics, capable of producing hundreds of millions of phones per year while maintaining quality. The company's factories in Finland, China, India, and elsewhere formed an integrated production network that competitors struggled to match.
Third, design excellence. Nokia phones were not just functional; they were beautiful. The company employed some of the world's best industrial designers and invested heavily in user experience research. Nokia phones felt good in the hand, had intuitive interfaces, and came in a variety of form factors to suit different markets and use cases.
Fourth, emerging market strategy. While competitors focused on wealthy consumers in developed markets, Nokia aggressively pursued emerging markets in Africa, Asia, and Latin America. The company developed low-cost phones for price-sensitive consumers and built distribution networks that reached rural villages. This strategy generated enormous volume and brand loyalty.
By 2007, Nokia seemed invincible. The company was Finland's largest employer, its most valuable company, and its most recognized brand globally. Nokia's headquarters in Espoo, a suburb of Helsinki, had become a pilgrimage site for business executives seeking to learn the secrets of mobile success.
But beneath the surface, cracks were forming.
The Hidden Cracks
Between 1996 and 2000, headcount at Nokia Mobile Phones increased 150% while revenues grew 503%. This rapid growth came at a hidden cost—managers found themselves under ever-increasing short-term performance pressure, unable to dedicate time and resources to longer-term innovation. The bureaucracy expanded. Internal competition intensified. The nimble startup culture that had enabled Nokia's rise began calcifying into something slower and more political.
Nokia's decline cannot be explained by any single factor. Management decisions, dysfunctional organizational structures, growing bureaucracy, and deep internal rivalries all played a part. But the company's mobile phone story exemplifies a common trait in mature, successful companies: success breeds conservatism and hubris.
Nokia's leadership believed they understood the mobile phone market better than anyone—because they did. But this very expertise blinded them to the possibility that the market itself might fundamentally change. The company that had revolutionized telecommunications was about to be revolutionized itself.
IV. The Fall: From Dominant to Decimated (2007-2013)
On January 9, 2007, Steve Jobs walked onto a stage in San Francisco and introduced "a revolutionary product." The device he unveiled—the iPhone—looked nothing like any Nokia phone. It had no physical keyboard, no buttons to speak of, just a large glass touchscreen. Nokia's executives watched the presentation with a mixture of curiosity and skepticism.
The iPhone's initial technical specifications were unimpressive by Nokia standards. It ran on 2G technology while Nokia's phones used 3G. Its battery life was poor. Its camera was mediocre. Most importantly, it couldn't do what Nokia phones did: make calls reliably everywhere in the world.
Nokia refused to take Apple as a serious threat to its high sales numbers. Company executives also considered Apple's phones inferior because they ran on 2G technology while Nokia's mobiles ran on 3G. This was a classic case of measuring competition by the wrong metrics. Nokia was winning the technical specification war while losing the more important battle: user experience.
After the introduction of Apple's iPhone in 2007 and Google's announcement that it had formed an Open Handset Alliance to develop Android OS, the situation in the mobile phone device market began to agitate rapidly. Nokia was caught in what business school professors would later call the "innovator's dilemma"—so focused on serving existing customers and improving existing products that it failed to see a fundamentally different approach emerging.
The Symbian Trap
Nokia's smartphone operating system, Symbian, had been developed in the 1990s for devices with limited processing power and memory. It was efficient and reliable for the phones Nokia was building, but it was increasingly difficult to adapt for the new touchscreen era.
Symbian exacerbated delays in new phone launches as whole new sets of code had to be developed and tested for each phone model. By 2009, Nokia was using 57 different and incompatible versions of its operating system. The fragmentation was mind-boggling: software written for one Nokia phone might not work on another Nokia phone, even if both were released in the same year.
While Nokia posted some of its best financial results in the late 2000s, management was struggling internally. Software was taking precedence over hardware as the critical competitive feature. The importance of application ecosystems was becoming apparent, but as the dominant industry leader, Nokia lacked both the skills and the inclination to engage with this new way of working. The company that had mastered hardware manufacturing had no institutional capability for software platform development.
Why did Nokia invest so heavily in its own increasingly outdated Symbian software platform even after major competing smartphone platforms—iOS and Android—emerged in 2005–2007 and quickly proved themselves hugely successful? The answer involves organizational inertia, sunk cost fallacy, and a fundamental misunderstanding of where competition was heading.
The Burning Platform
On September 10, 2010, Nokia's board announced that CEO Olli-Pekka Kallasvuo was being replaced. The company's market share was declining, its stock price was falling, and its smartphone strategy was visibly failing. The board sought an outsider who could break from the traditional "Nokia way."
It was announced that Stephen Elop would become Nokia's CEO, replacing the dismissed Kallasvuo and becoming the first non-Finnish director in Nokia's history. Nokia's chairman Jorma Ollila commented that Elop had "the right industry experience and leadership skills." What Ollila didn't mention was that Elop came from Microsoft, where he had run the Office division—a fact that would take on enormous significance.
Sometime in early 2011, Elop issued a company internal memo titled "Burning Platform," which was leaked to the press. The memo likened Nokia's situation in the smartphone market to a person standing on a burning oil platform. The metaphor came from a real incident where an oil rig worker, faced with certain death from fire, jumped into the freezing North Sea—and survived.
"The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable," Elop wrote in the memo.
"We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally. Nokia, our platform is burning."
The memo was not intended for the public but was eventually leaked by Engadget on February 8, 2011, becoming widely circulated and receiving a large deal of attention. Nokia's Board of Directors saw the memo as an act of misjudgment, and Chairman Jorma Ollila bitterly criticized it at a board meeting.
The memo's impact was devastating. By publicly declaring Nokia's existing products dead, Elop gave customers no reason to buy them while the promised replacements were still months or years away. This was the "Osborne effect"—named after the computer company that collapsed after its CEO pre-announced a superior product too far in advance.
The Microsoft Partnership
On February 11, 2011, Elop officially announced the new strategy for Nokia, which involved a "strategic partnership" with Microsoft and shifting its smartphone strategy to Microsoft's Windows Phone, whilst gradually phasing out their in-house Symbian and MeeGo operating systems.
Nokia took the first step in February 2011, when the company announced a collaboration with Microsoft to strengthen its position in the smartphone market. In 2011, Nokia joined forces with Microsoft to make Windows Phone devices, abandoning old operating systems like Symbian and MeeGo.
The decision was controversial from the start. Android was free and rapidly gaining market share. Why pay Microsoft for Windows Phone when Google was giving Android away? Nokia's board believed that Android would commoditize the smartphone market, turning hardware makers into interchangeable suppliers. Windows Phone, they hoped, would provide differentiation.
In 2012, the Windows phone failed to make an impact on an already established smartphone market. The main reason was the lack of applications on the Windows store compared to Google's Play Store and Apple's App Store. Developers wrote apps for iOS and Android, where the users were. Users bought iPhones and Android phones, where the apps were. Nokia was trapped outside this virtuous cycle.
The Collapse
For the first time in its recent history, in the latter half of 2008, Nokia's global market share in mobile devices declined. But the real collapse came after the Burning Platform memo and the Microsoft partnership announcement.
In only two years, Nokia's operating profits shrank dramatically; by 2011, the corporation as a whole was unprofitable. It took only six years for Nokia to lose around 90% of its market value, and the company never recovered its mobile phone business.
During Elop's tenure from 2010 to 2014, Nokia's stock price dropped 62%, their mobile phone market share was halved, their smartphone market share fell from 33% to 3%, and the company suffered a cumulative €4.9 billion loss.
Root Causes Analysis
What killed Nokia's mobile phone business? Researchers and analysts have identified multiple factors:
Technical capability gaps: Professors at Aalto University found that Nokia's technical capabilities in software development were less than Apple's. The company was complacent and didn't see the disruptive iPhone coming—even after it arrived.
Organizational dysfunction: Major reasons for Nokia's decline included pervasive bureaucracy leading to an inability to act, destructive internal competition, and the failure to realize the importance of lifestyle products like the iPhone.
Fear and internal politics: Nokia's ultimate fall can be attributed in significant part to internal politics. Nokia people weakened Nokia people and made the company increasingly vulnerable. When fear permeated all levels, lower rungs of the organization turned inward to protect resources, themselves, and their units. Information about competitive threats didn't flow upward because middle managers feared being blamed as messengers of bad news.
The debacle cost both companies dearly: Microsoft eventually took a $7 billion write-down, and Nokia suffered a 90% loss in market capitalization.
V. The Microsoft Sale & Reinvention (2013-2016)
By 2013, Nokia's mobile phone business was hemorrhaging money. The Windows Phone partnership had failed to reverse the decline, and the company's market share continued to collapse. Nokia's board faced an existential choice: continue funding a dying business or find a buyer.
Microsoft, under CEO Steve Ballmer, was desperate to establish a presence in mobile. Despite Windows Phone's failure to gain significant market share, Ballmer believed Microsoft could still win if it controlled both the hardware and software—the "devices and services" strategy that had worked for Apple.
On September 3, 2013, Microsoft and Nokia announced a deal that would reshape both companies. Under the terms of the agreement, Microsoft paid €3.79 billion to purchase substantially all of Nokia's Devices & Services business and €1.65 billion to license Nokia's patents, for a total transaction price of €5.44 billion in cash.
The acquisition closed in April 2014. Nokia's then-CEO, Stephen Elop, joined Microsoft as president of its Devices division. Some observers noted the irony: the former Microsoft executive who had steered Nokia toward Windows Phone was now overseeing the absorption of Nokia's phone business by Microsoft.
Microsoft's Disaster
Microsoft's Nokia acquisition became one of the worst technology deals in history. Elop is best known for his ill-fated tenure as Nokia CEO, which included controversies such as the "burning platform" memo and the company's partnership with Microsoft, resulting in the move to Windows Phone software exclusivity.
In 2015, Microsoft wrote off $7.6 billion as a consequence of the Nokia acquisition and laid off 7,800 employees. Because "goodwill" is the difference between purchase price and actual assets, writing off the entire amount signaled that Microsoft grossly overpaid. This write-off was Microsoft's largest ever, exceeding by 23% the $6.2 billion charge it took in 2012 for its failed aQuantive acquisition.
It was Microsoft's last major push into the mobile market and Nokia's last grasp at the smartphone business—and it failed spectacularly. Barely two years after the acquisition was announced, the entire strategy fell apart. Satya Nadella, who replaced Ballmer as Microsoft CEO, effectively acknowledged defeat in mobile and began refocusing the company on cloud computing.
Nokia's Parallel Transformation
While Microsoft was destroying the value of Nokia's mobile phone business, Nokia itself was transforming into something entirely different. The company that emerged from the Microsoft sale was unrecognizable from the consumer electronics giant of 2007.
In 2013, Nokia moved to reinvent itself with two transformative transactions. It acquired 100% of the shares of Nokia Siemens Networks, a joint venture that had been formed in 2007, and rebranded it as Nokia Networks. This deal made Nokia a major player in telecommunications infrastructure—the equipment that powers mobile networks rather than the phones that connect to them.
This caps a radical three-year transformation that started with the purchase of Siemens' share in Nokia Siemens Networks in 2013 and was followed by the divestments of the Devices & Services and mapping businesses (HERE, Nokia's mapping unit, was sold to a consortium of German automakers for €2.8 billion).
The Alcatel-Lucent Mega-Deal
The most dramatic move in Nokia's reinvention came in April 2015. Nokia announced its intent to purchase Alcatel-Lucent for €15.6 billion in an all-stock deal. The acquisition aimed to create a stronger competitor to Ericsson and Huawei in telecommunications equipment.
Nokia acquired French telecom equipment maker Alcatel-Lucent for €15.6 billion ($16.6 billion)—more than double what Microsoft had paid for Nokia's phone business just two years earlier. Most significantly, Nokia also acquired Alcatel-Lucent's famous Bell Laboratories.
Nokia Bell Labs is an American industrial research and development company. With headquarters located in Murray Hill, New Jersey, it operates several laboratories in the United States and around the world. Bell Labs and its researchers have been credited with the development of radio astronomy, the transistor, the laser, the photovoltaic cell, the charge-coupled device, information theory, the Unix operating system, and the programming languages B, C, C++, and others. Eleven Nobel Prizes and five Turing Awards have been awarded for work completed at Bell Laboratories.
The combined company had more than 40,000 R&D employees and R&D spending of €4.7 billion in 2014, positioned to accelerate development of future technologies including 5G.
On January 14, 2016, Alcatel-Lucent started operating as part of the Nokia Group. The company that had once made paper and rubber boots was now a telecommunications infrastructure giant with one of the world's most prestigious research laboratories.
Return of the Brand
In 2016, the Nokia brand re-entered the mobile handset market through an unusual arrangement. Under a strategic agreement covering branding rights and intellectual property licensing, Nokia Technologies granted HMD Global Oy, a newly founded company based in Finland, an exclusive global license to create Nokia-branded mobile phones and tablets for the next ten years.
HMD intended to invest over $500 million over the next three years to support the global marketing of Nokia-branded mobile phones and tablets. Nokia would provide HMD with branding rights and cellular standard essential patent licenses in return for royalty payments, but would not be making a financial investment or holding equity in HMD.
The sale to HMD Global and FIH Mobile amounted to just $350 million—a fraction of what Microsoft had paid. Nokia would collect royalties from HMD's phone sales while HMD took all the risk and capital requirements of actually building and selling phones.
This licensing model represented Nokia's definitive exit from the mobile phone business. The company that had once made nearly half of all mobile phones in the world would now simply license its brand to others.
VI. Nokia Today: The 5G Infrastructure Giant (2016-Present)
The Nokia that exists in December 2025 bears almost no resemblance to the company that dominated mobile phones in 2007. Today's Nokia is a business-to-business company that most consumers never interact with directly, even though they use its products every time they make a phone call or stream video on their mobile devices.
Current Business Model
Nokia is now uniquely positioned to help communication service providers, governments, and large enterprises deliver on the promise of 5G, cloud computing, and the Internet of Things. The company's four main business segments are:
- Network Infrastructure: Optical networks, IP networks, and fixed networks
- Mobile Networks: Radio access equipment for cellular networks
- Cloud and Network Services: Software and services for network management
- Nokia Technologies: Patent licensing and research
Full year 2024 net sales declined 9% in both reported and constant currency, of which 7 percentage points was related to India. Comparable operating profit was €2.6 billion. In 2024, Nokia registered €19.22 billion in revenues.
Nokia saw a strong finish to 2024 with 9% net sales growth year-on-year in Q4. Management is optimistic that the improving market trends will persist into 2025. Alongside the net sales growth, Nokia saw excellent profitability in Q4 with a comparable operating margin of 19.1%.
The enterprise sector has become a key focus. "Nokia continues to expand its presence in private wireless, now with 850 customers." Huawei, Nokia, and Ericsson were the top global private RAN suppliers in 2024, with Huawei leading in wide-area deployments and Nokia taking the top spot in campus network installations.
2025: The AI Pivot and New Leadership
The most significant development in Nokia's recent history came on February 10, 2025, when the company announced a leadership transition. Justin Hotard, born 1974, became the president and CEO of Nokia in April 2025, replacing Pekka Lundmark.
Hotard earned a degree in electrical engineering from the University of Illinois Urbana-Champaign and an MBA from MIT Sloan School of Management. Before joining Nokia, Hotard held a senior role at Intel, where he oversaw the Data Center and AI Group, and previously held leadership positions at Hewlett Packard Enterprise, NCR Corporation, Symbol Technologies, and Motorola.
His last role at HPE was Executive Vice President and General Manager, High-Performance Computing, AI & Labs. In this role, he delivered the world's first exascale supercomputer for the US Department of Energy and positioned the company at the forefront of AI, quantum computing, and sustainability research.
The choice of Hotard signals Nokia's strategic direction. His leadership marked a strategic shift for Nokia, emphasizing innovation in AI and digital infrastructure.
The NVIDIA Partnership
On October 28, 2025, Nokia announced what may be the most significant partnership in its post-mobile history. NVIDIA announced it would invest $1 billion in Nokia at a subscription price of $6.01 per share.
NVIDIA and Nokia announced a strategic partnership to add NVIDIA-powered, commercial-grade AI-RAN products to Nokia's industry-leading RAN portfolio, enabling communication service providers to launch AI-native 5G-Advanced and 6G networks on NVIDIA platforms. The investment is subject to customary closing conditions. The partnership marks the beginning of the AI-native wireless era.
Nokia shares jumped the most in more than a decade following the announcement. Nokia will issue about 166 million shares to Nvidia at $6.01 each as part of the deal, giving Nvidia a 2.9% stake.
"The next leap in telecom isn't just from 5G to 6G — it's a fundamental redesign of the network to deliver AI-powered connectivity, capable of processing intelligence from the data center all the way to the edge. Our partnership with NVIDIA, and their investment in Nokia, will accelerate AI-RAN innovation to put an AI data center into everyone's pocket," said Justin Hotard.
Capital Markets Day 2025
At its Capital Markets Day on November 19, 2025, Nokia announced its strategy to position itself to lead in the AI-driven transformation of networks and capture the value of the AI supercycle.
To execute on its new strategic direction, Nokia is simplifying its operational model into two primary operating segments of Network Infrastructure and Mobile Infrastructure.
Nokia's new financial goals are to grow annual comparable operating profit to a range of €2.7 to €3.2 billion by 2028.
Nokia targets 6-8% net sales CAGR during 2025-2028 for Network Infrastructure. This includes a 10-12% target for the combined Optical Networks and IP Networks.
Nokia's new strategy focuses on five strategic priorities: Accelerate growth in AI and Cloud; Lead the next era of mobile connectivity with AI-native networks and 6G; Grow by co-innovating with customers and partners; Focus capital where Nokia can differentiate; Unlock sustainable returns.
The Infinera Acquisition
On February 28, 2025, Nokia announced the closing of the acquisition of Infinera Corporation. The San Jose-based company has become part of Nokia effective as of the closing.
Nokia acquired Infinera in a transaction valuing the company at $6.65 per share or an enterprise value of $2.3 billion.
The acquisition brings together two pioneering leaders in the optical networks market and creates an optical networks powerhouse—underpinned by the cutting-edge research of Nokia Bell Labs—with the scale to accelerate product roadmaps. It expands Nokia's presence in the fast-growing webscale segment and further expands Nokia's ability to help network operators unlock the opportunities of the AI era.
Bell Labs: Nokia's Innovation Engine
Nokia Bell Labs is celebrating its centennial in 2025, marking 100 years of groundbreaking discoveries and innovations that blazed the trail for the digital age. Over the last century, Nokia's award-winning industrial research arm invented the transistor, solar cell, and laser and laid the groundwork for the digital age.
Over the past 100 years, Nokia Bell Labs researchers have made revolutionary discoveries in radio astronomy, semiconductors, Information Theory, and cellular communications. These breakthroughs have resulted in 10 Nobel Prizes and five Turing Awards, as well as three Emmys, two Grammys, and an Academy Award.
VII. The Competitive Landscape
Nokia operates in one of the most intensely competitive industries in technology. Its primary rivals are Ericsson of Sweden, Huawei of China, ZTE of China, and Samsung of South Korea.
Huawei, with a 31% global market share, continues to dominate, outpacing its Western counterparts, Nokia (14%) and Ericsson (13%). However, the international figure obscures a divided market reality.
The global telecom equipment market has entered a phase of contraction. In 2024, revenue from network equipment declined by approximately 11%, with 2025 expected to remain flat. Major segments, including radio access networks (RAN), optical transport, and core infrastructure, have been affected.
Nokia's net sales fell in 2024, with its Mobile Networks division posting a 21% year-on-year sales decline. "Our Mobile Networks business faced an exceptionally tough year, with revenues declining 21%," said Tommi Uitto, President of Mobile Networks at Nokia.
The geopolitical dimension is crucial. In China and increasingly across Asia, Africa, and parts of the Middle East, Huawei and ZTE retain strongholds. In contrast, Western markets, particularly those in Europe and North America, have moved to curtail or eliminate Chinese technology from their networks on grounds of national security.
The fragmentation is compelling vendors to reconfigure their strategies. Ericsson and Nokia are repositioning as end-to-end 5G solution providers, bolstering their software capabilities and targeting high-growth enterprise opportunities such as private mobile networks.
VIII. Strategic Analysis: Powers and Moats
Porter's Five Forces Analysis
Threat of New Entrants: Low to Moderate
Telecommunications infrastructure requires enormous R&D investment, global sales networks, and decades of accumulated expertise. The capital requirements alone deter most potential competitors. However, Open RAN technology threatens to lower barriers by enabling smaller players to compete in specific segments.
Bargaining Power of Buyers: High
Nokia's customers are large telecommunications operators—companies like Verizon, AT&T, Deutsche Telekom, and Vodafone—who have significant negotiating leverage. These operators can play vendors against each other and often have multi-vendor strategies specifically to avoid dependence on any single supplier.
Bargaining Power of Suppliers: Moderate
Nokia relies on global supply chains for semiconductors, components, and raw materials. The semiconductor shortage of 2020-2022 demonstrated the vulnerability of telecom equipment makers to supply chain disruptions. However, Nokia's scale gives it leverage with most suppliers.
Threat of Substitutes: Moderate and Growing
5G is not the end of the road. Wi-Fi technology continues to improve and competes with cellular in many indoor applications. Satellite communications (Starlink, OneWeb) threaten to displace terrestrial networks in some use cases. Software-defined networking threatens to commoditize hardware.
Competitive Rivalry: Intense
The RAN market is essentially an oligopoly with three major Western players (Nokia, Ericsson, Samsung) competing against two major Chinese players (Huawei, ZTE). Competition is fierce on price, technology, and customer relationships.
Hamilton Helmer's Seven Powers
Scale Economies: Nokia benefits from scale in manufacturing, R&D amortization, and procurement. However, Huawei's larger scale provides even greater advantages.
Network Effects: Limited. Unlike consumer platforms, telecom equipment doesn't benefit significantly from network effects.
Counter-Positioning: Nokia's bet on AI-native networks and the NVIDIA partnership represents potential counter-positioning against competitors who may be slower to embrace this transition.
Switching Costs: High. Once an operator deploys Nokia equipment, switching to a competitor is expensive and disruptive. However, operators deliberately maintain multi-vendor environments to limit vendor lock-in.
Branding: Nokia's brand has significant value in consumer awareness (hence the HMD licensing deal) but limited differentiation in B2B infrastructure markets where technical specifications matter more.
Cornered Resource: Bell Labs represents a unique research asset. Eleven Nobel Prizes and five Turing Awards have been awarded for work completed at Bell Laboratories. This institutional knowledge and research capability is difficult to replicate.
Process Power: Nokia's decades of experience in network deployment, supply chain management, and standards-setting processes provide advantages that newer competitors cannot easily match.
IX. Investment Considerations: Bull vs. Bear Case
The Bull Case
1. AI Infrastructure Positioning
The NVIDIA partnership positions Nokia at the center of the AI-RAN revolution. The partnership addresses the fast-growing AI-RAN market, representing a significant opportunity within the RAN market that is expected to exceed a cumulative $200 billion by 2030, according to analyst firm Omdia.
2. Western Vendor Preference
Geopolitical tensions between the West and China continue to benefit Nokia. With European telecom operators showing a preference for Nokia and Ericsson, the void left by Huawei has been quickly filled by these two industry stalwarts.
3. Bell Labs Innovation Pipeline
Nokia's ownership of Bell Labs provides a unique research and development engine. The centennial celebration in 2025 highlights the laboratory's continued relevance in emerging technologies including 6G, quantum computing, and AI.
4. Enterprise and Private Networks
The private wireless market saw impressive momentum in 2024, with radio access network revenues growing more than 40% year-over-year. This outpaced earlier projections. Nokia's leadership position in campus networks provides a growing revenue stream.
5. Improved Profitability
Nokia saw excellent profitability in Q4 2024 with a comparable operating margin of 19.1%. Full-year comparable operating profit was €2.6 billion, at the mid-point of guidance.
The Bear Case
1. Structural Market Decline
The global telecommunications equipment market entered a turbulent phase in 2024, recording an 11% year-over-year contraction, the sharpest decline in more than 20 years. If this represents a structural shift rather than a cyclical downturn, Nokia faces a shrinking addressable market.
2. Chinese Competition
Huawei has outperformed its Nordic competitors in the 5G market despite facing US sanctions. Huawei has a larger market share and even managed to have higher R&D spend compared to its rivals. In markets where Huawei is not banned, Nokia struggles to compete on price.
3. Open RAN Threat
Open RAN technology threatens to commoditize the radio access network market by enabling operators to mix and match components from different vendors. While Nokia participates in Open RAN, the technology could undermine its integrated hardware/software business model.
4. Customer Concentration
Nokia's revenue is concentrated among large telecommunications operators who have significant negotiating power. AT&T's decision to switch from Nokia to Ericsson in December 2023 demonstrated the vulnerability of large customer relationships.
5. Execution Risk
Nokia has undergone multiple strategic pivots in recent years. The new AI-focused strategy under CEO Justin Hotard represents yet another transformation that must be executed successfully.
X. Key Performance Indicators to Track
For investors monitoring Nokia's progress, three KPIs are most critical:
1. Network Infrastructure Revenue Growth Rate
Nokia targets 6-8% net sales CAGR during 2025-2028 for Network Infrastructure, including a 10-12% target for the combined Optical Networks and IP Networks. This is where Nokia sees its growth opportunity in the AI supercycle. Consistent achievement of these targets would validate the strategy.
2. Comparable Operating Margin
Nokia targets comparable operating profit of €2.7 to €3.2 billion by 2028. With €19-20 billion in annual revenue, this implies operating margins in the 13-16% range. Margin expansion demonstrates pricing power and operational efficiency—critical in a competitive market.
3. AI and Cloud Customer Revenue as Percentage of Total
In Q3 2025, AI and Cloud customers accounted for 6% of net sales at the group level and 14% for Network Infrastructure. This metric tracks Nokia's progress in diversifying beyond traditional telecom customers toward the hyperscale data center market that drives the AI supercycle.
XI. Playbook: Business and Strategic Lessons
Nokia's 160-year journey offers profound lessons for investors, executives, and students of business strategy.
Lesson 1: Corporate Reinvention is Possible—But Requires Painful Choices
Nokia has reinvented itself at least four times: Paper → Rubber/Cables → Mobile Phones → Infrastructure. Each transformation required divesting businesses that once defined the company. The willingness to kill your own products—before competitors do—is essential to long-term survival.
Lesson 2: Success is the Enemy of Adaptation
Nokia's mobile phone dominance bred the complacency that enabled Apple and Google to disrupt it. The company's very expertise in hardware-centric feature phones blinded it to the software-centric smartphone revolution. Organizations must institutionalize paranoia even at the peak of success.
Lesson 3: Software Platforms Trump Hardware Excellence
Nokia built the best mobile phone hardware in the world but lost to companies with superior software ecosystems. In technology markets, platforms that attract developers and enable network effects often defeat superior point products.
Lesson 4: Internal Politics Can Kill Companies
Nokia's fall was as much about organizational dysfunction as technological disruption. Fear cascaded through the organization, preventing honest assessment of competitive threats. When middle managers are afraid to deliver bad news, companies lose their ability to respond to change.
Lesson 5: Patents and Research Create Durable Value
Even after losing its mobile phone business, Nokia retained valuable patent portfolios and the Bell Labs research organization. These assets provided the foundation for reinvention. Investments in fundamental research create options for future transformation.
Lesson 6: Geopolitics Shape Technology Markets
Nokia's current competitive position is inseparable from the US-China technology conflict. Western governments' decisions to exclude Huawei from 5G networks created opportunities for Nokia and Ericsson. Technology investors must consider geopolitical scenarios in their analysis.
XII. Conclusion: The Reinvention Machine
In 1865, Fredrik Idestam could not have imagined that his paper mill would become a symbol of Finnish innovation, rise to dominate global mobile communications, crash spectacularly, and emerge as an infrastructure company powering the artificial intelligence revolution.
Nokia's story is not finished. The company faces real challenges: intense competition, market contraction, and the need to execute yet another strategic transformation. But it also possesses genuine assets: Bell Labs' research capabilities, strong positions in optical and IP networking, the NVIDIA partnership, and institutional expertise in telecommunications built over decades.
"It's impossible to imagine the past 100 years without Nokia Bell Labs, and it's difficult to imagine the next 100 years without it either," said Nishant Batra, Nokia Chief Strategy and Technology Officer.
For investors, Nokia represents a bet on multiple propositions: that AI will drive a supercycle in network infrastructure investment; that Western governments will continue preferring Western vendors; that Nokia can successfully pivot to software and AI-native networks; and that the company's research capabilities will generate future competitive advantages.
The paper mill from the banks of the Nokianvirta river has traveled an extraordinary distance. Whether it can successfully navigate the AI era will determine whether Nokia's remarkable story continues—or whether the world's greatest corporate phoenix has finally exhausted its capacity for reinvention.
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