The rise and fall of Nokia: How Nokia’s top engineers pushed the company to the brink


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Tuesday, 05 July 2011
In the heydays of Nokia, which is in 1997s, suddenly 45 Nokia’s top engineers created their own companies, with the intention to work for Nokia's biggest competitors but that move later backfire. This was a bold move that would have tipped Nokia off the cliff long ago.

A new revelation today about how Nokia has survived the threat of destruction in the past was made today by reports in various Finnish press on Tuesday. It show how an undercover manoeuvre was brewing within Nokia, the pain of its success that could have push Nokia to real disaster, documents seen by reporters in Finland on Tuesday show.
In 1997, Nokia's shares were more valuable than ever and the trend of growth and power pointed straight up. But behind the scenes was a power game that was creating serious problems for Nokia.

Nokia did their best to develop its first dual band mobile phone to be able to break through on the U.S. market. At the same time 45 key people of the company founded secretly their own cell phone company. The brain behind it all was Nokia’s top engineer and product developer Jyrki Hallikainen.

The intention was that he would start selling its technical expertise to Nokia's competitors, Philips and Ericsson. IT-entrepreneur, Thomas Zilliacus who worked at Nokia until 1996 is well aware of this manoeuvre.
“The thing was discussed actively within Nokia since Hallikainen took important engineers to effectively create a direct competitor to Nokia. The consequences could have been very serious if the manoeuvre succeeded, said Thomas Zilliacus because Nokia managed to avert the coup


The planning went on for about half a year, but Nokia's leadership sensed something. It was discovered only after the 45 engineers resigned in July 1997. Nokia's leadership reacted strongly and called it the most brazen manoeuvre in Finnish economic history.

Hallikainen offered to continue working with Nokia, but at a price of $200 million a year. This was too expensive for Nokia, which turned it down. Instead, Nokia started a rapid re-recruitment and managed to stop the cooperation between Philips and Hallikainens companies. Slowly Hallikainens team fall apart and more and more began to return to Nokia.

Then Jyrki Hallikainen was left alone and the whole manoeuvre was running out of steam because Nokia had also begun a legal process. Thomas Zilliacus notes that there is always risks of similar magnitude in the IT industry, but believes that the situation of Nokia's part looks different today.

Nokia’s lost of leadership to iPhone is yet the engineer coup in 1997 and not a problem on Nokia's part. In the early 2000s a bunch of engineers from Nokia started the company MyOrigo which developed a forerunner of today's iPhone. Also this time there was Jyrki Hallikainen behind the scenes with one of his new company.

“They developed a mobile phone with touch screen and other features that are very similar to today's iPhone. If the engineers had not supported Nokia and Nokia in turn shown greater interest in their new phone, Nokia would have been able to launch a counterpart to the Iphone ten years earlier than Apple,” says Thomas Zilliacus.
By Team

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