From Bankruptcy to NVIDIA's $1B Bet: The Nokia Resurrection

Nokia's Transformation: From Bankruptcy to AI Partnership

The Fall of Nokia

• On July 18th, 2012, Nokia's stock plummeted to €1.33, marking a significant decline where the company lost 98% of its value.

• Despite facing inevitable bankruptcy, Nokia sold its phone business to Microsoft and acquired a French-American telecom giant, initiating a decade-long transformation.

Historical Background

• Founded in 1865 by Frederick Edustam in Finland, Nokia began as a paper mill before evolving into various industries including rubber and cables.

• In 1979, Nokia entered the mobile phone market through a joint venture called Moira, releasing their first car phone in 1982.

Rise to Prominence

• Under CEO Jorma Ola in 1992, Nokia shifted focus solely on mobile phones amidst the rise of digital cellular networks.

• By 2000, Nokia accounted for 4% of Finland's GDP and dominated the Helsinki stock market with a market cap of €303 billion.

Market Dominance and Challenges

• The release of the indestructible Nokia 3310 in 2000 solidified their position as they controlled nearly 40% of the global mobile phone market by 2007.

• The introduction of Apple's iPhone in January 2007 posed a significant threat; internal assessments recognized it as a serious competitor despite initial dismissals from management.

Missteps and Decline

• Management underestimated the iPhone’s impact; by late 2007, while Nokia held onto half of the smartphone market share, Apple was rapidly gaining traction.

• The launch of HTC and Google's Android further fragmented the market; competition intensified beyond just Apple.

Failed Innovations

• In response to competition, Nokia launched N97 in 2009 but faced backlash due to poor user experience and an inadequate app ecosystem.

• An apology from executive VP Anie Vanjoki highlighted consumer disappointment with N97’s performance.

Leadership Changes and Strategic Shifts

• Steven Elop became CEO in September 2010; his famous "burning platform" memo outlined urgent changes needed due to competitive pressures from Apple and Android.

• Elop chose Windows Phone over Android for differentiation purposes but publicly declared Symbian dead which led to immediate sales declines.

Consequences of Strategic Decisions

• Following Elop's strategy shift towards Windows Phones resulted in dismal sales figures compared to competitors; by his departure in 2014, Nokia's smartphone market share had dropped below 3%.

Nokia's Transformation: From Collapse to Innovation

The Decline of Nokia

• In 2000, Nokia's stock peaked at €65 but plummeted to €1.33 by July 2012, marking a 98% collapse and pushing the company towards bankruptcy.

• By May 2012, Risto Silasma became chairman during a critical period when revenues dropped another 20%, and operating losses reached €2.3 billion.

• Silasma's strategy involved drastic changes likened to dismantling an airplane mid-flight; initially resistant to selling the phone business, he later recognized it as essential for survival.

• Microsoft announced its acquisition of Nokia’s phone business for $7.2 billion in September 2013, marking a significant shift in Nokia's focus.

• Prior to this deal, Nokia bought out Seammens' half of their network infrastructure joint venture for €1.7 billion, allowing them full ownership.

Strategic Repositioning

• After selling its phone division, Nokia emerged with $7.2 billion in cash and retained control over its patents and network business.

• Rajie Suri became CEO in May 2014; he aimed to expand the profitable network division into a larger entity amidst competition from Ericsson and Huawei.

• To compete effectively, Suri recognized the need for end-to-end networks rather than just wireless solutions.

• In April 2015, Nokia announced plans to acquire Alcatel Lucent for $15.6 billion to gain missing components like IP routing and optical transport capabilities.

• The acquisition included Bell Labs, enhancing R&D potential crucial for leading advancements in 5G technology.

Advancements and Market Challenges

• By January 2018, Bell Labs developed the Reef Shark chipset that significantly improved bandwidth while reducing power consumption; this attracted interest from multiple operators.

• The U.S. government banned Huawei from American networks in May 2019 due to security concerns, creating opportunities for competitors like Nokia.

• Following Huawei's exclusion from major markets like Britain and the U.S., Nokia secured numerous contracts including with BT and AT&T by October 2020.

• Despite initial successes in securing commercial deals for 5G technology, Nokia faced setbacks as major clients shifted contracts away from them starting in early 2025.

Future Prospects Amidst Competition

• On October 28th, 2025, Nvidia’s Jensen Huang highlighted America's lack of homegrown platforms for future technologies like 6G at a conference amid ongoing telecom industry challenges.

Nokia's Strategic Shift: From Smartphones to AI Infrastructure

The Partnership with Nvidia

• Nokia's unique infrastructure allowed for a seamless integration of AI workloads on Nvidia chips, unlike other vendors reliant on Intel architecture.

• Nvidia invested $1 billion in Nokia, becoming its second-largest shareholder, marking a significant commitment to the telecom sector.

• The collaboration aims to create AI-powered cell towers that not only transmit data but also process it, enhancing network efficiency and reducing energy consumption by up to 30%.

• This partnership is positioned as a pivotal move for both companies, with Nokia CEO emphasizing the return of telecommunications technology to the U.S. market.

• Following this announcement, Nokia's stock surged by 22%, indicating strong market confidence in their new direction.

Future Prospects and Market Impact

• Analysts predict that if successful, this partnership could allow Nvidia and Nokia to dominate the telecom market, potentially outpacing competitors like Ericsson.

• The anticipated growth of the AI-driven market is projected to exceed $200 billion by 2030, highlighting significant future opportunities for both companies.

Key Decisions Behind Nokia's Resilience

Selling Core Business

• In 2013, Nokia sold its phone business to Microsoft for $7.2 billion; critics viewed this as detrimental at the time but it ultimately allowed them to divest from a failing venture.

Investing in Growth

• Instead of using their cash reserves for survival tactics post-sale, Nokia invested €15.6 billion in acquiring Alcatel Lucent, aiming for transformation rather than mere survival.

Leveraging Existing Assets

• Rather than pivoting entirely into new areas, Nokia capitalized on its existing network infrastructure business which had been quietly operating as a joint venture since 2007.

Conclusion: Lessons from Nokia’s Journey

• Despite losing the smartphone battle, Nokia’s strategic decisions have positioned it as a key player in developing future telecommunications infrastructure focused on real-time AI processing capabilities.