If you look around Europe for countries to backstop Germany in the deepening crisis, you’ll find there are very few. You might read of a Euro zone of 17 countries, but, in fact, these are mostly minnows. The countries that stand behind Germany are France and Italy, one with an inflexible labor market, hampering recovery, the other on the point of its own crisis.
Behind these two come smaller countries like Holland and Finland, both of whom are heartily sick of Germany’s bailout program. Of these Finland is having to rewrite its history almost as fast as Spain.
Finland’s GDP is about $238 billion. It grew steadily from the mid-1990s onwards and peaked about three years ago. That trajectory is roughly in line with Nokia’s growth and decline, though of course Nokia is falling faster. Since the early 2000s Nokia has contributed between 4 and 6% of Finland’s GDP. Nokia and mobility are both very important to a country that has grown spectacularly but solidly over the past twenty years.
But perhaps as important for Europe as a whole Nokia has been a major contributor to know-how, both through its investments in R&D and the way it has shared market knowledge with its partners. Nokia remains, just, an emblem of Nordic innovation. And as its decline continues, the alarm bells ring around not only Finland but Sweden, Norway and Denmark too (none of whom are in the Euro). The Nordic’s rely on advanced engineering for their industrial culture, though they have known for some years now that an R&D dependency is lazy and increasingly ineffective. But that’s the way it is.
What has this to do with Android and Apple? The first breach in Nokia’s dominance of mobility came as early as 2004 when mobile devices first became commoditized. The development of the iPhone began in 2005, as American computing companies began to see an opportunity in the service layer around mobile. In the same yearGoogle bought Android, and moved the mobile OS to an open source development model in 2007, the year of the iPhone launch. Nokia had a new class of competition.
But during that period Nokia had the option of joining Android’s Open Handset Alliance and steadfastly refused. Instead, Nokia announced it would purchase and then open source its own smartphone operating system, Symbian. That was 2009. The rest has been a sorry history for Nokia. Applehas dominated profitability in the smartphone sector, Samsung overtook Nokia as the world’s largest handset maker, and now comes second to Apple in smartphone profitability.
Hindsight is wonderful but even so it is hard not to conclude that Nokia should have become an Android partner and increased its options in the device market – primarily it would have given it the advantage of better interface usability a lot earlier and perhaps, more tellingly, introduced the company earlier to the new ecosystem economics.
The broader lesson for business though is that strategic options are critical, a point Nick Vitalari and I make in The Elastic Enterprise – Nokia, Palm and RIM left themselves without options or postponed their options deep into the future, with catastrophic results. But there is lesson here also for politicians. Europe’s problems extend to its competitiveness. Not since the mid-1980s have Europeans strategized their long term industrial policy successfully. Instead they have focused on political issues, such as refocusing economic activity around ecological research, and latterly the Euro and integration.
In the meantime some very simple decisions have gone against one of its main champions. The consequence is that Finland’s leaders have now joined the group of Euro zone countries who are least likely to support any further bailouts of other countries – the main reason being, they see their own vulnerability in the real economy and that real economy will not go away, as much as Euro leaders would like to think the answers lie in protecting the Euro project.