Nokia 2004 Annual Report Download - page 24

ITEM 4. INFORMATION ON THE COMPANY
4.A History and Development of the Company
Nokia is the world’s largest manufacturer of mobile devices and a leader in mobile networks.
Nokia connects people to each other and the information that matters to them with mobile
devices and solutions for voice, data, imaging, games, multimedia and business applications. We
also provide equipment, solutions and services for our operator and enterprise customers. For
2004, Nokia’s net sales totaled EUR 29.3 billion (USD 39.6 billion) and net profit was EUR 3.2 billion
(USD 4.3 billion). At the end of 2004, we employed 55,505 people and had production facilities in
nine countries, research and development in 12 countries, sales in over 130 countries, and a global
network of sales, customer service and other operational units.
During our 139-year history, Nokia has evolved from its origins in the paper industry to become a
world leader in mobile communications. In 1967, we took our current corporate form as Nokia
Corporation, a corporation under the laws of the Republic of Finland. This was the result of the
merger of three Finnish companies: Nokia AB, a wood pulp mill founded in 1865, which took its
name from the nearby Nokia River; Finnish Rubber Works Ltd, a manufacturer of rubber boots,
tires and other rubber products founded in 1898; and Finnish Cable Works, a manufacturer of
telephone and power cables founded in 1912.
Nokia entered the telecommunications equipment market in 1960 when an electronics department
was established at Finnish Cable Works to concentrate on the production of radio transmission
equipment. During this time Nokia diversified into other industries as a hedge against economic
cycles.
In the 1980s, we strengthened our position in the telecommunications, consumer electronics and
personal computer markets. We introduced the first fully digital local telephone exchange in
Europe in 1982 and the world’s first car telephone for the Nordic Mobile Telephone analogue
standard that same year. Since then, Nokia has introduced mobile phones across all major cellular
standards. In 1987, we acquired the consumer electronics operations and part of the components
business of Standard Elektrik Lorenz of Germany, as well as the French consumer electronics
company, Oceanic. At the beginning of 1988, Nokia became the largest technology company in the
Nordic region after the purchase of Ericsson’s information systems division.
Basic industry and non-telecommunications operations including paper, personal computer,
rubber, footwear, chemicals, power plant, cable, aluminum and television businesses, were
divested during the period from 1989 to 1996. In the early 1990s, we made a strategic decision to
make telecommunications our core business, with the goal of establishing market leadership in
every major global market. Our organizational structure also evolved to consist of two main
business groups, Nokia Mobile Phones and Nokia Networks. A venturing arm called Nokia Ventures
Organization was later created to foster new businesses. Over the course of the decade, the
relative financial contribution of the two main business groups fluctuated. However, by the end of
the 1990s, Nokia Mobile Phones came to represent the largest part of our business, and together
with Nokia Networks accounted for substantially all of our net sales.
Finland’s competitive business climate and emphasis on innovation have contributed to our
success. From the beginning of the telecommunications era, there have been several
telecommunications operators in Finland. These companies were not required to purchase
equipment from national suppliers, providing a spur to competition in the domestic market. The
need to export products to other markets to achieve substantial volume growth encouraged us to
develop our business and products in an international environment and build a leading
competitive position.
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