They created the first phone you liked. What is Nokia doing now?

The Finnish giant missed the smartphone revolution. Now he is going to equip the new world with romo mobiles and telemedicine.

The author of the article evaluates a VR demo on cellular equipment with low latency



We can say that Nokia has been working in the communications technology business for a hundred and fifty years. “It can be said”, because for this you need to consider the company's original product - paper, as a means of communication. You also need to know that Nokia Corp. still exists.



For those who, with the word “Nokia”, recall mobile phones with nostalgia, this may not be so obvious. For 14 years, the technology giant has been the largest handset maker and the main engine of the Finnish economy. The fall of the company was quick. In 2012, she lost $ 4 billion. In 2013, she agreed to sell the phone business from 32,000 employees of Microsoft Corp. “Obviously, Nokia does not have the resources to finance the acceleration of the development of mobile phones and smart devices,” said the company's chairman of the board, Risto Siilasmaa, announcing the sale.



But although Nokia has decreased, it has remained a large company, with total revenues of $ 26.1 billion over the past year. However, now it is very different from the one that existed in the heyday of simple, reliable and touching thick phones. It practically does not produce things that consumers would buy. Today, the familiar logo of capital letters can be seen on network processors, routers, base stations for radio access, and other components of the invisible infrastructure that underlies the mobile Internet.



The challenges Nokia has to solve in order to meet the ever-growing demands of the world for data are devilishly complex. In parallel with competitors, including the Swedish Ericsson (another faded leader in the world of mobile phones) and the Chinese Huawei Technologies Co. (a more modern competitor), the company reevaluated a modest cellular tower using sophisticated software that directs data beams to individual users while they are moving.



The next two years will be a particularly important time for Nokia as the industry begins to push the next generation of wireless networks. The so-called 5G networks will bring faster data. According to the company and its competitors - the developers of the underlying technology equipment - these changes will lead to the emergence of a completely new type of mobile technology. Robomobi, telemedicine, workplace automation and much more that we still can not imagine. “I want us to be a company that helps big industrialists go digital,” says Nokia CEO, Radzheev Suri. Betting on 5G is the largest for the company since its departure from the telephone business. If she does not play, they will have to reinvent themselves again.



Nokia is older than Finland itself. The woodworking enterprise, from which the company began, was built in 1865 near the city of Tampere in the south-west of what was at that time the great principality of Finland within the Russian Empire. In 1917, Finland gained independence, but the country's economic condition was shaped on the basis of its proximity to Russia. Finland became an ally of Nazi Germany against the USSR during the Second World War, and after it was forced to pay large sums to the USSR for reparation. Today, the Finns are ready to remind you that their country paid the full amount of $ 300 million (in dollars in 1938), and Stalin's requests for trucks and trains forced Finland to move from a predominantly agrarian economy to an industrial one.



Nokia was at the center of this transformation. By the beginning of the 20th century, the company had already diversified into the generation of electricity, the manufacture of wires, telephone cables, rubber tires and shoes. By the second half of the century, it was already a conglomerate that produces everything, from television sets to gas masks. By the 1960s, Nokia began producing radios for police and military. In 1982, she released a car phone and entered the network business with a digital relay for telephone switches. In the late 1980s, she began to transfer more and more resources to the nascent mobile phone business.



Its success can be attributed in part to the development of a system such as the Nordic Mobile Telephone . Government committees responsible for regulating communications in each of the Scandinavian countries worked together to create a common platform so that early users of the system could travel to neighboring countries and stay connected. This system was analog, not digital, but it was able to solve the problems of detecting moving subscribers, and transferring them from one cell tower to another. Every G that has existed since then, including 5G, is a successor of NMT.



At first, Motorola dominated the emerging global industry, but Nokia overtook it in 1999, partly because of the transition to a faster and safer digital system, while its American competitor clung to the analog one. “Nokia has been involved in such risky things for decades,” says Tero Kuytinen, co-founder and chief strategist of the Finnish company Kuuhubb, which invests in mobile apps. “When Nokia actively entered the mobile phone market in the early 90s, many claimed that she had lost her mind because she had previously made cables. And when they decided to switch from analog to digital in the mid-90s, many believed that it was too aggressive a move. ”



The significance of Nokia for the Finnish economy and national identity is difficult to overestimate. The rise of the company brought the country out of the depression, which occurred in particular because of the collapse of the USSR, the largest trading partner. In 2000, Nokia was responsible for a third of the increase in GDP. Taxes paid by the company and many local suppliers supported the country's generous social programs and one of the best education systems in the world. Nokia accounted for about a third of the country's advanced research and development funding. At that time, Finland spent more of its GDP on research and development than almost any other country in the world, says Jari Gustafson, the Deputy Minister for Economy and Employment of Finland.





Nokia Headquarters in Espoo



But Nokia, who quickly saw the benefits of digital networks, was too slow to respond to the promises of smartphones. The high cost of touchscreens has forced the company to choose their cheap versions or to abandon them altogether. Even in Finland, users complained that they had to thresh on it to make the Nokia touchscreen work. Complicated menus looked too fanciful compared to the elegant controls of the iPhone, and then with the applications. Apple Inc. and Korean manufacturers Samsung Electronics Co. and LG Electronics Inc. left Nokia far behind.



Nokia’s problems have become Finland’s problems. The drying out of the country's largest company and its suppliers has added problems to an economy that has already suffered from the high cost of labor and social security payments. The country was not able to devalue its currency to stimulate demand because of its membership in the euro area. Finland has entered a period of stubborn stagnation, from which it is beginning to emerge only now.



When Siilasmaa was appointed head of the board of directors in 2012, he recalls, “we were in a very difficult position from many points of view.” He sits in a room on the first floor of the company's headquarters in Espoo, the country's second-largest city after Helsinki. Now the beginning of June and here is exactly the weather that the Finns are waiting for during the long and dark winter.



Siilasmaa founded the local cybersecurity company F-Secure Corp., and when he was lured to Nokia, the phone manufacturer was in serious trouble. Telephone sales in the second quarter of 2012 fell by 26% compared to the previous, to $ 4.5 billion. “Our employees were demotivated due to the abundance of bad news. The press talked about when bankruptcy would come, ”he says. Siilasmaa helped the company sell Microsoft, which already supplied the OS for Nokia phones. Nokia’s CEO, Stephen Elop, who came from Microsoft, went back along with the phone business, and Silasmaa took his place as interim director.





Modern Nokia Base Station



The deal has become a national injury for Finland. It was also the best way to take advantage of a bad and rapidly deteriorating situation, a way to free a company so that it concentrated on income-generating equipment for wireless providers. Prior to that, Suri managed the business as a joint venture with Siemens AG. After gaining control in 2009, he changed the situation from losses to 12% of operating profitability, cutting costs and focusing on the United States, Japan, South Korea and other rich markets. By mid-2013, Nokia bought all the shares from Siemens. “The devices sold by the business have become the basis of the new Nokia,” says Suri. At the time, as Siilsmaa says, the directors were wondering whether to buy part of a small French competitor, Alcatel-Lucent SA. Last year, Nokia bought the entire company.



Nokia phones have not disappeared without a trace. Last year, Microsoft, whose phone business was no better than that of Nokia, sold it to a division of the Chinese manufacturer Foxconn Technology Group. Together with the Finnish company HMD Global Oy, Foxconn creates a line of cheap and medium-sized phones and tablets under the brand nokia. The first phones running Android OS are on sale this year. Nokia has retained its intellectual property rights for the benefit of itself - it has become a good source of income and a subject for disputes. The company constantly sued Apple about these patents, the most recent of these battles ended only in May. Companies announced that Nokia will provide network services for Apple, and some Nokia products will be sold in Apple stores.



But most of Nokia’s profit comes from sales to wireless service providers, such as Verizon, AT & T, T-Mobile, Korea Telecom and Deutsche Telekom, all they need to ensure communication between customers: radio transmitters, routers, servers, antennas and software under whose control they work. The company establishes networks, checks them, and even manages them for a certain commission. After buying Alcatel-Lucent, Nokia now sells the so-called. fixed systems used by cable providers to organize data access to homes.



And although mobile providers must constantly replace and update parts of the infrastructure, the gold mine will be a situation in which it is possible to convince everyone to start upgrading to a new generation platform. Each of the “generations” is just a set of technical requirements, developed in a series of international meetings, providing the opportunity for communication between all types of equipment - servers and routers, transmitters and telephones. Requirements for 5G, which must be fully developed during the year, will include improvements in download speed, reliability, the number of devices supported at a particular site and reduced waiting time. Verizon, AT & T and T-Mobile announced tests in selected US cities, and South Korea Telecom promised that it would launch the system before the Winter Olympics were held there.



The general opinion is that the obstacles to the implementation of 5G can be solved, although they are quite complex. According to Lori Oksanen, head of Nokia’s R & D department, "the narrowest part is the air between the antennas and your phone." His researchers are working on several interrelated technical patches that can eliminate this congestion. Part of the solution is to switch to free, even higher frequencies of the radio spectrum. Nokia and competitors are developing antennas capable of transmitting data in the part of the spectrum between microwaves and infrared waves - this frequency is much higher than that used in most mobile phones. The tradeoff is that the higher the frequency, the shorter the wavelength, so millimeter waves cannot pass through walls, trees, or people. According to Oksanen, even the plastic cover of the antenna can prevent such a signal. This means that providers will have to poke small antennas everywhere - on lanterns and roofs, as well as inside buildings. This process will require the conclusion of contracts with property owners - one of the obstacles to 5G, not related to strictly technological.



Oksanen's team will make smarter and more effective antennas that used to be blunt metal masts. The speed of the systems is determined by the software, which redistributes signals and data using complex schemes. Adjusting compliance with the 5G standard is a matter of improving the technologies that the company already has. One of them, " massive MIMO " - multiple input, multiple output - is capable of including a huge number of very small antennas in arrays using software that coordinates them so that data transfer can be distributed faster and more reliably.



Another technology, beam forming , directs the cellular signal to a specific zone as if a spotlight beam, and is capable of tracking even a single user, instead of spreading the signal throughout the severity. This is achieved by controlling the time of transmission of signals from different antenna elements. “By feeding the signal to the antenna, you can change the phase of the signal at each of them. And without physical rotations of the equipment, the direction of the radio beam can be rotated with the help of phase shifts between antennas, ”says Oksanen, holding up a hand depicting an antenna array. "I think how to depict it more clearly, but you will probably have to just believe me."



It is not yet known whether consumers will be able to notice the increase in speed promised by Nokia and its competitors. The main theme of the World Mobile Congress in Barcelona this spring was the discussion of whether 5G is a revolution or just marketing hype. Suri understands skepticism. For the average user, an iPhone or Android 4G already has a fairly low latency. “Today the network latency is 50 ms. If it decreases to 1 ms, then it will be possible to download the movie in three seconds, ”he says. “It will be nice, but I don’t think that we are ready to pay much more for this.”



The real possibilities of 5G, in his words, lie in other areas: an increase in speed can help improve the coordination of robots and automatic trucks. Robots in factories can be detached from cables, which will allow assembly lines to become more flexible. Houses can be connected to the Internet without wires, which will bring competition to the oligopolistic cable services market. There is already talk of remote surgery with the help of robots.



According to some analysts, the problem with these seductive examples is not only that they are still hypothetical. Even if they are implemented, they will not require a switch to 5G and other network upgrades that Nokia is counting on. “Saying: 'Build networks, and customers will appear,' very well, if you build a baseball field on a cornfield,” says Bill Ray, director of research company Gartner. "But you are asking companies to invest many millions of dollars." According to him, all the futuristic applications of 5G, which Nokia and its competitors are talking about, can work fine on modern networks together with Wi-Fi.



Of course, the same generation of skepticism was accompanied by the previous generation of wireless communications, and the Nokia management is confident that requests for faster, richer and ubiquitous data transfer will grow. Companies need it. Even after the deal with Alcatel-Lucent, Nokia cannot catch up with Huawei in network equipment sales, and the business has slowed down in recent years, as companies have cut their spending on purchasing equipment to migrate to 5G.



The company is also trying to return to the consumer electronics segment. Last year, she bought the French company Withings, which develops good fitness trackers, thermometers and devices for tracking children - now they do it under the Nokia brand. The company has just started selling the Ozo virtual reality camera worth $ 40,000 - for professional filming for now. Such technology as virtual reality can take users beyond the limits of 4G capabilities, because in order to maintain the illusion of immersion and prevent unpleasant user experiences, tremendous speeds and a very small delay are required. If Nokia’s growing catalog of tools and toys pushes people to request high speeds, then for 5G architects, that’s fine. And if the company can create products that ordinary people want to buy again, even better.