In the northern skunk works called Finland, the 21st century is in beta: It's a call-anytime, roam-anywhere, use-any-protocol kännykkä world


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Just Say Nokia

In the northern skunk works called Finland, the 21st century is in beta: It's a call-anytime, roam-anywhere, use-any-protocol kännykkä world.

By Steve Silberman

The city is alive with plots. The normally calm, clean-swept streets and alleys seethe with deception and murder. In a storm drain - an escape route known only to local mafiosi - a double agent uplinks stolen nuclear-trigger specs to a Chinese operative on a mobile phone. Near the railway station, another call seals the fate of a diplomat.

Feared nemesis of the KGB, Iiris Konttinen is disarmingly articulate in any language she chooses. One day she was spotted in several countries - East Germany, Turkey, and Czechoslovakia - on a single afternoon. Then, the machine guns were cucumbers, the pistols bananas, and the long-range artillery planks of wood. Today, the Mannerheimintie, the broad central avenue that runs down the center of Helsinki, is the Berlin Wall. Checkpoint Charlie is a tunnel under the street. But the mobile phones play themselves.

Iiris Konttinen is the future - not just the future of Finland, but of the networked world. At 16, she is one of only two students in her English class at Ressu Comprehensive School who doesn't own her own mobile phone yet. Like the other kids who joined her in creating the role-playing game called East Berlin Rush Hour, she's already thriving in two parallel universes. One is her native Helsinki (called by locals simply Stadi, "the city"), where dusk lingers at the horizon until midnight in spring and all the beautiful glassed-in phone booths are empty. The other is a new social landscape that her peers are creating using the mobiles - no one calls them cell phones here - and mapping over the streets of Stadi.

In the last couple of years, Finnish teenagers have quit referring to mobile phones as jupinalle - "yuppie teddy bears" - and started calling them kännykkä or känny, a Nokia trademark that passed into generic parlance and means an extension of the hand. The ubiquitous kännys, with their custom ringing tones broadcasting chipmunked miniatures of pop hits, have transformed the ways young Finns roam the city. They've taken a feature first introduced by Nokia in 1992 - Short Message Service (SMS), a form of email you can send from phone to phone - and made it their primary means of mobile communication. Like schools of fish, kids navigate on currents of whim - from the Modesty coffee bar to the Forum mall for a slice of pizza or a movie to a spontaneous gathering on a street corner, or to a party, where SMS messages dispatched on the phones summon other kids or send the whole group swimming somewhere else.

While her father's generation maps out the mergers and rollouts that will write tomorrow morning's Financial Times, Konttinen and her role-playing friends are already using wireless technology to script shared dreams.

Last year, more mobile phones were sold worldwide than automobiles and personal computers combined. Out of the 165 million phones sold, 41 million were made by Nokia. And the market is nowhere near saturation. In Finland, the number of subscribers to mobile-phone services has already leapfrogged over the number of fixed-line subscribers. Ericsson estimates that the total number of wireless subscribers will grow to 700 million by 2002. A year after that, Motorola believes, the market will hit 1 billion.

Nokia alone employs many more engineers than Finland - with roughly the population of Dallas-Fort Worth - can train. Though a ravaging recession in the mid-'90s still lives in the collective memory, Nokia's surging growth now accounts for more than half of the activity of the Helsinki stock market. One telecom entrepreneur here, Mikael Roos of Softline Technologies, told me, "Nokia has validated the whole idea of Scandinavian companies playing an important role in the development of the global market. When we travel now, it's easier for us to be accepted. People listen."

Nokia sells 75 percent of the mobile phones bought in Finland, but for Konttinen and her peers, there may as well be only one brand of phone. "Here in Finland, Nokia is an absolute," Eetu Mäkelä, one of three young gamemasters who orchestrated East Berlin Rush Hour, told me in an email. "Only Nokia designs look like mobile phones to us." Just saying the name Nokia - properly accented on the first syllable - gets home-team grins from teenagers in the Ressu schoolyard. (Imagine a mention of Microsoft causing skateboarders in a Seattle mall to burst out in high fives.) And the phones are only the most visible face of Nokia's story. One-third of its $15 billion-a-year business is infrastructure: the base stations, switching networks, and software the company sells to telecom operators to set up their own mobile networks. In places like rural Africa, where scavengers dig valuable copper wires out of the ground, it's cheaper to set up a few base stations, and hire guards to stand around them 24 hours a day, than to lay in a fixed-line network. With markets in 140 countries, Nokia is thriving under more flags than McDonald's.

Founded in 1865 by an engineer who opened a pulp mill north of Helsinki, Nokia meant durable rubber boots, cables, and toilet paper to previous generations of Finns. The company weathered several dark nights of the soul before coming of age in the late '90s: A series of logistical blunders in 1995 cut the value of Nokia stock in half, forcing company-wide reorganization to increase communication among its many divisions. In 1988, Kari Kairamo, Nokia's CEO, committed suicide. Kairamo believed Finnish manufacturers like Nokia could ride the consumer-electronics wave into the global marketplace. He was right, but the scope of the vision needed to be narrowed. By lopping off other product lines (like TV sets, cables, and PCs) and maintaining a laserlike focus on digital phones and networks, Nokia boosted its market cap from $1.7 billion in 1988 to $70 billion last year, when the company edged past Motorola to become the world's leading manufacturer of mobile phones.

In many ways, the story of Nokia's success is the story of the digital-telecom standard that helped create a unified European mobile market in the '90s: the Global System for Mobile Communications. The widespread adoption of GSM was not locked in from the start. In development from 1982 on, the project was dubbed the Great Software Monster by engineers debugging the slew of new applications required to support such ambitious features as international roaming, call forwarding, and SMS messaging.

Kännykkä - slang for mobile phone - means an extension of the hand.

In 1989, Nokia and two Finnish telecom operators made an alliance to get the first GSM network up and running. Fearing they would go out of business competing as providers of analog mobile services with Telecom Finland - which had a long-standing, state-sanctioned monopoly on long distance calls - the Helsinki Telephone Corporation and the Tampere Telephone Company formed a company called Radiolinja. Radiolinja bought $50 million of infrastructure from Nokia, though the startup didn't even have a license for its new network.

Jorma Ollila, who had been brought into the company by Kari Kairamo, became the head of Nokia's mobile-phone division in 1990. "The GSM project was in disarray. There was a lot of disillusionment with the spec and the difficulty of the technology," he recalls. "People were saying we wanted a racehorse, but some committee got into the design process and we ended up with a camel. But we continued because we believed in digital." Ollila appointed a new manager for the GSM team.

On July 1, 1991, the first call ever placed on a commercial GSM network was made by the prime minister of Finland - on a Nokia phone. "There was a lot of difficulty, a lot of pain, a lot of soul-searching before we got there," says Ollila. His turnaround of the GSM project sufficiently impressed the Nokia board that they made Ollila the CEO a year later.

When Nokia poured its resources into GSM, it was a moderately successful company from a small country betting against billions of dollars of entrenched infrastructure and a widely accepted standard. GSM took off - not only all over Europe but also in Asia, Latin America, and elsewhere.

Now Nokia is taking a leadership role in the development of third-generation wireless services, or 3G. In telecom speak, analog cellular was the first wave, and digital networks the second. The third generation of data and voice communications - the convergence of mobile phones and the Internet, high-speed wireless data access, intelligent networks, and pervasive computing - will shape how we work, shop, pay bills, flirt, keep appointments, conduct wars, keep up with our children, and write poetry in the next century. Every buyout and consolidation in the headlines leads us into a realm of essential questions about the roles communication and connectedness will play in our lives as the Net and the phones in our pockets converge.

Nokia and the Finns, inseparable from their kännykkäs, somehow got there first. To understand where we're headed, we need to understand who they are.

"We're basically a company from nowhere. Finland? That's a town in Minnesota, isn't it?" Anssi Vanjoki is exaggerating, but as senior VP of Nokia's mobile phone division in Europe and Africa, he's smiled politely through his share of clueless questions about where he's from. Partly owing to canny product placements in films like The Saint and The Matrix, a Finnish official remarked last year, Nokia is now more widely known across the globe than Finland itself. A surprising number of savvy people still think that Nokia is a Japanese company - an accident of Finnish phonetics and the fact that the brand name shows up on small, sleek consumer electronics products that work. (Nokia does have an outpost in Tokyo, along with satellite offices and laboratories in Beijing, Boston, Budapest, Copenhagen, Dallas, London, Paris, Singapore, South Korea, and Sunnyvale, California.)

The Web may be pulling us like a magnet toward shared global standards, but many of the decisions that carved out bands of available radio frequency for cellular services, and determined local protocols for voice and data transmission, were set 10 or even 20 years ago. The result is the confusing proliferation of the three- and four-letter network systems that make mobile phones work, from analog-era AMPS to the digital GSM used throughout most of Europe to more recently promoted data-friendly standards like TDMA and CDMA.

To the Japanese, Nokia markets snappy little retro Lifestyle phones that let you communicate over Japan's PDC network and dial by voice, rather than use kanji. Nokia markets its 5100 series in South Korea, where the government mandated a switch from analog AMPS services to digital CDMA to give homeboys Samsung, Lucky Goldstar, and Shinsegi a strategic advantage in the emerging world market. For European frequent flyers, Nokia furnishes everything from dual-mode GSM 900/1800 phones to the Communicator, the first handheld device that lets users make calls, surf the Web, and transmit data and faxes. To the welter of competing systems in the US, Nokia serves up phones that work on TDMA, CDMA, GSM, and analog networks.

A surprising number of savvy people still think that Nokia is a Japanese company.

In a holy war of acronyms, Nokia is like an arms dealer, quietly selling munitions to every side. Other manufacturers haven't been so quick to think out of the box. Motorola came out with the eminently pocketable StarTAC - which every gadget groupie in the Valley flashed around for a couple of months - but was late to the digital convergence. Playing catch-up, Motorola signed a deal in May with Bell Atlantic Mobile to ship a million CDMA phones. Ericsson excelled in TDMA-based technologies, but also "missed the boat when CDMA took off," says Naqi Jaffery, wireless-industry analyst for Dataquest. Ericsson was able to recover when it wisely ended a two-year patent dispute with Qualcomm by buying the company's CDMA division in a highly publicized deal last March. "Nokia's advantage is that it has been involved with all of these technologies from the beginning," Jaffery observes.

"Nokia is all over the world - it learns what's good in every culture it works in, and combines it all," says Johanna Lemola, my guide in Helsinki, who is also the city's official spokesperson. With a Finnish weakness for assonance, Nokia president Pekka Ala-Pietilä calls his company's readiness to adapt to local conditions "selecting horses for courses." As digital cellular breaks into markets like Russia and China, where fixed-line phone service never gained a foothold, the company from nowhere is galloping everywhere.

Nokia's dream of a wireless information society is at least as old as the first phone call ever made to an automobile. In 1906, a radio engineer named Lee de Forest transmitted a message to an experimental phone in a car idling on a New York street: "How do you like your first wireless ride? The fire department, steamships, and railways ought to adopt the same method of communication." Not as dramatic as Samuel Morse's "What hath God wrought?", but the press release sent out by the president of De Forest Wireless turned out to be prescient. "Hereafter," he declared, "we hope it will be possible for businessmen, even while automobiling, to stay in constant touch."

For CEO Jorma Ollila, the creation of the third-generation networks is a matter of shaping tools that are more like us - always in motion and awake to their surroundings. I spoke with Ollila at Nokia House, the company's corporate headquarters in Espoo, a suburb of Helsinki on the Gulf of Finland. There are no dark corridors at Nokia House: The building is transparent to the sky and water, covered by a thermodynamically efficient layer of 26,000 plates of glass. Ollila, who earned graduate degrees in political science, economics, and technology before coming to Nokia, combines Finnish directness with an almost confrontational intensity. A look, tilted up through tortoiseshell spectacles, is a challenge, as if to say, "What have you got?" I asked him what the wireless information society would look like at the beginning of the next century.

"The desktop isn't going to die, but there will be tremendous flexibility in office work," he replied. "Many of the services - accessing information, making transactions, and working in a team - will happen in a wireless environment."

In 1998, Nokia, Ericsson, Motorola, and Psion (a British manufacturer of handhelds) formed the Symbian alliance, a private consortium for the development of 3G wireless systems. The Symbian strategy for the next generation of computing is to ratchet up bit rates in mobile-phone networks and marry those accelerated networks to the Internet. The goal, says Ollila, is "to put the Internet into every pocket."

From the focus on phones and networks that carried it to the top of the heap of second-generation manufacturers, Nokia is aiming high again, to take advantage of upgrades that operators will be building into mobile-phone networks all over the world in the next few years. The next wave of telecom products will employ three kinds of data and voice transmission - "three layers of radio," explains Pekka Lundmark, senior VP of Nokia's wireless-business-communication team - to remain in constant touch with the Net and each other. The comparatively slowest layer of coverage will be available anywhere you can use a mobile phone. A series of upgrades to mobile-phone networks in the next couple of years will bring bit rates from the current 9.6 Kbps to three times the speed of ISDN connections, or 384 Kbps.

The next notch up in speed, but with more limited areas of coverage, is wireless local area networks, which Nokia started selling for offices in July. Siphoning datastreams from this layer, a laptop computer will eventually be able to stay jacked into the company intranet and the Net at speeds up to 54 Mbps. Nokia is pitching wireless LANs to hotels and airports to create high-bandwidth "hot spots" where business travelers can log in, and the company foresees wireless LANs replacing cables in the home when prices come down.

The third layer is a limited-range, low-power radio network that will allow every device you carry in your pockets or briefcase to communicate with every other device in your immediate area. The Symbian alliance's protocol of choice for this "personal networking" layer is called Bluetooth.

The wedding of the Web and wireless has already begun, with Nokia's Communicator, the Palm VII, and the release this summer of mobile phones - like the Qualcomm QCP-1960, the NeoPoint 1000, and the Motorola i1000 Plus - that use Phone.com's UP.Browser and UP.Link Gateway with Wireless Application Protocol (WAP) to fetch and display data from the Net. With its wireless LAN products, Nokia took on a whole new army of heavyweight competitors of the IP world - the Ciscos, Lucents, and 3Coms. If Nokia can ride this next wave, it won't be the first time the Finns have stolen the future.

Even in the most wired country on the planet, wireheads get dissed. "The cultural mystery remains," the Helsinki Culture Guide muses, "why Finnish students of technology (teekkari) are so much fun, whereas our engineers are usually sour-faced and uninspiring bores." The authors couldn't have been thinking about Neuvo. Ruddy-faced and powerfully built, Neuvo, in his late fifties, radiates both optimism and pragmatism about the future. He comes from a family of scientists - there's an asteroid named after Neuvo, and a crater on the moon, Väisälä, was christened after his grandfather. The young engineers at Nokia love him. For 17 years, Neuvo was a professor of electrical engineering at the University of Tampere. He was perfectly happy as an academic, he says, enjoying visiting professorships abroad and racking up patents. By the time he turned 50, he had granted almost 200 master's degrees and 30 doctorates. Then his aunt decided to leave Finland for Africa to tutor Namibian children in mathematics. Neuvo realized he was not too old to reinvent himself.

One of his babies is the sleek, silvery Nokia 8810, the eye-catching pocket model that's often compared to a Zippo lighter. Code-named Small Beauty when it was first conceived, the 8810 was rushed through development and introduced at CeBIT '98 in an effort to "surprise the market," Neuvo says. It succeeded in surprising at least one Ericsson executive, who had the misfortune of sitting beside Neuvo on a panel in Stockholm. When the moderator suggested the panelists show off their phones, Neuvo pulled out his 8810. The Ericsson rep demurred, saying, "I'm sorry, I don't have my phone with me." Then something started ringing in his pocket.
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