June 11, 2010
Although Nokia can trace its lineage back much further than Yahoo, both companies rose to prominence in the 1990s, only to fall from grace in the noughties.
The Finnish mobile phone company started life in the late 19th century as a paper, rubber and cables conglomerate (rubber boots being one of its best-known product lines). It started making mobile phones in the 1980s but it was the switch to the digital GSM standard across Europe in the early 1990s that provided the spur to growth.
Presented with such a mammoth market, Nokia saw sales explode. Innovative products such as the Nokia 101, the first so-called "candy bar" phone, and the Nokia 8110i (which featured in the film The Matrix) helped it blast past America's Motorola and its Swedish rival Ericsson to become the world's largest mobile phone manufacturer in 1998. While Nokia was changing mobile phones into fashion items, two students at Stanford University – David Filo and Jerry Yang – were playing around with the internet. They started keeping a list of their favourite links and other people who also wanted to be able to get around the web were increasingly using the pair's links. In mid-1994 Jerry and David's Guide to the World Wide Web became Yahoo! – a name coined by Swift in Gulliver's Travels for an imaginary race of rude, brutish creatures. When Yahoo floated in 1996 it had fewer than 50 employees and was quickly becoming one of the web's hottest destinations.
But as the web increased in size in the late 1990s, directories such as Yahoo, which used human editors instead of automation to rank web pages, were creaking under the strain. Then in 2000 Google started selling adverts alongside its search results. While Yahoo was fast cornering the online display advertising market, Google sparked a boom in search advertising. Google has since pushed Yahoo into a series of restructurings and then finally in 2008 an acrimonious bid battle with Microsoft ended in a search and advertising tie-up.
Nokia rode the mobile phone wave in the early part of this century but alienated the mobile networks. When newer manufacturers such as Samsung started producing fashionable phones, the operators grabbed the chance to dump the Finnish firm.
But it was the arrival of the iPhone, launched by Apple in June 2008, that really showed how far Nokia had slipped. It quickly became a must-have gadget for the mobile phone operators in a way that a Nokia device had never managed. Rivals rushed to produce touchscreen phones but Nokia has yet to produce a real "iPhone killer".