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Nokia’s destiny: From boots to phones to… boots

Published Jul 1st, 2014 10:00AM EDT
Nokia Future

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The year 1973 was crucial for one for the giants of European industry. That was when Finnish Rubber Works merged with Finnish Cable Works, forming a company called Nokia Corporation. That year, Nokia had a massive consumer market blockbuster with Kontio Rubber Boot. Kontio was named after the Finnish term of endearment for “bear” that was commonly used in Middle Ages to avoid the religious taboo against using the true name of this animistic deity (Karhu).

This groundbreaking footware introduced many key features that would become staples of modern rubber boot manufacturing: a tightening strap, a reflective band and a rotationally rigid midsole construction. Kontio would define the Nokia brand in Europe during late 1970s and the 1980s.

FROM EARLIER — Nokia reborn: Nokia’s new Android launcher is wonderfully simple and shockingly innovative

During 1990s, Nokia lost its focus on cutting-edge rubber boot design and manufacturing, diversifying recklessly into mobile infrastructure and even mobile handsets. In 1990, Nokia sold off its rubber boot division — a decision that was harshly criticized by the Finnish financial media and arguably turned out to be a false step, so to speak.

While Nokia did indeed have some success in the mobile handset business, the phone unit sank deeply into losses by 2011 and ultimately had to be sold off to Microsoft. Meanwhile, high-end rubber boot manufacturing continues to yield 2-5% profit margins to leading vendors.

Now Nokia is mostly focused on the rather boring mobile infrastructure market. But there is a glimmer of hope in the horizon. Nokia did cut a deal with Microsoft pledging not to re-enter mobile phone business for years.

But it never agreed not to re-enter rubber boot industry.

In a fascinating new interview, Compal’s R&D wizard Shen Cun-te points out that smart shoes will be the new star of the wearable device industry, since shoes are undeniably worn more often than watches! This insight is particularly meaningful for Nokia, thanks to its history of innovation regarding mid-sole construction and impact-absorbing heel structures.

Nokia’s 25-year old detour into mobile phones is over — but its footwear saga may only be starting.

Global handset revenue has peaked and will continue declining in the coming years as low-end smartphones undercut sales of luxury models. Who cares about this twilight industry?

The nascent smart boot market is waiting to be born, promising calorie tracking, GPS navigation, mapping software synergies, gamified orienteering and shoe-based social networks that revolve around mushroom picking and berry gathering. The spirit of Kontio still glows somewhere deep inside Nokia Corporation.

We could be on the verge of the grandest corporate rebirth since Apple in 2002.

After launching mobile game company SpringToys tragically early in 2000, Tero Kuittinen spent eight years doing equity research at firms including Alliance Capital and Opstock. He is currently an analyst and VP of North American sales at mobile diagnostics and expense management Alekstra, and has contributed to, Forbes and Business 2.0 Magazine in addition to BGR.