Finnish tech sector picks up the pieces after Nokia disaster
Microsoft bought Nokia’s mobile division this past spring, and thousands of employees in Finland have been laid off. Oulu, a northern tech hub, was particularly hard hit, but new opportunities in new industries are springing up in the resilient northern community.
Jani Pernu’s skinny character leaps through the air, expertly swinging his sword at a pixelated orc. With a few slashes the orc collapses and Pernu continues on his quest. Just yesterday he was a heavy metal rock star, but now he’s doomed to fight his way through the legions of evil creatures populating a retro world.
There should be heavy metal blaring, but Pernu and his team haven’t picked the music yet. Orc Emperor is only in the early stages of development, after all, although it has recently come one step closer to becoming a fully realized game; in mid-September it was chosen as one of ten games to advance to the next stage of Oulu Game Lab’s development program.
Pernu tests Orc Emperor in Game Lab; the game has been selected to move on to another round of development (Photo: Jimmy Thomson)
Like his character in Orc Emperor, Pernu wasn’t always on this particular quest. Three weeks ago he was one of the rock stars of the Finnish tech world: an engineer at Nokia, the jewel of Scandinavian communications technology. Now he’s one of more than 1,000 former “Nokians” looking for a new way to apply his skills.
Nokia is known for mobile tech today, but it hasn’t always been so. Its roots are in a conglomerate of pulp mills and rubber factories in the late 1800s. But over the next century the company shed most of its vast catalogue of industries and focused on communications technology.
In the early 2000s Nokia became a powerful player in the growing cellphone (and eventually smartphone) market. In 2007, nearly two thirds of phones sold worldwide were running on Nokia’s Symbian platform.
Then, in 2008, along came the iPhone and everything changed.
The iOS and Android platforms destroyed Nokia’s former dominance. Despite a partnership with Microsoft to make Windows phones, by 2013 Nokia had just a fraction of the smartphone marketshare. In April 2014 Microsoft bought Nokia’s mobile device business and patents for €5.5 billion, and those who weren’t working on Windows phones – 12,500 employees in total – were let go.
The layoffs devastated Oulu. What had been a tech hub of the north went into instant decline. Housing prices plummeted as panicked engineers fled and the local economy went into a tailspin.
Two years ago, Tuomas Kallio, a 17-year Nokia veteran, was working in research and development. He was laid off in some of the earliest cuts. He finally had an offer on his house last week – for €21,000 less than the asking price – and plans to move into an apartment.
In a city suddenly dominated by young startups, his extensive experience is less of an advantage than he had expected.
“I’m not the youngest guy anymore,” Kallio says over coffee in Oulu’s city centre. He has a 16-year-old son to worry about, making it complicated to move to places like Beijing or Taipei, where he had job offers. “There are so many people like me.”
Kallio retrained as a photographer, but found that industry, too, flooded with newcomers. The severance pay from his union dries up soon, and photography does not pay the bills.
“I can’t even dare to think, ‘What would be my dream job?’” he says. “I have to find work.”
Tuomas Kallio has applied for over a hundred jobs, and rarely received a call back despite 17 years of experience in tech research and development. (Photo: Jimmy Thomson)
Arto Pussinen sees people like Kallio as one of Oulu’s great assets.
Pussinen is a managing partner at Kaato, an organization set up to help Finland leverage its huge number of highly skilled workers to attract new businesses.
Most of the people working in Kaato itself have a Nokia background, and almost everyone the organization deals with comes from Nokia. It was even set up in part with Nokia funding. But Pussinen is thinking bigger.
“The future of Oulu is not making smartphones,” he says. But the people who made the smartphones are still there, and their ingenuity can be put to other uses.
Recently, Norwegian company Nordic Semiconductor announced plans to set up an R&D base in Oulu, which is expected to employ 20-50 people initially. It’s a fraction of what Nokia shed, but it represents the attraction that a huge concentration of tech experience presents for a company looking to grow. With a giant, available workforce, Pussinen is hoping Oulu and other Finnish cities can continue to attract tech players.
Pussinen says 600 of Oulu’s 1,000 laid-off engineers have found new jobs so far.
The growing Finnish gaming industry is picking up some of the slack. Everyone knows about Rovio, the Helsinki-based maker of Angry Birds, which is possibly the first mobile game to reveal that apps can be a lucrative trade. But Oulu has its own success story in Fingersoft, whose addictive Hill Climb Racing has topped charts around the world.
Fingersoft pays close attention to what comes out of Oulu Game Lab, according to Kari-Pekka Heikkinen. Although it’s funded by public money and part of the Open University (tuition costs just €300), the Game Lab feels more like a startup cluster than a university.
The fruit flies buzzing around the basement where second-stage games are in final development attest to that, as does the male-dominated work area.
“We wanted to create the kind of environment that simulates, as close as possible, the real small-game-company life,” said Heikkinen, navigating through the dim concrete labyrinth connecting the early-stage games like Orc Emperor, months away from release, to those that are more advanced, like the side-scrolling Rocket Renegades, which will be out by Christmas. “We wanted to get away from the campus area.”
The teams at Game Lab work in the same space on a variety of games, bringing them through multiple stages of development, often all the way to a published product. (Photo: Jimmy Thomson)
Heikkinen, like so many others a former Nokian, was one of the founders of the Game Lab.
So far the Game Lab has fostered nine startups that have published 10 games with a total of 40 million downloads.
The startups tend to stay close – literally – occupying the building next door. The top floor is plastered with promotional posters for finished games like Hamsterscape Olympics and Nepcar Racing, while others are still in development. Their developers act as mentors for the students next door while they work through the complex process of conceptualizing, designing, programming and publishing a game.
While Game Lab is currently providing one avenue for skilled young people like Jani Pernu to explore, Heikkinen has bigger plans for the lab concept. Soon there will be health, clean tech, automotive and pedagogy labs run under the same model of collaborating across disciplines to bring an idea from conception to realization.
Whether these diverse startups will grow to fill the void left by Nokia is uncertain. But jumping from paper and rubber boots to smartphones, Nokia itself is an example of how unpredictable success can be.