Finnish mobile developers are rallying behind Nokia's new platform Windows Phone, yet the handset maker's precipitous decline could be the sour medicine the nation's software industry needed, according to researchers at Finland's Aalto University.
Nokia's new smartphone platform is Windows Phone, which in 2011 replaced Symbian and its short-lived successor MeeGo as the handset maker's OS of choice. It's no shock then to find in the Aalto University BIT Research Centre's 2012 Software Industry Survey (PDF) of Finnish software companies, the seven percent that built on MeeGo or Symbian in 2011 is expected to fall to two percent by 2013.
However, an even more dramatic shift is expected to occur by then: 34 percent of Finnish developers plan to be building for Windows Phone, leaving Android (33.4 percent) and iOS (24.3 percent) as the second and third most popular mobile platforms.
While it may seem counterintuitive – Windows Phone has just a single digit share of the global mobile market – it has a greater presence in Finland. According to one local report, Windows Phone has a 32-percent market share in the country, and analytics company StatCounter is also tracking a rapid rise for Windows Phone in Finland, which overtook former Nokia golden child Symbian this August.
While there is some loyalty to Nokia amongst Finnish consumers, developer interest in Windows Phone more likely stems from delivering services to local businesses, according to BIT Research Centre's researcher manager, Mikko Rönkkö.
"It used to be almost a de facto standard that Finnish companies provided Nokia phones for their employees," he tells Norse Code, adding that BlackBerry is almost non-existent in Finland.
"A large share of Finnish software companies are serving other Finnish companies. Because of the earlier popularity of Nokia phones in Finnish enterprises, many software vendors probably assume that Nokia phones will be popular in the future as well."
Another explanation, according to fellow researcher Juhana Peltonen, is that firms that develop Windows desktop software see a continuum to high-growth mobile through Windows Phone.
"They're not making the next Angry Birds, but there are a lot of these small business-to-business firms that have been able to sell this software to small manufacturing plants perhaps. And they think, OK, it works on Windows, so why don't we try it a mobile version of this."
Nokia's stamp on Finland's window to change
The shift towards Windows Phone among mobile developers comes at a time of upheaval in the wider Finnish software industry, which not so long ago faced a serious shortage of software engineers but is now facing a sustained oversupply, and not just due to Nokia's layoffs.
One of the challenges the industry has faced is that Finland has had a handful of large buyers — Nokia being one, along with manufacturing and government — that concentrated contracting with a few large suppliers.
"Finnish public-sector IT procurement has been a lot about buying from the biggest service companies and then on the other hand you have Nokia. So you think about where do growth companies come from — you have these big firms that are blocking the sunlight," says Peltonen.
Along with Nokia's mass layoffs, other large IT services firms in Finland, including Digia (which bought Nokia's QT in August), Ixonos, and Accenture (which absorbed 1,200 Finnish Symbian developers in 2011), have laid off hundreds of staff in the past year — some of these decisions were related to the Nokia cut backs, and some independent of them.
None of these have the visibility of Nokia's layoffs, but says Rönkkö "when Nokia announces something, usually within a few months [these companies] follow up".
Peltonen's "conservative" estimate of the overall number of Finns laid off between 2011 to 2013 as a consequence of Nokia's downsizing is 10,000, a figure that includes both laid-off Nokia staff and those at contractors that depend on the handset maker for their bread and butter. "That's in Finland, not the world," says Peltonen, noting Nokia itself accounts for 6,900 of the 10,000.
Nokia's contraction has doubless been painful for Finland. However, Peltonen points out the concentration of the software industry with the company was not good for the country either.
"It's a good idea that there is more space for firms to come and grow and even out the infrastructure, both in terms of the software industry but also overall in Finland. It kind of gets us on this path of renewal, but on the other hand it came so quickly and so massively, so it's hard to say that it's all good."
Luminous lining to dark clouds
The Finnish employment market for software engineers has been turned on its head in the past four years.
"There was an unmet demand for software talent, but [the change] has been like putting out somebody's thirst with a fire hose" — Juhana Peltonen
"Around 2008-9 there was not a lot of software engineers. A lot of SMBs were complaining about it, there were active recruiting campaigns, firms teamed up and bought ad space from major papers and TV stations. There was an unmet demand for software talent, but [the change] has been like putting out somebody's thirst with a fire hose," says Peltonen.
Peltonen estimates there won't be a similar shortage of software engineers in Finland for the next four to five years.
By settling on Windows Phone, Nokia changed its own course, but also made third-party software firms that built on Symbian and MeeGo redundant. This wiped out one escape hatch that ousted Nokians had turned to find employment prior to Nokia's platform shift.
"There was a lot of other companies doing Symbian and MeeGo development and these had been hiring a lot of folks that had been coming out of Nokia. But now these companies developing for Symbian and MeeGo — it's collapsing," says Peltonen.
Rönkkö's and Peltonen's 2011 survey found that software companies that built on Android and iOS showed no preference for Nokia employees over any other candidates. On the other hand, Peltonen points out that Intel has hired 200 for MeeGo/Tizen development while Jolla plans to hire 100 in Finland for its MeeGo phone, suggesting possibly better prospects for those platforms than Symbian.
"One reason why these mobile [development] companies might not be so interested in people from Nokia is the image that they are used to this big company culture and most of these mobile development companies are small. So those companies that hire Java developers typically might be a bit larger than the mobile development companies," speculates Rönkkö.
As for the middle-management and marketing folk, whom Peltonen estimates made up half of those laid off in Helsinki, there are even fewer options.
"It might be more difficult to employ these middle management people because there is really no other company that is like Nokia."
While the immediate future might be tough for the thousands of Nokia staff exiting the company, the software companies betting on Windows Phone could come out very well should the platform take root outside of Nokia's Finnish heartland.
"Certainly it's risk-taking, but you could say if Windows Phone takes off, then Finland could be in a good position — and not just through Nokia," says Peltonen.