The 7700, which dates from 2003, was never released. A follow-up model was discontinued. When Apple revolutionised the smartphone market with its iPhone in 2007, Nokia, the world's largest handset manufacturer until last year, was left trailing. On Tuesday, the company passed to Microsoft the supremely difficult mission of catching up with rivals, agreeing the takeover of its mobile phones business in a $5.4bn deal.

The announcement helped lift the market value of the whole of Nokia to 15bn, which is only a fraction of the 100bn it was worth five years ago. Nokia will keep its network equipment and mapping businesses, as well as a portfolio of patents and the ownership of the Nokia brand, but it will hand to the US software company what was once Finland's greatest source of corporate pride.

Former Nokia employees and executives, politicians, economists and many ordinary Finns agree that while Tuesday's announcement came as a shock, it was not a surprise. It may even prove to be positive, though in a country that is still suffering economically, as traditional businesses such as forestry, shipbuilding and papermaking decline, it is hard for ordinary Finns to be very upbeat.

Pekka Ala-Pietila, president of Nokia until 2005 and author of a government-commissioned blueprint for alleviating the impact of restructuring in the technology sector, sums up the mood: “There's a feeling of sadness for something that had a lot of national pride attached to it but Finns are very practical and they look forward. You need to . . . go through that period of sadness and not deny it, and then get on.”

Jan Vapaavuori, Finland's minister of economic affairs, echoes the sentiment: “This is the most pragmatic country in the world – so what happened happened and we'll now go forward.”

It is probably harder for Finns to show stoicism about this blow than nationals of other countries with a more diverse corporate economy. At its peak in 2000, Nokia was responsible for 1 per cent of total employment in Finland, 4 per cent of gross domestic product and last year still accounted for 31 per cent of corporate research and development.

It was a stunning turnround story: an ageing conglomerate producing timber, tyres and rubber boots that in the early 1990s dragged itself – and recession-hit Finland – back to health by refocusing on mobile phones, spotting that what started as a business tool would become an indispensable consumer product.

What went wrong? In the search for a scapegoat, Finland's tabloid newspapers have targeted the current chief executive, Stephen Elop, himself a former Microsoft chief executive. Brought in three years ago to attempt a second difficult turnround, the Canadian issued a memo saying Nokia needed to jump from its “burning platform” and quickly allied the company with his former employer.

He selected the Windows smartphone operating system for Nokia smartphones, abandoning internally developed options and shunning Google's fast-growing Android software. The assumption was that with Microsoft's marketing dollars and Nokia's handset and design expertise, the two companies would carve out a third smartphone “ecosystem”. They have done this but in terms of market share the strategy has failed. At the same time, the bedrock sales of Nokia's basic mobile phones in markets such as China and India have crumbled.