A stark warning for anyone in the research and development domain: Nokia wasted $40 billion on R&D over the past decade on useless projects that never turned into products. You can hire a lot of smart engineers and spend a lot of money, but if you don't organize it well your time and energy will be spent for nothing.

More than seven years before Apple Inc. AAPL +0.94% rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button. The device was shown locating a restaurant, playing a racing game and ordering lipstick. In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen--all features today of the hot-selling Apple iPad.

"Oh my God," Mr. Nuovo says as he clicks through his old slides. "We had it completely nailed."

Consumers never saw either device. The gadgets were casualties of a corporate culture that lavished funds on research but squandered opportunities to bring the innovations it produced to market. ...

Nokia is losing ground despite spending $40 billion on research and development over the past decade--nearly four times what Apple spent in the same period. And Nokia clearly saw where the industry it dominated was heading. But its research effort was fragmented by internal rivalries and disconnected from the operations that actually brought phones to market.

Instead of producing hit devices or software, the binge of spending has left the company with at least two abandoned operating systems and a pile of patents that analysts now say are worth around $6 billion, the bulk of the value of the entire company. Chief Executive Stephen Elop plans to start selling more of that family silver to keep the company going until it can turn around its fortunes.

"If only they had been landed in products," Mr. Elop said of the company's inventions in a recent interview, "I think Nokia would have been in a different place."

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