In “we didn’t do anything wrong, but

In
every Baby Boomers’ and early Millennials’ memory is the infamous Nokia logo.
Nokia was once the world’s largest mobile phone manufacturer and market leader.
The company connected people. However, Nokia’s success didn’t last. After the
release of the first generation iPhone by Apple, Nokia has consecutively
reported losses. Their stock prices have dropped to below $2 and Nokia was on
the verge of bankruptcy. Nokia was later taken over by Stephen Elop, former
Microsoft executive, in 2011 and acquired by Microsoft in 2013. Before the
acquisition, Nokia’s former CEO said, “we didn’t do anything wrong, but
somehow, we lost.” After Microsoft’s acquisition of Nokia, many jobs were cut
and Nokia still could not keep up with its competitors.

Nokia
was a part of my memory. It was my first mobile phone. Stephen Elop was right.
Nokia did not do anything wrong, but still, they lost. People are forgetting,
or have forgotten Nokia. However, today, we will bring back memories. We will
further analyze Nokia’s part of the smart phone innovation and industry life
cycle, Nokia’s successes, and its failures.

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Origin

Nokia
was founded in 1865 and headquartered in Espoo, Uusimaa, Finland. The company
started as a single paper mill operation which later expanded into making other
products, such as paper products, rubber products, cable, mobile devices, and
telecommunications infrastructure equipment. (https://www.nokia.com/en_int/about-us/who-we-are/our-history).

 

Timeline

·        
In
1963, Nokia created radio telephones and emergency responders for the military.

·        
In 1982, the company introduced the Mobira Senator, a car phone.

·        
In
1987, the Mobira Cityman, Nokia’s first GSM handheld mobile phone, was
introduced.

·        
In
1992, Nokia exits the rubber products and cable industry.

·        
In
1994, the 2110 was first introduced alongside with Nokia’s signature ringtone.

·        
In 1998, Nokia becomes the largest mobile phone manufacturer in the
world after manufacturing its 100 millionth mobile phone and held this position
for 14 consecutive years.
At this time, Nokia has also taken up all the market share.

·        
In
1999, Nokia released the 3210.

·        
In
2002, Nokia introduced the 6650, the first ever 3G phone.

·        
In
2003, 1100 handset is released.

·        
In
2005, Nokia introduces the N-series smartphones which allows users to listen to
music, take pictures, play games, and access the internet using their phone.

·        
In
2006, Olli-Pekka Kallasvuo becomes the president and CEO of Nokia.

·        
In 2007, Apple released its first iPhone
which became the center of demand of the smart phone market. Nokia kept their
ways.

·        
In
2009, Nokia posts its first quarterly loss after HTC releases a phone that uses
the Android operating system by Google.

·        
In
2010, Stephen Elop, former Microsoft executive, becomes Nokia’s chief
executive.

·        
In
2011, Nokia enters into a partnership with Microsoft and launches the Lumia
800, the first Windows phone that targeted the high-end smartphone marketplace.

·        
In
2012, Samsung defeats Nokia and becomes the world’s largest mobile phone maker.

·        
In
2013, Nokia started cutting jobs in Finland and transferred some of its
employees to India. The company has also started outsourcing. In the same year,
Microsoft acquired Nokia for €5.44 billion, roughly about $6.45
billion in today’s exchange rates.

·        
In 2014, Nokia became more focused on network equipment and signed a
$970 million deal with China Mobile.

·        
In
2015, Nokia purchased Alcatel-Lucent, a French telecommunications equipment company
for €15.6 billion—Nokia’s shareholders hold 66.5%
and Alcatel-Lucent’s shareholders hold 33.5% of this company. Nokia
also sold its Here digital maps division for €2.8 billion to BMW, Daimler AG,
and Volkswagen Group.

·        
In
2016, the merger of Nokia and Alcatel-Lucent was closed. Nokia also acquired
Withings, a health device maker, for $191 million. Nokia also introduced the
first 5G-ready network in Finland. In the same year, Microsoft Mobile sold the
Nokia-branded feature phone to HMD Global, an associated factory in Vietnam to
Foxconn’s FIH Mobile.

·        
In
2017, Nokia signed a multi-year patent agreement with Xiaomi, a privately owned
Chinese electronics and software company. Nokia also made a comeback with three
Android phones: the Nokia 3, Nokia 5, and Nokia 6. (verge)

 

Innovation and Industry Life Cycle

Nokia
is a player in the mobile phone and smartphone industry life cycle which
consists of introduction, growth, shakeout, maturity, and decline. Nokia was
only able to make it through three stages, the introduction stage, the growth
stage, and the shakeout stage, before the company started to decline.

In
the introduction stage of the mobile phone industry, Nokia was ahead in the
game. In 1982, Nokia released their Mobira Senator, a car phone. Nokia’s phone
became the framework for what a phone should be like and what a phone should
do, connect people. Nokia did not encounter any first-mover disadvantages and
had reached their strategic objective in achieving market acceptance and
allowing for growth.

In
the growth stage, Nokia gave up producing their other line of products to
specialize in mobile communication products. Nokia had sold its 100 millionth
phone, became the world’s largest mobile phone manufacturer, and had taken up
all the global smartphone market share. The company had a competitive advantage
with the release of their Mobira Cityman, the first ever GSM handheld mobile
phone, which has set a standard for about 80 percent of the global mobile
market (book). At this stage, Nokia was still innovating products and
innovating processes.

In
the shakeout stage, Nokia was competing with Apple for market share. After
Apple’s release of the first-generation iPhone, Nokia’s sales started to
decline. Consumers were

After
the shakeout stage, Nokia started to decline…

 

Porter’s 5 Forces Strategy Analysis

1.   
Competition

2.   
Potential
of new entrants into the industry

3.   
Power
of suppliers

4.   
Power
of customers

5.   
Threat
of substitute products

 

Reasons why they were successful at
first

Nokia
wanted to focus their strengths…gave up producing other line of products that
were profitable to specialize in mobile communication products in 1992, when
the mobile phone industry was not profitable. These other lines of products
included paper products, rubber products, cables and computers.

Nokia
developed the Symbian system which allowed for them to become the world’s smart
phone market leader…until 2007

 

Reasons why they failed

            The first reason, and the biggest
reason, why Nokia failed was because of Apple’s release of their first-generation
iPhone. After the release of the first-generation iPhone, it changed the way
consumers viewed smartphones. It was the first touch screen smartphone that
used an application-based operating system, the IOS system. After the release
of the new iPhone, consumer demand rose for these new types of smartphones.
Nokia did not see this. Nokia ignored the rising demand for these new
smartphones and kept their ways. They were short-sighted. Overtime, Nokia
phones were not able to keep up with the needs of consumers. They did not
update their Symbian system which caused them unable to keep up with the IOS
system and Android system of their competitors. In the graphs below, we can see
that the Nokia’s sales were at €35 billion in
2008 and dropped down to €15.7 billion in 2012. Nokia’s market share have also declined from 43.7% to 3%
(Quartz,…). By the time Nokia realized that they needed to respond to the
iPhone release, it was four years too late (Wired).

……

……

            The second reason why Nokia failed
was that Nokia focused too much on satisfying each user. Nokia created a phone
for every customer segment. The company released a numerous number of models of
phones, ranging from hundreds to even a thousand models (Wikipedia). With so
many choices, it was overwhelming for consumers. Instead of focusing on
improving one phone model, they cranked out hundreds of different phones. Nokia
spent a lot of money on researching what each customer’s wants and needs were
instead of focusing on making their phones better and better. They made it more
complicated for themselves by trying to satisfy each customer when they could
have done what Apple did, create just one phone that anyone can use, that is
easy to use, and takes care of what peoples’ needs for a phone are. Then,
improve and go on from there, just like how Apple makes minimal changes to
their phones each year, in the way the product looks and the features, and
releases it as a new generation iPhone. Nokia did not have to release a phone
for every different person.