In this blog, I will talk about how Nokia after rising to the top in the mobile industry failed. It’s a very interesting business case study which teaches the business world a lot. From being synonymous with the word Mobile phone to going to the point where it’s sales went so low that it had to sell its mobile phone division. How did this happen? Let’s begin to understand this interesting story of how a company so successful can ever fail!
Nokia was established in 1865 in Finland. It was in the business of communication, information technology and consumer electronics. Nokia first acquired Mobira (A telephone company) and got into the business of handset devices. Nokia kept on improving the handsets with time. In 1991 the first GSM call was made by the PM of Finland Harri Holkeri using a Nokia phone. In 1997-1998, Nokia dominated the market with 25% market share. In India, Nokia 1100 and 1110 captured 70% market share. Nokia was booming in the early 2000s. More manufacturing plants were set up, global presence was increasing rapidly. In 2008, Nokia sold nearly half a million handsets and was leading the market at 49.4% market share. To this day, no mobile phone company had able to reach such heights of success.
Mobile industry was shaken in 2007 with the launch of full touch mobile called iPhone by Apple. Next year, Google launched its first android phone. The famous battle of mobile phones has begun – Apple’s IOS vs Google’s android. However, Nokia responded to this with the xpressMusic touch screen phone. It was a commercial success but it received bad feedback by the critics due to its poor software implementation.
Now the big question is – where did Nokia go wrong exactly? It was because of multiple reasons discussed below:
- Overconfidence: Nokia refused to take new companies as a threat to its sale. Nokia considered apples phones inferior to them because that worked on 2G and was expensive whereas Nokia phones worked on 3G. As the sale of IOS was increasing, a new OS has entered the market – Android. To tackle IOS sales, Nokia should have shifted its outdated Symbian OS to android. Nokia’s management dismissed the idea of moving towards android by saying it’s like “pissing in your pants for warmth in summer “.
- Delayed release due to internal conflicts: The company’s R&D was divided into 2 divisions. One worked on improving the Symbian OS and the other worked on building the new OS MeeGo. Both teams claimed that their software was better. Finally, In 2010, Nokia launched its new phone N97 which ran on a new improved version of Symbian OS. But the launch was too late due to internal clashes. Hence it failed to compete with Apple and Google.
- Frequent Changes in Management and Organisation Structure: The CEO of Nokia was changed 2 times in 5 years. This didn’t give time to employees to adjust to the vision of the new CEO and also caused dissatisfaction among them. Apart from this, organisational structure changes caused many stakeholders upset due to which many left the company. Due to this the people who helped Nokia become the best were no longer there.
- Partnership With Microsoft: In 2011, to tackle the declining sale, Nokia partnered with Microsoft to launch windows phones. But this step also failed to put any impact on the market. The main reason was the number of applications in IOS and android were huge compared with those in windows.
What’s up with Nokia Now?
Nokia still exists! But not as relevant as it was. It is still trying to regain its glory by not repeating the mistakes of the past.
In 2016, Microsoft sold the mobile phone division of Nokia for $350 million to HMD global which was made up of previous Nokia’s executives.
In 2017, HMD global released an android based phone under the brand banner of Nokia. Still, it’s a long way from catching up to the current competition.
Tell us what you think?
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