Nokia is the first brand that was in the market when we heard of the early mobile phones. For a decade, Nokia remained in the market and introduced new models of the phone every now and then. It catered all segments of society by providing the phone with different price ranges. Millennial would be able to relate with me better. With a glorifying history of the company, it gets hard to realize that Nokia is no more relevant in the mobile phone industry. But why Nokia failed?
This is a question that needs exploration, and we are going to explore the factors responsible for this drastic change in the mobile phone industry in this article. One thing to note here is that it is not about everything that Nokia did wrong; there were certain things that other companies in the industry, especially Samsung did right. Thus, the failure of Nokia is a mixture of the mistakes made by Nokia and the successful strategies that the other brands in the industry used.
In 2006, Nokia was still the world leader in mobile phones with a market share of almost 50%.
Nokia was the global giant that everyone wanted to surpass, but held on.
And then an innovation changed everything. As is often the case, hegemonic leaders like Nokia are overwhelmed by a major technological disruption that they are unable to anticipate and then adopt.
In early January 2007, Steve Jobs announced the iPhone. A revolutionary device that will create a whole new industry: that of smartphones.
The latter sees the presentation of the iPhone but thinks that Nokia has no worries. He underestimates this upcoming revolution. Yet Nokia had prototypes of smartphones in its boxes.
But Olli-Pekka Kallasvuo prefers to continue betting on the cell phones that have made Nokia's success so far.
This is a major strategic mistake that will change Nokia's destiny forever. In fact, the opposite destiny of Apple and Nokia since 2007 reminds us of a fundamental truth in the business world: Evolve or Be Extinct.
By refusing to evolve, Nokia has lost everything in the world of smartphones.
Google has joined Apple in this smartphone revolution. With Android, Google has created the dominant OS. All manufacturers have come, from Samsung to Motorola or Sony. All but two: Nokia and RIM.
These two manufacturers who dominated the market at the time then fell irretrievably.
Olli-Pekka Kallasvuo then had the opportunity to get involved in the Android world, but he preferred to continue betting on Symbian, Nokia's home OS, before betting everything on Windows Mobile.
It was too late. When Olli-Pekka Kallasvuo leaves his position as CEO at the end of 2010, Nokia no longer even has a 30% market share worldwide. Worse still, Nokia represents nothing in the world of smartphones that will dominate the decade then beginning.
The takeover of Nokia's smartphone activities by Microsoft is the fatal blow for Nokia. This 7.6 billion dollars will not change anything. Steve Ballmer leaves his position as CEO of Microsoft just after, and Satya Nadella will confirm this failure by selling Nokia's smartphone business for barely 350 million dollars in 2016 to a consortium composed of Foxconn and HMD Global in particular.
Today, Nokia represents only a market cap of $19 billion, down from over $110 billion in early summer 2007.
Conversely, Apple, which has been able to evolve and innovate, has seen its market cap rise from $100 billion in early summer 2007 to over $2,000 billion today!
The moral of the story is simple: you always have to evolve to stay at the top.
I'll give you more details here on this exciting subject: “Evolve or Be Extinct: The Opposite Destiny of Apple and Nokia Reminds Us of This Fundamental Truth[1]”.
This is a question that needs exploration, and we are going to explore the factors responsible for this drastic change in the mobile phone industry in this article. One thing to note here is that it is not about everything that Nokia did wrong; there were certain things that other companies in the industry, especially Samsung did right. Thus, the failure of Nokia is a mixture of the mistakes made by Nokia and the successful strategies that the other brands in the industry used.
In 2006, Nokia was still the world leader in mobile phones with a market share of almost 50%.
Nokia was the global giant that everyone wanted to surpass, but held on.
And then an innovation changed everything. As is often the case, hegemonic leaders like Nokia are overwhelmed by a major technological disruption that they are unable to anticipate and then adopt.
In early January 2007, Steve Jobs announced the iPhone. A revolutionary device that will create a whole new industry: that of smartphones.
The CEO of Nokia at the time was Olli-Pekka Kallasvuo.
The latter sees the presentation of the iPhone but thinks that Nokia has no worries. He underestimates this upcoming revolution. Yet Nokia had prototypes of smartphones in its boxes.
But Olli-Pekka Kallasvuo prefers to continue betting on the cell phones that have made Nokia's success so far.
This is a major strategic mistake that will change Nokia's destiny forever. In fact, the opposite destiny of Apple and Nokia since 2007 reminds us of a fundamental truth in the business world: Evolve or Be Extinct.
By refusing to evolve, Nokia has lost everything in the world of smartphones.
Google has joined Apple in this smartphone revolution. With Android, Google has created the dominant OS. All manufacturers have come, from Samsung to Motorola or Sony. All but two: Nokia and RIM.
These two manufacturers who dominated the market at the time then fell irretrievably.
Olli-Pekka Kallasvuo then had the opportunity to get involved in the Android world, but he preferred to continue betting on Symbian, Nokia's home OS, before betting everything on Windows Mobile.
It was too late. When Olli-Pekka Kallasvuo leaves his position as CEO at the end of 2010, Nokia no longer even has a 30% market share worldwide. Worse still, Nokia represents nothing in the world of smartphones that will dominate the decade then beginning.
The takeover of Nokia's smartphone activities by Microsoft is the fatal blow for Nokia. This 7.6 billion dollars will not change anything. Steve Ballmer leaves his position as CEO of Microsoft just after, and Satya Nadella will confirm this failure by selling Nokia's smartphone business for barely 350 million dollars in 2016 to a consortium composed of Foxconn and HMD Global in particular.
Today, Nokia represents only a market cap of $19 billion, down from over $110 billion in early summer 2007.
Conversely, Apple, which has been able to evolve and innovate, has seen its market cap rise from $100 billion in early summer 2007 to over $2,000 billion today!
The moral of the story is simple: you always have to evolve to stay at the top.
I'll give you more details here on this exciting subject: “Evolve or Be Extinct: The Opposite Destiny of Apple and Nokia Reminds Us of This Fundamental Truth[1]”.
Nokia failed primarily due vanillaOS to its slow adoption of smartphones and the shift to Android, leading to a loss in market relevance.
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