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Lessons From The Rise And Fall Of Nokia

From The Number-One Phone Maker In The World To Evaporating Under Microsoft, The Biggest Lesson From The Demise Of Nokia Is That No Business Or Brand Is Too Big To Fail

Nokia
Image Source: Nokia

The name Nokia gives most of us that nostalgic feeling of ‘the good old days’. A once dominant name in mobile phone market, with great and promising future, how did the spaceship carrying Nokia to the summit of global mobile phone market crash out of the sky?

 

The beginning  

Anytime Nokia is mentioned, mobile phones immediately come to mind, but the company actually began as a paper mill. In 1865, Fredrik Idestam established a paper mill in Tammerkoski Rapids in south-western Finland. However the name Nokia was birthed after establishing his second paper mill on the banks of the Nokianvirta river in 1871, wish inspired the name Nokia.

Becoming a global force

Between 1898 and 1987, with new investors onboard, Nokia expanded and went into different businesses which include, rubber business; making rubber boots and tyres, cable and electronics business, launched Nordic Mobile Telephone Services, which was the world’s first international cellular network, also the first to allow international roaming, introduced the first car phone, then launched the Mobira Cityman, the first handheld mobile phone. But it was not until 1992 that Nokia launched Nokia 1011, its first digital handheld GSM phone. This milestone led Nokia to focus just on its telecommunications and mobile phones, resulting in the sale of its rubber, cable and consumer electronics divisions.

With that decision, Nokia launched several successful GSM phones; by 1998 the company was the leader in mobile phones market, overtaking Motorola as the number-one phone manufacturer in the world. From 1996 to 2001, Nokia’s profit skyrocketed to €31bn from €6.5bn. At this point there was almost no stopping Nokia from greatness. In 1999, it launched Nokia 7110, a phone with web-based functions and also introduced its first phone with a camera, Nokia 7650.  In 2002, Nokia introduced its first phone with video recording capabilities and its first 3G phone. But by 2004, there were signs all is not well, as Nokia started losing market share to rivals. In 2005 the company sold its billionth phone in Nigeria, a Nokia 1100.

Nokia E6
Image Source: coroflot | Original Nokia E6

Beginning of the end

In 2007, due to battery issues, Nokia was forced into the world’s largest product recall. To compound its woes, Apple launched the iPhone the same year. This launch by Apple revolutionised the mobile phone market as it was known up to that (2007) point. As if the bad news wasn’t bad enough, in 2008, a year after IPhone entered the market, Google launched the Android 1.0. This signalled the beginning of Operating System (OS) battle between Apple’s iOS, Google’s Android OS and Nokia’s Symbian OS. The same year Android launched, Nokia’s Q3 profits fell 30% and sales dropped to 3.1%, while iPhone sales rose to around 330%. By 2009, Nokia announced plans to retrench 1,700 workers worldwide; admitting its reaction to the rise of iPhone, Blackberry and Android devices was too slow. But at this point, it was too late to save Nokia from its first loss in more than a decade. At this point, dumping its beloved Symbian OS for Android even as a short term solution seem the most logical thing to do but Nokia’s head of Smartphone, Mr. Anssi Vanjoki dismissed the idea as “pissing in your pants for warmth” in the winter.

As completion got tougher, Nokia hired a Canadian, Stephen Elop in 2010, as its first non-Finnish CEO. Before joining Nokia, Mr. Elop was the head of the Business Division at Microsoft. His arrival ushered in a breath of fresh air at the ailing company as Nokia saw rise in profits but announced a further 1,800 job cuts. But the euphoria that greeted his arrival was short lived as Nokia quickly returned to the trenches as battle for the soul of global Smartphone market rages on. Mr. Elop in 2011 issued a warning to his staff “we are standing on a burning platform” and to compete with Apple and Android, he announced a partnership with Microsoft and adopted Windows as its primary OS. But job cuts continued as 4,000 staff were asked to join the labour market. The same year, Nokia was overtaken by Apple and Samsung in Smartphone market as its profit and sales drops.

End of the road

As the brand continues to struggle, in 2012, it closed its last Finnish factory, moved its Smartphone manufacturing to Asia and announced a further 10,000 job cuts. By 2013 Nokia was back to profit after a run of 18-month losses. However, the company couldn’t make any mark in the Smartphone market leading to considerable revenue drop. Final nail on its coffin arrived in September of that year, as they announced it’s selling its Devices & Services division to Microsoft for €5.44bn, the sale was officially completed in April 2014.

 Conclusion

From the number-one phone maker in the world to evaporating under Microsoft, the biggest lesson from the demise of Nokia is that no business or brand is too big to fail. Pride and lack of vision is another important factor; if Nokia had adopted Google’s Android, chances are, they will still be in business today, probably still leading the market. In business, timing is everything but Nokia took too much time in reacting to competition which usually leaves them playing catch-ups.

Like the laws of gravity; what goes up, must come down. In business, the world is not yours; always keep an eye on your competition as they are there to your share of the market.

 

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