How and why NOKIA failed…?

Nokia- one of the most dominant and successful mobile phone manufacturer in the late ’20s. Nokia used to have a 25% market share in the world in 1997-98 and had 70% market share in India in 2008-09. But at some point, Nokia failed. It could not stand the competition. Is that so or someone murdered Nokia? Before diving into deep, let’s have a look at Nokia Corporation.

How and why Nokia failed

History:

Nokia was established in 1865 in Finland. Communication, Information technology and consumable Electronics were the main industries for Nokia back then.

Nokia acquired the Mobira Company and started manufacturing phones. In 1982, Nokia introduced the first car phone named Nokia Mobira Senator weighing 10 Kg. Later on, in 1984, Nokia Mobira Talkman was launched in the market weighing 5 Kg. It was also famous as the “First Transportable Phone due to its low weight”.

Nokia Mobira Senator

Nokia Mobira Talkman

Again, 1987, Nokia came up with Nokia Mobira CityMan with the unbelievable weight which was 800g. It was one of the most successful and highest sold phones until then. Even, at 1991 PM of Finland Mr Harri Holker was the first human being who did world’s first GSM call via Nokia CityMan.

Nokia Mobira Cityman

In 1992, Nokia introduced Nokia 1011 followed by 2100 series (First Feature Phone) in 1994. Nokia was expecting that they would sell 400,000 (4 lakh) handsets but what they saw was unbelievable. In 1994, Nokia sold 40,000,000 (4 Crore) handsets.

Nokia 1100 and 1110 Series

Here, we can see that as Nokia was planning to adapt to the market. The market was growing rapidly and Nokia was adapting it.

In 1997, Nokia gained 25% market share in the world and became no.1 Phone Manufacture in the world.

In 1999, Nokia had top 20 handsets in the list of “Top 50 most selling handsets in the world”.

This is what I call understanding the market, its need and adoption curve. In 1992, Nokia predicted that there would be 40 million handsets in the market till 1999. However, in 1999 there were 250 million handsets active in the market.

In between 2003 to 2005, Nokia launched the 1100 and 1110 series in India. I am damn sure that many of us had used any of these or both of these phones in our childhood (snake game wala phone). These two-handset series helped the Nokia to gain 70% market share in India.

Nokia Market share in 2005 and 2012

After 2005, Nokia was growing in size of manpower, growing in size and number of manufacturing plants and of course growing in the size of global presence.

Till the 2000s, Nokia was like a racing car on a highway. In 2005, it became a heavy truck who was ruling the highway of communication sector dominating Motorola which was another popular phone manufacturing company back then after Nokia.

But nobody knew that this the dominating truck was about to stick in heavy traffic in the coming future.

Emerging Competitors:

After 2005, small companies like Samsung, Xiaomi, Lava, Intex, Gionee, Oppo, Vivo and other small Chinese Companies started to introduce their mobile phones. That was the time when Google Android and Apple were coming with their own software technology. Whereas Nokia was going with Symbian.

Google android was spreading across the US and UK resulting Nokia sale dropped drastically (approx. 30% drop in sales). However, in Emerging Asian Market, Nokia was still ruling the market. (Asian markets are always behind the US, UK market)

Nokia Sales from 2010 to 2015

That was the first sign that the market gave to Nokia but unfortunately, Nokia did not get it.

Here in India, Samsung and Motorola started to introduce “Flip Phones”. An innovative and creative design did not fail to impress the Indian market and consumers. Result? Nokia sale started to drop.

Samsung's First Flip Phone

Motorola's First Flip Phone

It is very tough to drive or to turn the heavy truck in traffic than driving a car. Something like that was happening with Nokia. Nokia was so huge in terms of global presence that it was not able to adapt this change globally. On the other hand, Motorola was bouncing back with its Motorola Razr handset.

Now let’s talk about Chinese phones. China is no doubt, number one in affordable manufacturing. At that time, China has introduced many affordable mobile phones in Indian Market. This is due to the fact that their execution was outstanding and low manufacturing cost.

Chinese Phones in Indian Market

Now Nokia was beaten by both US, UK market and Asian Market. But Nokia was a heavy truck which was trying to turn their system as per the market but failed to match the speed of other competitors’ and market demand. Whereas other companies were cars and off course small vehicles always escape traffic quickly than larger vehicles.

Remember: Every competitive advantage has a limited lifespan.

At the time of 2009-10, Nokia was ready to change as per the market demand. Nokia has everything that a company needs to be successful in the competitive market.

The market had 3 tier structure in 2010.

1. The high range where all the premium mobile phones with the latest technology were there. Nokia’s execution time was more due to global presence. That’s why even though Nokia had the best team in innovation, Nokia never met the market demand speed and failed to introduce any new phone in time.

2. The Medium range phone market was captured by Google android. Android and Apple had created its own ecosystem under UK and US. Now both of them planning to get into the Asian Market. Android and Apple kicked out the Nokia from the med-range competition in US, UK and was about to do the same in the Asian Market.

3. The Low range phone market was captured by Chinese mobile companies because their manufacturing cost was very low than other branded companies. Ultimately, their product cost was also low. Nokia could not compete with Chinese companies in terms of the cost of manufacturing.

When android and apple created its own ecosystem then that was the time when the market was shifted to software and was not depend on hardware anymore. This was what Nokia failed to understand and made their second mistake.

Android had more than 125,000 apps. Apple had around 300,000 apps in its online store whereas Nokia’s Symbian has only 20,000 apps.

Other companies like Samsung, Lava, Intex, etc. where shifting to android instead of creating their own operating system. Resulting, they have created interdependent ecosystem.

Due to this, many app developers shifted to Android because it was an easy platform to develop the apps then Symbian. Nokia should have known that it was time to leave the Symbian and adapt the Android. However, Nakia decided to continue with Symbian.

Instead, Nokia started to fire its employees across the globe. On average, Nokia cut off 3000 employees every month in 2010 but then also did not leave the Symbian.

The world changed in 2011. Androids were everywhere in the Asian Market. Nokia Corporation fired the old CEO and appointed new CEO Mr Stephan Elop. He knew that Nokia doing wrong by not going with the flow. Nokia needs to adapt to the new operating system as hardware is not their competitive advantage anymore.

Steven Elop (Nokia CEO) and Steve Ballmer (Microsoft CEO)

Nokia was about to shift android but then Stephan Elop thought that “why to become like everybody else? Why adapt to Google Android? Why don’t we create our own ecosystem”? In terms of Management, it is known as ‘blue ocean strategy’. The thought was good to listen but difficult to execute. With this thought, Nokia made another mistake and approached Microsoft. Mr Steve Ballmer was the CEO of Microsoft at that time.

Friends, let me tell you that back in 2011, Microsoft’s Windows OS was not at all compactable to mobile. Both Nokia and Microsoft needed to create the whole ecosystem from scratch.

On the other hand, Android and Apple were emerging rapidly and successfully created their own community in the world.

Now, even consumer, developer and mobile phone manufacturer, all of them shifted to Android. It is again an Interdependent Ecosystem. Nokia had no such ecosystem. Everybody was asking for Android-based phones in the shop. Every developer was creating his app on Android platform. Most of the mobile phone manufacturers started to use Android as their operating system.

Nokia was alone with Windows. It was alone previously with Symbian too. Nobody was interested in their product.

Apple was creating its own community but differently. Apple launched many devices like iPhone, iPad, Apple TV, Mac OS X, Mac PC, iWear, iPlay. They all are interconnected. So after sometimes, a single customer becomes the part of Apple Comunity.

Apple Products

Actually, Apple created its own closed Ecosystem in US and UK. So, if a customer purchases any one device of apple then he wanted to purchase another Apple product due to its closed ecosystem.

Apple's Closed Ecosystem

Whereas Android has an open ecosystem which was very much successful in the world apart from the US and UK.

Android's Open Ecosystem

Nokia failed to create both kinds of an ecosystem. Meanwhile, in 2014, Nokia launched its Lumia Series. But it was not that much success and did not survive in the market.

Now it was 2015, we all know that Android was ruling the Indian Market. Android and Apple ruling the world. Smartphones were becoming more affordable and there was no sign of Nokia.

Once, Nokia used to have a 70% market share and now Nokia has vanished.