The company Nokia was established in 1865 and focused on the manufacture of paper; at the beginning of the 20th century, Nokia became a power industry company. Only at the end of the 20th century, the company’s core business became the development, production, and sales of mobile phones. The company experienced a peak in sales and popularity in the market at the end of the 1990s and in the 2000s but had to face a decline at the end of the 2000s. In 2013, the company sold its business to Microsoft.
The main failure that led to the company’s decline was its inability to adapt to the demands of the market, i.e. provide products that would be efficient in the era of the mobile Internet. The company was not prepared for the emergence of new technology (smartphones) and failed to understand the consumers’ needs. The company’s investment in its operational system Symbian was not successful because Google had presented a similar, if not more effective operational system Android even before Symbian became open-source software. In 2007, both Android and iPhone smartphones were introduced to the market, which adversely influenced Nokia’s sales: in October 2009, Nokia reported its first quarterly loss since 1996. Nokia’s inability to adapt to the new market demands and compete with the new entrants led to its decline; the company’s financial investments in the Symbian OS did not bring it any profit because iOS and Android were much more efficient and valued by the market.
Nokia since the start had been focusing on making it a magical phone, a phone which is hard, durable and does not break; they completely ignored the fundamental problem of compatibility of the hardware with the operating system. The OS of Nokia was Symbian, it was a popular OS back in the machine age and it had earned Nokia a lot of market share in the past, but as the technological advancement took place, the Symbian OS start falling behind other OS like android and IOS. The problem with Symbian phone was not being compatible, it had many incompatible versions and also had no ability of backwards compatibility, this lead to Saipan 7 and Saipan 8 which was clumsy and had shortcomings of its own. The Saipan 7&8 was unable to support touch screen, multimedia, new operation interface which pointed that Nokia phones were disadvantage in the market, and when Saipan was working on development of 2G, it could not keep up with the 3G momentum going in the industry.
Inadequacy of Symbian to not adapt to the technological advancement was not the only problem, the fault lied at the inadequacy of Nokia to develop another operating system and cooperate with Google Android to develop an OS superior to both Android and Symbian. One of the biggest and fatal mistakes which Nokia made was its refusal to cooperate with other Mobile Manufacturers in the business ecosystem. Symbian in itself was a closed operating system, which has dual effect; one by raising the barriers of entry for any other handset manufacturer, second was being totally blind to what was happening in the outside world, both these reasons contributed towards the failure of Nokia to not foresee its future. Nokia operated in monopoly and thus refused to work and share its technology with other manufacturers to boost its profits. Though this strategy worked, Nokia did well in its own inherent market, but the problem was cropping with Symbian, it was too difficult to develop and operate application with Symbian, which made it extremely difficult to meet the demands of its consumers. At the same time, most of the other handset manufacturers joined hands and have joined the camp of “Android”, companies such as Samsung, HUAWEI, HTC, Sony, and Coolpad & ZTE were part of the camp. The joining of other handset manufacturers in the Android camp was a fatal blow to Nokia, as now they had a better understanding in relevance with the audiences’ requirements and many of the companies moved together in the direction of developing large number of applications based on Android operating systems in order to strengthen and securing the system.
The problem of failed investments in obsolete technology was a cause of another wrong approach, namely, the approach to leadership. The management of the company was not efficient enough because it was too bureaucratic and could not answer adequately to the rapid changes in the market. The organizational structure, compared to Apple and Google, was too complicated, and a product decision took too much time to compete with the other smartphone giants. The last “nail in the coffin” was the new CEO Stephen Elop who blamed employees for the decline and terminated several projects, including the development of Symbian OS, which led to a dramatic drop in Nokia’s share price. After that, the company was sold to Microsoft, which developed a new OS that, however, was also not able to compete with iOS and Google.
The main cause of Nokia’s failure was the inability to invest in the right technologies and the lack of strategic leadership. The company continued to invest in R&D (even more than Apple) but was unable to compete with this rival because of its inability to provide innovative products that corresponded with the market’s demands. The company’s evaluation of the industry and the market was inadequate; furthermore, it was not even able to follow the competitors and develop a similar product to increase its competitive advantage (as HTC did).
It is possible to assume that Nokia’s investments in R&D were futile because it did not recognize the need to develop a new product that would not be based on Nokia’s previous products and technologies. Therefore, the failure to invest correctly and the failure to analyze the market and the industry adequately were the main causes of Nokia’s decline in the 2010s. The company’s business tactic was to support the development of Symbian; however, if the company could recognize Android’s potential from the beginning (as Samsung did), it would have acquired the chance to become one of the most successful smartphone manufacturers on the market. The company relied solely on Symbian’s popularity and serious profits it provided during the company’s peak. Nokia was resistant to changes and its reluctance to adjust eventually led to its decline.
Competitors of Nokia like Samsung, Sony came up with a new phone almost every new year, they came up with new and radical designing, they realized that the market now needs a phone with superior design, shine, cool features and ease to use and all of them were doing the same to gain a sizable market share. Nokia on the other hand was not able to innovate; Nokia did not even have the front camera for a very long time, which does not even make it 3G enabled, while the industry was on the verge of entering 4G. It can be thus said that smartphones of Nokia were feature ready but not future ready.
The early mobile phones came in the market for the purpose of calling, people had no idea what could be the next level of improvement with the phones, they never imagined that phones could be used for clicking pictures, recording video, accessing mails, sending information, shopping, social media, all these things were absolute surreal to human. Nevertheless, with time, and progress and development of science and technology, smartphones entered into people life and soon it became a necessity rather than an accessory. Earlier when the mobile phones were popular in the market almost a decade ago, people used to buy phones on the basis of actual benefits, such as battery life, durability, strength etc., their purchase behavior was rational, objective and real, however in a quick span of few years, as the income of people increased, their taste and preference gradually changed and the process of buying a mobile phone was not as careful and objective driven like the earlier times, it became more of an intuitive and an emotional purchase behavior.
The times and the market was changing rapidly, but Nokia was still focused on its technology oriented and product oriented strategies to guide the innovation of products, it continued to strengthen its inherent properties: making hard for cell phone to break, extend the battery life, increase pixel of phone and similar things. The team was busy focused on the product and technology that in the process they completely ignored what the consumer is looking out for in a mobile phone. Decision making that wasn’t based on consumer’s demand lead Nokia to not only separate itself from the market, ignore the real needs of the market but also to do much idle work.
The organization is only responsible for its own destruction and the primary reason behind this is the failure of the understanding the present requirements of the consumers. Consumers were demanding change but Nokia didn’t changed and continued with their old operating system and Android based operating system smartphones acquired the Nokia market share. The world is changing rapidly and so is the technological landscape, technology is changing at a much faster rate than anyone ever imagined, this also leads to replacement of products and services at a much faster rate. Hence, the needs of the customer are also susceptible to the tech advancement and hence change in their taste and preference is almost inevitable. Hence it is strongly advised to not blindly follow the old marketing formulae and to not linger around the same things which the company did in the past, the time is of innovation, and if one does not innovate they certainly would die. Nokia did the exact opposite of what had to be done, they did zero marketing research and just played on their strengths, unable to adapt to the changing technological times the company flattened out. The consumers were focused on software and wanted application in their phone, ease to use etc. were some of the features customers were looking for, if Nokia would have fulfilled those needs, the situation would have been entirely different. Demand of consumers is a subjective feeling and can be attributed to many factors such as product, service quality, brand influence, top of the mind recall, affordability, market trend etc.; hence it is difficult to determine one single attribute that could contribute to success of a smartphone. This requires companies to stand in leading position at all times, observe the trend of market, always ask the customer what they want and always put in an attempt to surprise the customer by providing him with everything he was thinking subconsciously. Thus, market research is a very important tool in the hands of company, and a better job at market research would lead to a better understanding of customer preference leading to enhanced product development and ultimately increase in revenue for the brand.
The present world is open and thanks to internet that everything can be accessed from anywhere. The openness in the market has made the entire world as one big major enterprise. There is no one single enterprise which is isolated, the world has become more cooperative because an enterprise is in contact with other enterprises and hence cooperation is the only source of power of long term development of enterprises. It should be understood that any organization which is unwilling to cooperate in doing something better for the world will get defeated once all of them gets united. Exactly the same happened with Nokia, when it refused other players with its technology, they all teamed up and joined android camp and came for everything which Nokia was too proud not to share.