Why Nokia Failed ?

  TIMELINE OF NOKIA'S IMPORTANT MOMENTS :

• In Late 1998, Nokia became the best-selling mobile phone brand in the world;
• Nokia’s operating profit went from $1 billion in 1995 to almost $4 billion by 1999;
• The best-selling mobile phone of all time, the Nokia 1100, was created in 2003;
• In 2007, Apple introduced the iPhone;
• In 2010 Nokia launched the “iPhone killer” but failed to match the competition;
• The quality of Nokia’s high-end phones continues to decline;
• In just six years, the market value of Nokia declined by about 90%;
• Nokia’s decline accelerates by 2011 and is acquired by Microsoft in 2013.

Nokia’s failure was something that just had to happen - Nokia, realistically, couldn’t have done much about it.

In 2007, around half of all mobile phones sold were Nokia phones. These guys were massively dominant.

Less than 10% of all phones sold were smartphones, but even in that growing space Nokia, with its Symbian, had dominance.

But in 2007 something happened that you can’t really blame Nokia for. A nut job, Steve Jobs, made this insanely great smartphone that didn’t even have a keyboard, the iPhone. Not only that, he made buying apps so easy that people would actually buy them, making smartphones so much more useful.

And then, to make matters worse, Google decided to partner with every smartphone manufacturer in the world via Android, which would emulate the iPhone. And they didn’t care whether they made any money or not so gave the software for free.

I mean, what were Nokia supposed to do? It’s far more difficult changing a legacy software, like Symbian, than making an essentially new one like Google did with Android. And given they were so dominant in both hardware and software, they couldn’t have really abandoned either.

Ok, in hindsight they should have adopted Android, but fat chance that was going to happen given Android was way behind, and a competitor.

And so the reason Nokia failed was because shit happens…

Nokia's failure can be attributed to a combination of 3 factors.

1. Competitors attacking the incumbent:

Nokia was the world leader in mobile phones circa 2008. The smartphone of those times were dominated by the Symbian consortium and Nokia was a dominant player in that ecosystem. The Symbian roadmap was being driven by Nokia and Samsung, LG and others were desperately trying to get out of Nokia's shadow in the Symbian ecosystem. They started to divulge from the Symbian consortium and eventually Nokia acquired Symbian. This effectively tied Nokia to that platform as they had already invested heavily in it. Meanwhile the competitors were looking for an alternative operating system.

2. The alternatives becoming the mainstream:

Around 2008 there was a shift in the smartphone market. Two new and promising alternatives were introduced to the market backed by companies with deep pockets, namely iOS and Android. Apps and Ads started to dominate the revenues. Both Apple and Google emphasized on creating a developer community to encourage people to adopt their new platform. This resulted in more apps being created for those platforms and with the respective market places, it became easier to monetize the apps. This started the ball rolling.

Nokia on the other hand had a fragmented developer community. Symbian was cumbersome to develop apps on. It was unweildy, heavy and not developer friendly. Moreover, there was no marketplace where developers can showcase their apps. It is fair to say that Nokia made a blunder in not recognising that Apps and Ads rule the world.

3. Strategic failures:

Nokia being behemoth that it was, was slow in reacting to these paradigm shifts. But it did react. A new platform was started called the Maemo to fight the iOS and Android ecosystem. A new marketplace was being created called the Ovi Store. But it was too little too late. There were already millions of apps in both App Store and Google Play to cater to most needs of people.

Nokia was slow in execution too. Nokia N900 was promising but it was slow and not as polished as iPhone had come to be. The software updates were few and far and there was not much content in the Ovi Store either.

All these lead to Nokia doing something very drastic. It wanted to hard reset. Enter Stephen Elop. In Feb 2011, he issued the "Burning Platform" memo and announced the strategic partnership with Microsoft. Windows Phone was announced to be the primary smartphone platform. Active development of Symbian and Maemo was stopped. Here was a chance for Nokia to regain the marketshare by providing an alternative platform to the world. But that strategy backfired as Windows Phone failed to gain any kind of foothold.