nokia vs apple case study

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The theory of disruptive innovation says smaller players get to spot disruptive opportunities, and new value chains, before their bigger brothers. Entrenched companies by way of contrast look to protect the cash they enjoy from their dominant position. Here's why I think that is wrong and how we need to rethink disruption (and innovation!).

First let's rephrase the theory - big companies are comfortable with smaller players taking a small bite out of their breakfast. What they fail to realize is that the nutrition gained at the outset will prime that small critter to take a chunk of their lunch and then to push them out of the way at dinner.

Often, and more and more often, this is not what happens.  Nokia is a case study in modern disruption.

Let's go back to 2006 to review the essentials of why.

Apple was about to launch a phone that nobody in the mobile world thought they had much of a chance. The company was just being too ambitious. They were calling it the iPhone and it was due soon.

Nokia sold phones in the hundreds of millions, controlled supply chains and had the tightest relationships with carriers. Customers meanwhile had to do mobile computing on a screen the size of their thumb.

While Apple was designing the iPhone and Nokia was selling half a billion phones each year, Google bought a company called Android and announced an Open Handset Alliance , a grouping of industry players who would come together to build an open source OS for smartphones. Nokia was invited to join but refused to demean itself.

Soon afterApple launched an Apps Store that began to take off, attracting tens of thousands of developers, and then customers.

Within two years of these events Nokia was already in crisis. In 2007, Nokia had a market capitalization of €110 billion; by May 2012 this had fallen to €14.8 billion. Those figures illustrate the extent of the decline over 5 years, years in which Apple and Android came to dominate smartphones.

So what are the lessons here for innovation? The first is that neither Apple nor Google were small players. They were hardly start-ups. They are both highly accomplished.

But they were making adjacency moves of a very radical nature - and at that time no company in their right mind made big adjacency moves likes this into totally new markets, like from ads to mobile and computing to mobile.

With the iPhone and Android, a new kind of adjacency was born, one I have called elsewhere radical adjacency . But so too was a new kind of platform business.

Apple had no inkling that its Apps Store would be so successful but it had experience of scaling a platform, with iTunes. That content platform already had the major ingredients for success for all types of platform businesses - intellectual property protection, seamless commerce, great content ingest, high scalability, attraction.

Google too had a platform, with Android, and has evolved it over time into Play. Apple had gone from devices to platforms and ecosystems and Google arrived at the same place, by way of its dominance in search and advertising and a punt on mobile open source.

Nokia's response is where the innovation case study becomes very interesting.

Nokia open sourced its own operating system Symbian - or at least it tried to. In effect it tried to do an Android, grouping together major players like Texas Instruments, Motorola and Samsung in an open source project to develop the Symbian OS as a mutual, open asset.

There were problems - an unwieldy governance structure that left decision making opaque, if you were a developer. A sense that these structures were great for big companies but that as a developer you were in the cold.

Nokia/Symbian also launched an Apps Store, Horizon, now happily forgotten, and after six months it had the sum total of 60 apps in it.

And Nokia launched its own Apps and Content store - Ovi, in 2009. But Nokia had no real platform experience to compare with Apple's. The platform was shaky and it tried to launch simultaneously in 35 countries - because that's what dominant players do. It was a disaster and the tech press called it out as such. Nokia was faced with a gale of criticism for the first time.

Within two years they closed down the Symbian open source project. Symbian had been rushed into the public domain months ahead of schedule. But so what? It didn't have support. It was soon gone and Nokia went looking for a new alternative (even though it had one in its labs). Of course, we now know, it chose windows.

The lessons from this though are that Nokia ignored threats to its business. They are that it made the wrong OS choices and the wrong platform choices. It lacked experience in the latter and it is still faltering over the former. It did not ignore the dangers. It simply did not understand the new skill sets it needed.

One of its key deficits was a lack of experience in platform development - a great engineering company but in 2008 few people had what Apple had - experience through iTunes.

So here is where we need to rethink disruptive innovation.

Disruption comes from the need of companies to make radical adjacency moves - especially in areas of convergence like computing and mobile. Your business is at risk from companies who are not now competitors. That's what the theory of radical adjacency tells you.

The disruptive weapon can be a design or a device but the business will be sustained by good platform choices. And acquiring skills in developing platforms is a must, as central to management as opening an office each morning.

In platform economics, the most important asset is being able to attract other groups and individuals to the platform. Leadership needs to re-orientate around attraction, giving it the same importance they place on investment. That means attracting people, resources and commitments to your project, your platform. That's the same whether you are out on Kickstarter or competing with Apple.

In the case of Nokia, then, disruption was no real surprise. They knew what was coming because they saw it (Apple and Android) and they were countering it (with Symbian open source)  but nobody could foresee the rapid evolution of platform economics, nor the skills needed to make platforms work.

This as much as the absence of a good smartphone to compete with the iPhone sank Nokia. In fact with its QT interface it could well have produced phones to compete with the iPhone - what it did not have was the Apps Store platform, a factor critics continue to ignore when assessing Apple's durability and strength.

Since then Nokia has still struggled to make good OS and good platform decisions. As one reader puts it:

Microsoft saw Nokia's weakness, and gave them what they wanted: a robust OS but with some stipulations. The greatest stipulation was that the raw kernel of Windows 8, the Windows NT kernel, which is the sweet-spot for true innovation, would not be accessible to Nokia. Microsoft carefully controls access to this kernel. One must remember that, when Nokia had their piggish Symbian, Nokia had full control over the OS. Not so with Windows Phone 8. It's locked down. Nokia is like the desperate home owner who is behind on mortgage, needs cash fast, finds a generous benefactor, only to discover that they have embraced a loan shark.

There are plenty of OS options out there for Nokia but it has embraced a company whose culture it understands, as a former gorilla in its own right, and, sadly,  it lost confidence in its judgment to go it alone.

That is the effect of this kind of disruption. It fillets confidence as well as the share price. But in Nokia's case nobody can say they didn't have a chance to take the same ride that Apple, or indeed Samsung, did. It was there to be taken.

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Apple and Nokia: The Transformation from Products to Services

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In the mid-to late 2000s, Nokia flourished as the world’s dominant mobile phone — and mobile phone operating software — producer. Founded in 1871 originally as a rubber boots manufacturer, by 2007 Nokia produced more than half of all mobile phones sold on the planet, and its Symbian mobile operating system commanded a 65.6 percent global market share. 1 But within half a decade, Nokia would falter and be surpassed in the smartphone market not only by Apple’s revolutionary iPhone but also by competitors including Google and Samsung. And in September 2013, Nokia would sell its mobile phone business to Microsoft for $7 billion. 2 Apple literally came out of nowhere — it sold exactly zero mobile phones before the year 2007 (the year Nokia held more than half of the global market share) — but by the first quarter of 2013, Apple had captured almost 40 percent of the US smartphone market and over 50 percent of the operating profit in the global handset industry. 3 In fiscal year 2013, Apple would sell five times more smart-phones than Nokia: 150 million iPhones compared to Nokia’s sales of 30 million Lumia Windows phones. 4 In contrast to Nokia, Apple realized it wasn’t just about the mobile device itself, it was about leveraging software to create a platform for developing compelling mobile experiences — including not just telephony but also music, movies, applications, and computing — and then building a business model that allows partners to make money alongside the company (e.g., Apple’s iTunes and AppStore) and, in so doing, perpetuate a virtuous cycle of making the iPhone attractive to customers over multiple life cycles through ever-expanding feature sets.

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Cuthbertson, R., Furseth, P.I., Ezell, S.J. (2015). Apple and Nokia: The Transformation from Products to Services. In: Innovating in a Service-Driven Economy. Palgrave Macmillan, London. https://doi.org/10.1057/9781137409034_9

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Nokia vs. Apple: the in-depth analysis

There's just something about Apple that makes people go crazy whenever the company's lawyers do even the simplest things -- whether it's filing routine trademark oppositions , getting patents granted , or, uh, defending allegations that the company is in league with the Mafia , Steve and friends just seem to inspire some strong reactions whenever they end up in the courtroom. So of course things got a little wild last Thursday when Nokia announced it was suing Apple over ten patents related to GSM, UMTS (what you know as 3G) and WiFi -- the pundit class immediately set upon the idea that the lawsuit was some sort of reaction to Nokia's diminishing cellphone marketshare and the perceived dominance of the iPhone, perhaps best exemplified by John Gruber's flippant "If you can't beat 'em, sue 'em." Nokia can't compete against Apple, so obviously it's abusing the hopelessly-broken patent system get a little payback, Espoo-style -- right? Well, wrong. As usual, the race to hype this dispute as a bitter standoff between two tech giants desperate to destroy one another has all but ignored the reality of how patents -- especially wireless patents -- are licensed, what Nokia's actually asking for, and how it might go about getting it. And as you know, we just don't do things that way, so we've asked our old friend Mathew Gavronski , a patent attorney in the Chicago office of Michael Best & Friedrich , to help us sort things out and figure out what's really going on here -- read on for more.

First, a preliminary note: we're just not going to get into the specifics of Nokia's ten patents, whether they should have been granted, whether they're valid, or whether the patent system itself is a good thing. Each of the ten patents in question covers a highly technical part of wireless communications, and we simply don't have the time to judge them on their merits -- and even if we did, we have no way of knowing how the iPhone's code and chipsets make use of the patented technology. As for the patent system, well, it's what we've got, this case isn't going to change it, and we're not going to begrudge Nokia for taking advantage of the primary means available to protect its billions in R&D. We doubt Steve Jobs feels any differently about things. So if we can't talk about the patents themselves, what can we talk about? A lot, actually. Contrary to what you may have heard, Nokia isn't after billions of dollars, and it's not trying to stop sales of the iPhone forever. Instead, this case boils down to royalty rates -- Nokia wants Apple to pay a fair price for licensing patents Nokia says are "essential" to using GSM, UMTS, and WiFi. That's all. Nokia isn't even really asking for money damages beyond interest on past due royalties, it just wants a fair license rate for its patents. That may sound simple, but it's really not -- in fact, it's insanely complicated. Wireless standards and essential patents A quick look at Nokia's actual complaint ( PDF ) reveals an impressively tight argument: Nokia says that it committed to licensing several of its patents under "fair, reasonable, and non-discriminatory" terms (or FRAND terms) during the development of the GSM, UMTS, and WiFi standards because those patents are essential to each standard's operation, and since the iPhone uses all three standards, Apple should pay to license the patents. Open and shut, at least if you believe Nokia. Of course, that's not the whole story. Wireless standards like GSM are developed by a standards-setting body with the cooperation of its members -- in the case of GSM and UMTS, it's the European Telecommunications Standards Institute (ETSI), and with WiFi it's the familiar IEEE. These organizations aren't blind to the fact that its members invest billions into R&D and have lots of patents, but they also recognize the need to develop standards that everyone can use -- so while a standard like GSM is under development, member companies are supposed to declare if they own any patents they think are essential to the standard's operation. What Nokia doesn't say is that there's no independent verification of a patent's essentialness during the standards process -- in other words, the ETSI and the IEEE don't maintain some master list of patents that are actually essential. Instead, each company that participates in developing a standard is basically on the honor system, and they all agree to abide by FRAND principles when negotiating licenses. That means there's a tremendous incentive to declare as many patents as possible to be essential, since anyone who wants to use the spec might have to pay license fees on all those patents, and not declaring a patent essential can result in various other unpleasant consequences. (Legal nerds will remember the Rambus case as an example of this: the short and highly-simplified version is that Rambus didn't declare it had patents on certain types of RAM, and years of litigation ensued.) As you might imagine, then, determining whether a given patent is actually essential to a standard is pretty damn important, and it's not an easy or exact science. It takes a ton of time, money and specialized effort to examine patents and standards, and the results are rarely published, since they're worth a fortune to the right clients. However, there are a few studies out there that shed some light on Nokia's patent portfolio and GSM, from a boutique research firm called Fairfield Resources International . Fairfield took every patent declared essential to GSM and assigned it to an expert to judge whether or not it was actually essential. The results? Nokia has far and away the most patents judged essential to the operation of GSM, by more than double.

Source: Fairfield Resources International

Nokia's in a similar position with UMTS and WiFi -- while some of the patents that it's declared essential to those standards might be fluff, it has many that experts have judged to be actually essential. What's more, Nokia's lawyers have cherry-picked just 10 total patents to sue Apple over, so we're inclined to believe that those are the clearest of the clear -- the ones that simply can't be avoided by GSM, UMTS, or WiFi devices. Based on probability alone, it's almost certain that the iPhone infringes at least some of those 10 patents , regardless of our inability to make that determination directly.

Royalty rates and Apple's next move So if Apple's using Nokia's tech, and Nokia's obligated by its agreements with ETSI and IEEE to offer licenses to everyone on fair, reasonable, and non-discriminatory terms, why isn't Apple paying? Would you be surprised if we told you that the answer is incredibly complicated? Because really, you shouldn't be -- especially when a word like "fair" is involved. The nature of the standards process means that when big telecom players (like, say, Nokia and Qualcomm) come to the table to hash out patent licensing agreements, each side has a pretty hefty portfolio of "essential" patents to bargain with, and they can walk away with a cross-licensing agreement instead of having to make huge royalty payments to each other. Cross-licensing agreements are incredibly common in the wireless industry, and we as consumers basically depend on them operating behind the scenes to make all these standards work. Of course, cross-licensing can break down as well -- Nokia and Qualcomm have been suing the pants off each other for years now, after all. But Apple doesn't have a huge portfolio of patents on wireless technologies to cross-license with Nokia -- the majority of its patents are on devices and interactions, and we don't think anyone in Cupertino is too anxious to share those. So it's got to be cash, and even if Apple's willing to pay a straight cash royalty for Nokia's patents, negotiating that price is anything but easy -- FRAND is basically what wireless industry licensing executives have to believe so they can sleep at night. In reality FRAND is nebulous and undefined, with almost no specific rules for determining what a "fair, reasonable, and non-discriminatory" license actually is. Nokia could be asking for $1 per iPhone -- chump change for

Apple -- or it could be asking for $100 per iPhone. As of right now we have no real way of knowing -- but since all Nokia's asked the court to do is set a price, it's clearly willing to simply accept cash and move on. So what's Apple's next move? Well, it has several options: first, it will likely say that it's not infringing the patents at all -- either because it believes the patents aren't actually essential to the standards, or because Apple bought the chips and components that use the patented technology from a licensed supplier. Nokia doesn't get to double-dip and be paid twice if Apple's suppliers have a license to use Nokia's patents and Cupertino's just buying phone components without dictating design. Again, we simply don't know the answer here -- we'll have to wait for Apple's reply to find out what tactic it decides to take, but we'd expect this to be the first line of defense. Second, it can try to to convince the court that Nokia's patents aren't valid, which would be the worst-case scenario for Espoo. Like we've said before, suing over patents is a big gamble because they might end up invalidated and no longer generate lucrative licensing revenue -- another reason we're inclined to believe Nokia's picked 10 rock-solid patents out of its collection of some 11,000. But invalidation doesn't really make tactical sense, considering all Nokia wants is a royalty -- if invalidation is Apple's strategy we'd say we're in for an easy decade of litigation, and that's not going to be cheap. And finally, Apple can just pay. We spoke to several experts in the field during the course of our research into this piece, and almost all of them were surprised that Apple hadn't already coughed up the green. Again, we don't know the royalty rates Nokia's demanding, but it's a little strange that Apple isn't using its enormous cash reserves to just make this disappear. The main issue we can see is that whatever rate gets set in this case will be the basis of all future license negotiations, and Apple's got to be careful with that -- unlike almost every other company in the space, it's become a major player in the phone market virtually overnight, and setting this precedent properly is an important step. That said, Nokia's got to feel pretty good about the rates they've offered Apple here -- filing a lawsuit means Nokia's license agreements with other companies will eventually be examined, so it'll be obvious right away if Espoo's not offering similar terms to Cupertino. Let's just say this: it's not going to happen anytime soon, but we wouldn't be surprised if Steve ends up writing a check somewhere down the line. Wrap-up Okay, that's a lot to think about, but let's just back up a second here and consider the big picture: this has nothing to do with Nokia's handsets versus the iPhone in the marketplace, and everything to do with the fact that Nokia's intellectual property is a critical part of making modern mobile phones work. The real questions are how much of that intellectual property is in the iPhone, and how much Apple's willing to pay -- and neither has a simple answer. Believe it when we say we've just barely scratched the first layer of complexity when it comes to patent licensing and wireless standards, and we've left out a ton of angles and strategies both Apple and Nokia could pursue. And even if we did know everything, at this point it's simply impossible to predict how this case will play out -- it could settle tomorrow, it could go on for two years, or it could linger on for two decades. As always, our hope is that both sides come to the table, figure out a royalty that makes sense, and get on with the business of developing innovative new technology -- like we've said before, the lawyers get paid that way too.

Disclaimer: Although Matt and Nilay are lawyers, they're not your lawyers, and this isn't formal legal advice or analysis. To the extent this article might contain any statements regarding infringement of a particular patent by a particular device or what those patents cover, those statements are attributable to Nilay, not Matt, who still makes a living by giving actual legal advice to actual clients.

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European Business Review

ISSN : 0955-534X

Article publication date: 17 May 2011

The purpose of this treatise is to present an analysis of the importance of positive transformational crisis management. The analysis relates to the difficulty now being faced by Nokia, historically the world's leading manufacturer of technologically advanced mobile phones, of Apple's innovative combination of its iTunes, iPhone, and applications that deliver internet content to the iPhone.

Design/methodology/approach

A crisis, typically considered to be a negative issue, can be a positive transformational event in the life of a business firm when that firm recognizes a crisis and makes appropriate changes in its operations to facilitate positive growth and development. However, the initial stage of a crisis must be recognized and appropriately responded to. The crisis management paradigm that is the foundation for this case analysis focuses on four stages of a crisis: the preliminary crisis, acute crisis, chronic crisis, and crisis resolution. The case deals with the innovations of Apple that have enabled the firm to become a direct competitor to Nokia in the smart phone market. The preliminary crisis stage was not appropriately recognized by Nokia, and the firm was thrust into an acute crisis that has now evolved into a chronic crisis. A brief overview is presented of the historical development of both Nokia and Apple, and an analysis of the present crisis situation in which Nokia now finds itself is presented in some detail.

It was concluded that Nokia is now in a very difficult position regarding Apple due to its failure to engage in a timely transformational response to the competitive innovations of Apple.

Originality/value

This is an excellent example of failure in positive transformational crisis management.

• Organizational change
• Transformational leadership
• Mobile communication systems

McCray, J.P. , Gonzalez, J.J. and Darling, J.R. (2011), "Crisis management in smart phones: the case of Nokia vs Apple", European Business Review , Vol. 23 No. 3, pp. 240-255. https://doi.org/10.1108/09555341111130236

Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited

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The Strategic Decisions That Caused Nokia’s Failure

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In less than a decade, Nokia emerged from Finland to lead the mobile phone revolution. It rapidly grew to have one of the most recognisable and valuable brands in the world. At its height Nokia commanded a global market share in mobile phones of over 40 percent. While its journey to the top was swift, its decline was equally so, culminating in the sale of its mobile phone business to Microsoft in 2013.

It is tempting to lay the blame for Nokia’s demise at the doors of Apple, Google and Samsung. But as I argue in my latest book, “ Ringtone: Exploring the Rise and Fall of Nokia in Mobile Phones ” , this ignores one very important fact: Nokia had begun to collapse from within well before any of these companies entered the mobile communications market. In these times of technological advancement, rapid market change and growing complexity, analysing the story of Nokia provides salutary lessons for any company wanting to either forge or maintain a leading position in their industry.

Early success

With a young, united and energetic leadership team at the helm, Nokia’s early success was primarily the result of visionary and courageous management choices that leveraged the firm’s innovative technologies as digitalisation and deregulation of telecom networks quickly spread across Europe. But in the mid-1990s, the near collapse of its supply chain meant Nokia was on the precipice of being a victim of its success. In response, disciplined systems and processes were put in place, which enabled Nokia to become extremely efficient and further scale up production and sales much faster than its competitors.

Between 1996 and 2000, the headcount at Nokia Mobile Phones (NMP) increased 150 percent to 27,353, while revenues over the period were up 503 percent. This rapid growth came at a cost. And that cost was that managers at Nokia’s main development centres found themselves under ever increasing short-term performance pressure and were unable to dedicate time and resources to innovation.

While the core business focused on incremental improvements, Nokia’s relatively small data group took up the innovation mantle. In 1996, it launched the world’s first smartphone, the Communicator, and was also responsible for Nokia’s first camera phone in 2001 and its second-generation smartphone, the innovative 7650.

The search for an elusive third leg

Nokia’s leaders were aware of the importance of finding what they called a “third leg” – a new growth area to complement the hugely successful mobile phone and network businesses. Their efforts began in 1995 with the New Venture Board but this failed to gain traction as the core businesses ran their own venturing activities and executives were too absorbed with managing growth in existing areas to focus on finding new growth.

A renewed effort to find the third leg was launched with the Nokia Ventures Organisation (NVO) under the leadership of one of Nokia’s top management team. This visionary programme absorbed all existing ventures and sought out new technologies. It was successful in the sense that it nurtured a number of critical projects which were transferred to the core businesses. In fact, many opportunities NVO identified were too far ahead of their time; for instance, NVO correctly identified “the internet of things” and found opportunities in multimedia health management – a current growth area. But it ultimately failed due to an inherent contradiction between the long-term nature of its activities and the short-term performance requirements imposed on it.

Reorganising for agility

Although Nokia’s results were strong, the share price high and customers around the world satisfied and loyal, Nokia’s CEO Jorma Ollila was increasingly concerned that rapid growth had brought about a loss of agility and entrepreneurialism. Between 2001 and 2005, a number of decisions were made to attempt to rekindle Nokia’s earlier drive and energy but, far from reinvigorating Nokia, they actually set up the beginning of the decline.

Key amongst these decisions was the reallocation of important leadership roles and the poorly implemented 2004 reorganisation into a matrix structure. This led to the departure of vital members of the executive team, which led to the deterioration of strategic thinking.

Tensions within matrix organisations are common as different groups with different priorities and performance criteria are required to work collaboratively. At Nokia,which had been acccustomed to decentralised initiatives, this new way of working proved an anathema. Mid-level executives had neither the experience nor training in the subtle integrative negotiations fundamental in a successful matrix.

As I explain in my book, process trumps structure in reorganisations . And so reorganisations will be ineffective without paying attention to resource allocation processes, product policy and product management, sales priorities and providing the right incentives for well-prepared managers to support these processes. Unfortunately, this did not happen at Nokia.

NMP became locked into an increasingly conflicted product development matrix between product line executives with P&L responsibility and common “horizontal resource platforms” whose managers were struggling to allocate scarce resources. They had to meet the various and growing demands of increasingly numerous and disparate product development programmes without sufficient software architecture development and software project management skills. This conflictual way of working slowed decision-making and seriously dented morale, while the wear and tear of extraordinary growth combined with an abrasive CEO personality also began to take their toll. Many managers left.

Beyond 2004, top management was no longer sufficiently technologically savvy or strategically integrative to set priorities and resolve conflicts arising in the new matrix. Increased cost reduction pressures rendered Nokia’s strategy of product differentiation through market segmentation ineffective and resulted in a proliferation of poorer quality products.

The swift decline

The following years marked a period of infighting and strategic stasis that successive reorganisations did nothing to alleviate. By this stage, Nokia was trapped by a reliance on its unwieldy operating system called Symbian. While Symbian had given Nokia an early advantage, it was a device-centric system in what was becoming a platform- and application-centric world. To make matters worse, Symbian exacerbated delays in new phone launches as whole new sets of code had to be developed and tested for each phone model. By 2009, Nokia was using 57 different and incompatible versions of its operating system.

While Nokia posted some of its best financial results in the late 2000s, the management team was struggling to find a response to a changing environment: Software was taking precedence over hardware as the critical competitive feature in the industry. At the same time, the importance of application ecosystems was becoming apparent, but as dominant industry leader Nokia lacked the skills, and inclination to engage with this new way of working.

By 2010, the limitations of Symbian had become painfully obvious and it was clear Nokia had missed the shift toward apps pioneered by Apple. Not only did Nokia’s strategic options seem limited, but none were particularly attractive. In the mobile phone market, Nokia had become a sitting duck to growing competitive forces and accelerating market changes. The game was lost, and it was left to a new CEO Stephen Elop and new Chairman Risto Siilasmaa to draw from the lessons and successfully disengage Nokia from mobile phones to refocus the company on its other core business, network infrastructure equipment.

What can we learn from Nokia

Nokia’s decline in mobile phones cannot be explained by a single, simple answer: Management decisions, dysfunctional organisational structures, growing bureaucracy and deep internal rivalries all played a part in preventing Nokia from recognising the shift from product-based competition to one based on platforms.

Nokia’s mobile phone story exemplifies a common trait we see in mature, successful companies: Success breeds conservatism and hubris which, over time, results in a decline of the strategy processes leading to poor strategic decisions. Where once companies embraced new ideas and experimentation to spur growth, with success they become risk averse and less innovative. Such considerations will be crucial for companies that want to grow and avoid one of the biggest disruptive threats to their future – their own success.

About the author(s)

Yves L. Doz

is an Emeritus Professor of Strategic Management and the Solvay Chaired Professor of Technological Innovation, Emeritus at INSEAD.

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Rahul Tripathi

30/03/2024, 03.42 pm

I found this article on the strategic decisions behind Nokia's failure incredibly insightful! 📉 As someone interested in business strategy and management, understanding the factors that led to Nokia's downfall provides valuable lessons for avoiding similar pitfalls in the future. 💡 The analysis of Nokia's missteps, from failing to adapt to changing market trends to underestimating the competition, highlights the importance of agility and innovation in today's dynamic business landscape. 🔄💡

Moreover, the article offers actionable insights that can be applied to various industries, making it a must-read for anyone involved in strategic decision-making processes. 🌟 Thank you for sharing such informative content! I'll definitely keep these lessons in mind as I navigate my own business endeavors. 👍📚

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Anonymous User

16/03/2022, 10.44 am

Nokia is the one of the oldest phone and also it is existed until now

17/09/2021, 07.41 pm

Why does Nokia fail

26/06/2021, 09.54 pm

Someone really should dig into the tale of Nokia Music, that of OD2, a successful independent company bought by Nokia in 2007. In less than four years through marketing bodges, strategic failures, interference from gormless management in the USA, and even more nepotistic and mostly incompetent management in the UK, a profitable company with numerous high profile corporate customers was brought to its knees by talent free people who should never have been promoted into the positions they were in. Well worth digging into, just don't interview the management or you will never get to the truth.

03/06/2021, 01.56 am

As I read through many of these comments, the word "dillusional" kept coming to mind. For starters, Windows OS was as good as either Android or iOS. The main thing lacking were just a few more core apps. That was really it.

Sure, they could easily have run Andoid, and as soon as that idea was floated, Microft instantly shuttered their offices.

The fact that Nadella had his trojan horse Elop do the deal on Friday and hand everyone their walking papers on Monday is proof positive that Microsoft never had any good intentions for Nokia.

MS could have easily thrown one of their legions of Devs onto the task of writing apps. which would have solved the app. store issue in a hurry.

Instead, Nadella destroyed Microfts own eco-system by loosing that lucrative and Crucial market sector. A permanent wound that still haunts them to this day, and showcased Nadella as being far Inferior to Ballmer as well as Gates.

While my first inclination is to assume some nefarious reason for this, I do have to acknowledge however the old addage: "Don't attribute to maclice, what can easily be explained by stupidity"

30/10/2020, 04.23 pm

Why only Nokia there are a number of business world wide which have failed because of its own Founders/CEO/COO lapses some of the reasons which I contribute are as follows.... 1. Lack of vision future 2. Innovation in new age computing revolution 3. High Salary package 4. Founders cannot be pushed out or replaced easily. 5. Management Decisions 6. Dysfunctional Hierarchy 7. Growing Bureaucracy 8. Internal rivalry

21/01/2018, 12.17 am

Captain of the ship knows how to sink the boat. Stephen (the first non Finnish CEO in history of Nokia) joined in 2010 from Microsoft and made a deal to use Windows only despite the fact that Android was growing and already captured huge market share. There was a lot of pressure from Nokia employees to move to Android but he ignored all. He fired a lot of people. It was famous in Nokia Espo office (H/Q) that he is a Trojan Horse. He later sold Nokia mobile business to Microsoft and earned millions of dollars in the deal. Later, he joined Microsoft again. Looks like the plan was to promote Windows Mobile at the cost of Nokia (that failed badly)

Sheila Yovita

13/01/2018, 04.20 am

If the company is at crises, what should the managers do? Could it be one of the option go for advices from top management consulting firms or any other third parties that can help to formulate better strategies to save the company? Assuming they went for consulting firms, then the firms were failed to help Nokia as well?

22/12/2017, 02.34 am

I would love to also see something similar about Blackberry. They were the prime brand for many early adopters and business users of cellular phones here in the USA. Similar to Nokia they also had/have secure network platform. I wonder if their demise was also due to strategic mistakes, and if similar to Nokia they also got bogged down with tactical activities and lost sight of overall strategy.

21/12/2017, 05.00 am

I agree with everyone, broadly. Nonetheless we should NEVER FORGET that Nokia would be far far better (as a Smartphone maker), than it is today.

Another illustration of a North American Corporation that did so well from its foundational years in the 19th Century and well into its first centenary is NORTEL Networks... I read a book about the rise, growth and maturity of NORTEL and it became one great role model for me... Unfortunately, NORTEL failed to go the length any longer than the beginning of the 21st Century; NORTEL collapsed for reasons that are too embarrassing to speak openly abbout - or even in privacy!

I'm working on to establish a Corporate and Product Branding Consultancy in town (Accra, Ghana), and this article on Nokia, like others, is what I've been looking out for, to help learn and know how to start and grow an enterprise and keep it growing and succeeding decade after decade, century after century!

I'm learning!

17/12/2017, 07.59 pm

"While Symbian had given Nokia an early advantage, it was a device-centric system in what was becoming a platform- and application-centric world." Well, actually Nokia pioneered the app-centric world. Go check. Only it's User Interface didn't keep up with the emerging competition.

07/12/2017, 05.51 am

Nokia is still alive... and much more than a mobile phone manufacturer. Nokia is the biggest network equipment maker in the world, employees +100k people and ~25 billion € in revenue in 2016...

30/11/2017, 05.40 pm

Good article. Thanks.

Interesting side note: While working in Japan around 2002, I heard "on the street" that Nokia ran a research center in Japan. Intended to tap the vast and growing Japanese mobile market. They saw everything that was coming in the Western world. Good cameras. Apps. Cost effective mobile internet & services. Mobile email messaging on a mass scale. Multi media devices. Long before the iPhone was invented. Nokia deemed the Japanese market too challenging and closed their research center. Turned a blind eye. The competition was already too far ahead.

28/11/2017, 03.21 am

Another consideration is that Nokia stayed committed to hardware-based human-computer factors as differentiation far longer than it should have: optical strip for scrolling, buttons for menus, buttons for navigation, etc. What the iPhone showed is that software-based UX was the more flexible and powerful approach.

26/11/2017, 04.40 pm

Just imagine, if Nokia had seen the future and adopted Android operating systems before 2009-10, perhaps the horizons of the mobile Eco system would have been very different today. Similarly, Blackberry also failed to see the shift in the mobile market from a communicating device to a multi Media device. Phones transcended the mere communication and functional level to take control of our social lives and presence. The social sites and e commerce growth were trends and changes that both these behemoths failed to see or gauge. They still remain extremely hardware centred, building very physically robust devices but perhaps falling short on the imagination part. I think this is entirely a matter of leadership vision and imagination.

25/11/2017, 12.00 am

Unless I am misremembering, I am sure I had a Samsung phone in the early 2000s. It was nothing like the Samsung mobiles of today. It was not user friendly, the operating system was a mess and I soon went back to Nokia but it's not true to say that Samsung hadn't entered the mobile communications market, they just hadn't entered the smart phone market. (Not that I don't agree with the thrust of the article - Nokia's downfall was very much of its own making).

24/11/2017, 11.53 pm

I think a similar story can be told about Microsoft under Ballmer. What Symbian was for Nokia, Windows was for Microsoft at one time. Nadella came in just at the right time to lift the company out of that slumber and made it take a leap of faith in the Cloud world. The results are evident. Microsoft is sailing at its lifetime best share prices. On the contrary, when we look at Apple, they seem to be following the footsteps of Nokia. Slowly but surely they are becoming a victim of their own success.

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• May 4, 2023

The rise and fall of Nokia - lessons from failure

Updated: May 8, 2023

One of the pivotal moments in life as we know it today was the emergence of cellular phones. The emergence of this sector gave rise to a plethora of brands, such as Apple, Redmi, Samsung, and the brand that was leading them all - Nokia. But sadly, what was a behemoth then is now just a footnote.

The once iconic cell phone that we saw in the hands of almost every adult, also named the Best selling Mobile Phone Brand in the world (October 1998), is now rarely even spoken about. So what went wrong? What resulted in Nokia’s downfall? Let’s explore the Nokia case study and find out what factors caused its tragic “from success to failure” story.

The following are the major factors that accounted for Nokia’s downfall:

Resistance to the only constant- Change: With the rapid pace of change, especially in technology, Nokia’s resistance didn’t help their brand. It kept producing older versions of its phones as compared to its competitors, who kept upgrading their phones. As a result, their market shifted to these newer, more affordable ones.

No strategic plan: Nokia’s rivals, such as Apple and Samsung, had a successful marketing strategy that kept their customers and potential ones interested and on the lookout for their new products. They both used the umbrella branding strategy (such as Samsung with their Galaxy series) that kept users hooked. Seeing this, Nokia tried to release its own line of hardware and software, but it already existed in the market because of its competitors.

Innovation: As the demand for their phones increased, Nokia focused most of its resources on its manufacturing rather than its innovation. Even with the release of their Nokia Lumia phone, they provided the most basic features with the dullest visuals compared to their competitors.

Overestimated strength: Nokia’s management believed that their market would wait for them and buy their phones regardless of what they produced and hence, didn’t focus much on what their competitors put out. They got stuck with outdated hardware and buggy software which resulted in Nokia’s downfall.

Check out these links to know more about the rise and fall of Nokia:

https://www.doersempire.com/why-nokia-failed/#:~:text=Initially%2C%20the%20new%20technology%2C%20urge,company%20on%20the%20strategic%20level -The history, fall and what we can learn from it.

https://www.feedough.com/why-did-nokia-fail/ -The rise, timeline of Nokia’s failure and its reasons.

https://startuptalky.com/reasons-why-nokia-failed/ -Reasons for Nokia’s failure and FAQs.

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The Rise and Fall of Nokia – Why and How Nokia Failed?

The Rise and Fall of Nokia – Why and How Nokia Failed? 12 min read

During the early 2000s, Nokia reigned supreme in the mobile phone market, boasting a significant global market share. Back then, Nokia faced little competition as it offered highly acclaimed and popular products like the Nokia 1280, Nokia 5300, Nokia N91, and Nokia N95. However, the brand’s fortunes took a nosedive as it witnessed a gradual decline in market share, eventually ceding ground to rivals such as Apple and Samsung. In 2014, acknowledging its inability to sustain a presence in the mobile phone market, Nokia made the decision to sell its mobile phone business to Microsoft. What led to the downfall of this once mighty mobile industry leader in a mere span of ten years? This article delves into the events that unfolded at Nokia and the valuable insights garnered from its story.

Table of Contents

The rise of Nokia

1865: nokia was found.

Established in 1865 by Fredrik Idestam, an esteemed engineer in Tempere, Finland, the company we now know as Nokia had humble beginnings. Initially, the business focused on operating a pulp mill and producing paper goods. In 1871, a second factory was opened alongside the banks of the Nokianvirta river, providing the inspiration for the company’s eventual name, Nokia Ab. It was not until 1979 that Nokia ventured into telecommunications research and manufacturing.

Initially, their offerings predominantly consisted of radio equipment, desk phones, and televisions. In the same year, Nokia made the strategic decision to merge with Salora Oy, an enterprise specializing in electrical equipment. Subsequently, the mobile device business was separated from the merged entity, establishing Nokia – Mobira Oy as a distinct entity. This significant development marked Nokia’s official entry into the mobile phone manufacturing industry.

1984: Nokia’s first mobile phone

In 1984, Nokia made its debut in the mobile phone industry by introducing the Mobira Cityman 900 to the public. This mobile phone operated on the NMT-900 network, offering improved signal strength compared to existing networks. Additionally, with a weight of only 800g, it was significantly lighter than other portable products available at the time, such as the Mobira Senator weighing 9.8kg and the Talkman weighing under 5kg. During this era, mobile phones were considered luxury devices reserved for the elite, including aristocrats and royalty. However, due to the sleek design and advancements of the Mobira Cityman 900, it quickly became highly coveted among affluent individuals.

In 1987, a noteworthy incident occurred when a reporter spotted Soviet leader Mikhail Gorbachev using a Mobira Cityman in Helsinki. This occurrence led to the phone earning the nickname “Gorba,” further enhancing its reputation and desirability.

Recognizing the immense potential of the mobile phone market, Nokia-Mobira Oy underwent a name change in 1989, adopting the name “Nokia Mobile Phones.” The company remained dedicated to significant investments in research and development, aiming to continuously innovate and introduce new products to the market.

The Nokia 1011 marked the next major milestone in Nokia’s journey of innovation

In 1987, Nokia achieved a significant breakthrough with the introduction of a groundbreaking phone, known as ‘The Brick’ or the Nokia 1011. This remarkable device became the first mass-produced GSM (Global System for Mobile Communications) phone, catapulting Nokia to new heights in the telecommunications industry. The Nokia 1011 boasted a compact design, measuring 195 x 60 x 45 mm, which was notably smaller compared to other phones available at the time. It featured a monochrome LCD display and an expandable antenna, offering users enhanced functionality and convenience.

Moreover, the Nokia 1011 showcased innovative features, including the ability to store up to 99 phone numbers in its memory and the capability to send SMS messages. These features, along with its compact design, made the Nokia 1011 an instant success upon its release, elevating Nokia’s reputation and influence in the telephony and telecommunications market. It is worth noting that although mobile phones were not yet widely accessible during this period, the Nokia 1011 garnered substantial acclaim and contributed to Nokia’s growing prominence.

1996: Nokia 9000 Communicator & Nokia 8110

In 1996, Nokia unveiled the Nokia 9000 Communicator, a groundbreaking phone that signaled the company’s strategic advancement. Priced at $800, this product ushered in a new era of capabilities, enabling users to access email, fax, and web browsing, while also providing word processing and spreadsheet functionalities. Despite industry recognition, the Nokia 9000 Communicator faced challenges due to its less user-friendly design and suboptimal user experience. Consequently, it did not achieve significant commercial success. Nonetheless, this product stood as a testament to Nokia’s commitment to technological innovation and breakthroughs, as the industry continually values advancements that push the boundaries of possibility.

That same year, the company also released the Nokia 8110 slider phone. The product was also nicknamed the “banana phone”, appearing in the popular 1999 sci-fi action film The Matrix.

1998: Dominating the global mobile phone market

In 1988, Nokia introduced the highly anticipated Nokia 6100 series, marking the dawn of a new era in mobile phone technology. This innovative product line showcased Nokia’s prowess and propelled the company into the global spotlight. The Nokia 6100 series featured a compact design, user-friendly buttons, and an LCD screen, offering consumers a seamless and enjoyable mobile experience. Additionally, the inclusion of the legendary Snake game, pre-installed on the phones, ignited a wave of enthusiasm within the user community. The exceptional popularity of the Nokia 6100 series translated into remarkable sales figures, with nearly 41 million units sold by 1998. This exceptional achievement propelled Nokia ahead of Motorola, solidifying its position as the world’s leading mobile phone manufacturer that year.

Besides the Nokia 6100 series, Nokia 8810 was also launched by Nokia in the same year. This is the first flagship phone without an external antenna with a sliding chrome cover.

With two groundbreaking and commercially successful new product lines, Nokia saw a jump in business results as the company’s net revenue increased by more than 50% year-on-year, operating profit increased. nearly 75% and the stock price skyrocketed 220%, resulting in an increase in market capitalization from nearly $21 billion to about $70 billion.

2000 – 2006: King of the early digital era

The year 2000 marked a significant milestone in the global shift towards the digital era, witnessing the emergence of groundbreaking technological advancements such as digital cameras, mp3 players, CDs, DVDs, and the advent of 2G and 3G networks. Amidst this transformative period, Nokia displayed remarkable adaptability by introducing new product lines that aligned with the changing technological landscape.

The Nokia 7650 represents Nokia’s initial response to the evolving mobile phone landscape. Released in 2001, it was the company’s pioneering device featuring an integrated camera capable of capturing and storing photos, accompanied by a vibrant color screen.

In the subsequent year, 2002, Nokia further expanded its product offerings with two notable releases. The Nokia 6650 was unveiled as the company’s first 3G phone, introducing users to the capabilities of this advanced network technology. Simultaneously, Nokia introduced the Nokia 3650, marking its entry into the Symbian software phone line. Notably, the Nokia 3650 featured a built-in camera with video recording functionality, adding an exciting new dimension to mobile phone photography.

In addition to its focus on the high-end market, Nokia also aimed to capture the popular segment. This led to the introduction of the Nokia 1100 in 2003, a budget-friendly phone renowned for its compact, user-friendly, and robust design that catered to essential functionalities like calling, messaging, and reliable connectivity across various telecommunications bands worldwide. The Nokia 1100 quickly gained traction, with approximately 250 million units sold in its debut year alone. This remarkable achievement earned it a place among the world’s best-selling consumer electronics products. By 2005, the cumulative sales of the Nokia 1100 surpassed an astounding 1 billion units.

In 2005, Nokia introduced its highly anticipated flagship series consisting of the N70, N90, and N91. These devices showcased significant advancements in design, camera functionality, storage capacity, memory, battery life, and speakers. At that time, these products were widely regarded as the epitome of technological excellence.

By 2007, Nokia’s business report revealed its commanding position in the global mobile phone market, boasting a market share of nearly 50%. The company’s revenue stood at approximately $150 billion, and its workforce consisted of around one million employees.

The downfall of Nokia

2006: a major change in nokia’s leadership and business strategy.

In 2006, a significant change occurred at Nokia as Olli-Pekka Kallasvuo assumed the role of chief executive officer, succeeding Mr. Jorma Ollila. Alongside this leadership transition, several new board members were appointed. Under this new leadership structure, Nokia made the decision to consolidate its smartphone and feature phone operations, emphasizing a focus on traditional phones rather than venturing into untested technologies. This strategic shift indicated a move towards prioritizing profitability over the pursuit of groundbreaking technological innovations.

Mr. Olli-Pekka Kallasvuo himself was known for his conservative approach to business strategy, often rejecting ideas for new products and technologies in favor of safer options that could generate revenue and profit in the near term. However, this strategic direction unexpectedly led Nokia into a downward spiral in the subsequent years, a decline that the company had not anticipated.

2007: Steve Jobs introduced the first iPhone

In 2007, Apple’s launch of the iPhone, a competitor significantly trailing behind Nokia in terms of brand recognition, market share, and scale, captivated the world. The iPhone represented a revolutionary product in the mobile phone industry, signaling the end of the era of digital phones and heralding the arrival of the smartphone era. Its design diverged entirely from existing mobile phone models, featuring a minimalistic layout with only a Home button, power button, and volume controls, while all other operations were performed on a single touch screen. Powered by the innovative iOS operating system, the iPhone also introduced an application store that enabled users to easily download and install various applications via the internet.

In response to the iPhone’s remarkable success, Nokia initially responded with indifference, derision, and laughter, dismissing the new technologies of the iPhone as impractical and asserting that consumers had to pay an exorbitant price to own one.

Despite the introduction of the iPhone, Nokia initially experienced a marginal 3% loss in market share by the end of 2007. Nokia had valid reasons for its initial dismissal, such as the iPhone’s limited 2G connectivity in contrast to Nokia phones equipped with 3G connectivity. However, Nokia’s executives basked too long in their victories, leading to a series of subsequent missteps and challenges that ultimately plagued the company.

2008: Android OS was released

Following the triumphant release of the iPhone, Google made its foray into the smartphone market in 2008 with the introduction of Android, an operating system designed for mobile devices. Despite the potential opportunity to rival Apple by embracing Android, Nokia’s management remained steadfast in their confidence in the Symbian operating system. They pursued plans to develop their own operating system, MeeGo, underestimating the significance of Google and considering it to be an inconsequential player in the market.

In an effort to compete with its rivals, Nokia introduced the 5800 Express series in 2018, featuring a spacious and responsive touchscreen. However, the company faced a critical drawback—its Symbian software, serving as an operating system, proved to be inadequate and significantly lagged behind the more advanced iOS and Android platforms available at the time.

In contrast, the iPhone experienced a surge in popularity, with Apple witnessing a steady growth in revenue.

2010: Olli-Pekka Kallasvuo was replaced by Stephen Elop

During the period from 2008 to 2010, Nokia encountered a series of product launches that failed to resonate with consumers and achieve commercial success. Concurrently, manufacturers of Android smartphones like Samsung and Huawei experienced substantial growth, further intensifying the competitive landscape. Faced with these challenges, Nokia came to the realization that significant changes were necessary to avoid stagnation and potential decline. Consequently, the company made the decision to replace Olli-Pekka Kallasvuo with Stephen Elop, who was recruited from Microsoft.

2011: Nokia partnered with Microsoft

In 2011, Nokia unveiled the N9 smartphone, which operated on its self-developed operating system called MeeGo. Regrettably, due to a rushed development process and a lack of expertise in operating systems, MeeGo encountered widespread issues, including security concerns and a limited selection of applications, which made it less appealing to developers. Consequently, the N9 faced an untimely demise, despite Nokia’s investment in a marketing campaign to promote the new product.

Following the disappointing outcome of MeeGo and the N9, Nokia sought a partnership with Microsoft to produce smartphones running on the Windows Phone operating system. Little did Nokia anticipate that this decision would become yet another misstep for the company’s management.

Following a collaborative effort, Nokia ventured into the Android market with its Nokia Lumia product line . This strategic move aimed to counter the decline in market share, leveraging the user-friendly interface design offered by the Windows Phone operating system. However, the Windows Phone platform still lagged significantly behind iOS and Android in terms of application stores. In an attempt to address this weakness, Microsoft made various efforts to attract developers, but these initiatives failed to yield substantial results, as Google and Apple had already established a stronger foothold in this aspect. Consequently, despite initial hopes, Nokia continued to experience a decline in market position approximately six months later.

2014: Nokia was on the verge of bankruptcy

In 2014, Nokia was on the verge of bankruptcy. With no other choice, Nokia had to sell its mobile phone business to Microsoft for just $7 billion.

After a period of time, Microsoft introduced the Nokia X and Nokia XL models, which ran on the Android operating system. However, these Nokia devices were criticized for their limited development time, resulting in a noticeable lag compared to other phone manufacturers, such as Samsung and Huawei, who had extensively optimized their devices for the Android ecosystem.

In subsequent years, Microsoft shifted its focus away from phone production, allocating fewer resources to the manufacturing of mobile devices. Instead, the company redirected its investments towards other product lines, including Windows, Office, Xbox, and Surface.

Now: Nokia is only a memory

Also Read: Case Study | How Nokia Built A Powerful Technology Brand

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Marketing Process and Nokia vs Apple Case Study

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ramanajaneyulu pokathota

Nokia was a synonym for the mobile phone industry for a long time; however, when it came into the era of smart phones, the former leader was under an awkward situation. Nokia sold its mobile phone business to Microsoft on September 3, 2013. A company following Kodak with the legendary color failed in the impact of the new technology revolution. This was a typical case of the subversion of an industry; therefore, the author believed that it was necessary to analyze the process. This paper studied Nokia's decline mainly from the three parts. First of all, looking back Nokia's development process from the glory to the decline, it can be divided into three stages: the transition period, the peak period and the decline period, followed by analyzing the reasons of its decline from three parts: Nokia executives' grasp for the market, the company's business strategy and business cooperation, and finally analyzing its inspiration for modern enterprises from the marketing perspective.

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The Rise and Fall of Nokia

By julian birkinshaw , lisa duke.

The case describes Nokia’s spectacular rise and fall, shedding light on the combination of external factors and internal decisions that resulted in the company’s handset business being sold to Microsoft in 2010.During the successful period of growth (roughly 1990 through to 2006), Nokia’s focus on design and functionality gained it a worldwide reputation. It was acknowledged as the first smartphone manufacturer. Through the early-mid 2000s it was the undisputed leader in the global mobile phone business. The case traces the first signs of trouble and the company’s subsequent decline over the period 2005 to 2010. Pressure in the early 2000s from low-end competitors led to early signs of problems. Then of course the game changed in 2007 with Apple’s iPhone and a year later with phones powered by Google’s Android operating system from HTC, Samsung and others. Nokia was initially dismissive of these new offerings but its proprietary OS, Symbian, was ageing badly and its App store (Ovi) was no match for Apple’s. In September 2010 it was announced that American Stephen Elop, formerly of Microsoft, would become CEO. Not long afterwards a partnership with Microsoft was signed which subsequently led to Nokia’s handset business being sold to Microsoft.

Learning objectives

• Understand why good companies go bad; in other words, see how the assets that enable companies to succeed can also be liabilities when the market turns against them.
• Provide insight into the nature of disruption in an established industry and why incumbent firms struggle to adapt.
• Examine the different paths companies should take to respond to disruptive forces.
• Understand the leadership challenge for executives when their performance starts to decline2. To understand the dynamics of change in a fast-changing industry.
• Identify strategies companies can use to adapt quickly to disruptive changes.

Other cases in Strategy

• Entrepreneurship
• Innovation and Entrepreneurship
• Management Science and Operations
• Organisational Behaviour
• Organizational Behaviour and Strategy’
• Sustainability

Privacy Overview

Nokia: The rise and fall of a mobile giant

• Published 3 September 2013

Nokia was the dominant player in mobile phones for more than a decade

From market domination to sell-off in less than 10 years. As Microsoft swoops in to buy Nokia's mobile business for £4.6bn, what happened to Finland's most beloved company, and why would Microsoft take it on?

Whenever you turned on one of Nokia's legendary handsets, you always got the same thing: that famous signature logo, holding hands.

And for more than one generation, it was hand-holding Nokia did best - carrying people through, bit by bit, the mobile revolution.

Because way before we were shouting, "Damn you autocorrect", we were grappling with new-fangled predictive text.

In the days before highly customisable backgrounds and operating systems, there were swappable (and very, very cool) fascias.

And, of course, more than 12 years before anyone ever made birds angry, there was the mobile game to rule them all: Snake .

Nokia were by no means the first company to release a commercially available mobile phone, but it was the first to do it really well, and with true mass appeal.

"Back in the 1990s there weren't these other big brands," says Ben Wood, an analyst at CCS Insight.

"Nokia were so dominant. People didn't talk about what brand, it was just about the number, 3210, or whatever you had. They took users on a journey."

Era of complacency

So far, so good - but then one presentation changed everything.

"Complacency had kicked in," Mr Wood continues, "they felt they could do no wrong.

Many people's first experience of mobile gaming was the highly addictive Snake

"Then all of a sudden, in January 2007, Steve Jobs walked on to a stage and pulled an iPhone out of his pocket and changed the world forever."

The fall was swift. According to figures from analyst firm Gartner, Nokia's smartphone market share in 2007 was a dominant 49.4%. In subsequent years, it was 43.7%, then 41.1%, then 34.2%.

In the first half of this year, it had plummeted to just 3%.

Many blame this decline, at least in the initial stages, on Symbian, the firm's mobile operating system. It was, to paraphrase a welter of expert opinion, simply not up to the job.

"They missed the importance of software," Mr Wood says.

"Nokia make great phones, they still do. They went through this incredible decade of innovation in hardware, but what Apple saw was that all you needed was a rectangle with a screen, and the rest was all about the software."

Windows gamble

It took just a few years for Nokia phones to go from being the must-have handset in your pocket, to being the long-forgotten handset, nestled in that eternal graveyard of the mobile phone - the kitchen drawer.

So why would Microsoft spend £4.6bn on a business that looks like it's on the way out?

To use a romantic analogy: they were the only two left at the party who hadn't paired up with anyone.

Launched in 1992 and weighing a colossal 495g (1.1lb), the 1011 was the first mass produced GSM phone

The interchangeable covers gave the 5110 a wide appeal

Weighing just 79g, the lightest handset on the market in 1999. Customisable covers helped popularise the 8210

The 3310/3330, released in 2000, among the best-selling phones of all time, with 126 million units produced

An early smartphone experiment, the 3650 was released in 2002. It ran Symbian Series 60, but the unique circular keypad was not popular

One of Nokia’s first 3G handsets, the 7600 unveiled in 2003. It was part of the ‘Fashion’ series – but the design experiment didn’t appeal to users

The N-Gage was Nokia's attempt to break into the handheld gaming market, released in 2003. Not as popular as expected due to limited number of games and clunky design

"They were left dancing together, and thought they might as well go home," jokes Mr Wood.

"Microsoft was left with few alternatives, because they've got to succeed in mobile."

But far from facing an awkward morning after, buying up Nokia's phone business does make a lot of sense for both parties.

For starters, Nokia's flagship smartphones already use Windows Phone, Microsoft's operating system which, although still way behind its competitors, is at least gathering some modest momentum.

With Nokia's phone business moving in-house, Microsoft boss Steve Ballmer tells the BBC that the acquisition means they can "improve the agility" of innovation in mobile.

Roberta Cozza, an analyst with Gartner, agrees.

"I think that for Microsoft to compete in today's mobile market against Apple and Google they needed to be more than just a software company," she tells the BBC.

"Depending on the way they figure out the organisational structure with the Nokia people inside, they can allow Nokia to innovate around hardware, and get input from them on the operating system, and gain the opportunity to deliver more competitive products."

Additionally, Ms Cozza says, Microsoft gains key expertise in emerging markets.

"Nokia has know-how of this market that goes beyond the hardware," she says.

Reinventing Nokia

It's hard to imagine Nokia as anything other than a mobile phone company.

But a peek into its history shows a deep-rooted ability to reinvent itself. Indeed, there was a time when Nokia was famous for its durable rubber boots and car tyres.

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Microsoft chief executive Steve Ballmer: "This is a big bold step forward"

"I wouldn't be against the 'new' Nokia managing to pull something off," says CCS Insight's Mr Wood.

Clues to the company's future lie with recent strategic movements.

One recent deal, for example, saw Nokia buy up Siemens' share in Nokia Solutions and Networks, a mobile broadband company.

Also remaining in Nokia's portfolio is its well-regarded maps division - Here - which is the mapping software of choice in 80% of cars that feature built-in dashboard navigation.

And then of course, there are those all-important patents. Thanks to Nokia's early dominance, it owns many crucial patents on which the mobile industry relies.

Forbes estimates that Nokia's portfolio is worth somewhere in the region of $4bn (£2.6bn).

So while this may signal the beginning of the end for Nokia as a well-known brand in the hands of millions, many believe it is in good shape to move forward and build as a key player behind the scenes - without the distraction of chasing mainstream popularity.

"Essentially what's left is a new Nokia," Mr Wood concludes.

Follow Dave Lee on Twitter @DaveLeeBBC , external

More on this story

Microsoft to buy Nokia phones unit

Microsoft and Nokia's 'big step forward' Video, 00:03:02 Microsoft and Nokia's 'big step forward'

Microsoft chief Ballmer to retire

• Published 26 August 2013

Wozniak: Microsoft resting on laurels

Microsoft unveils reorganisation

• Published 11 July 2013

What direction will Microsoft go in? Video, 00:01:27 What direction will Microsoft go in?

• Published 23 August 2013

Nokia: The Inside Story of the Rise and Fall of a Technology Giant

The case examines the downward spiral of Nokia, the mobile technology giant that once conquered the world, seen from the perspective of ‘insiders’ – based on interviews with Nokia executives at top and middle management level. They describe the emotional undercurrents of the innovation process that caused temporal myopia – an excessive focus on short-term innovation at the expense of longer-term more beneficial activities. Nokia’s once-stellar performance was undermined by misaligned collective fear: top managers were afraid of competition from rival products, while middle managers were afraid of their bosses and even their peers. It was their reluctance to share negative information with top managers – who thus remained overly optimistic about the organisation’s capabilities – that generated inaccurate feedback and poorly adapted organizational responses that led to the company’s downfall. The case covers the period from the early 2000s to 2010, with a focus on 2007 (the introduction of the iPhone) to 2010, when the CEO left. Read a related Knowledge article "Who Killed Nokia? Nokia Did" by Quy Huy.

After reading and analysing the case, students will understand (i) how emotional dynamics influence hard technological and strategic decisions in organizations as they translate into challenges for innovation, (ii) how emotional dynamics can undermine innovation and performance.

• Top and middle management
• Mobile phone
• Radical change
• Strategic agility
• Temporal myopia

Quy Huy

Timo o. vuori.

Lisa Simone Duke

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Judge in Nokia and Apple lawsuit owned Apple stock during proceedings

Last updated 3 years ago

Apple and Nokia were embroiled in a bitter patent dispute from 2009 to 2011, with both companies filing a series of legal complaints and regulatory challenges as competition in the smartphone market came to a head. The issue was ultimately settled in June 2011 , and while terms of the agreement were kept confidential, Apple was expected to make amends with a one-time payment and ongoing royalties.

According to a new court filing on Monday, a federal judge presiding over one of many scattershot legal volleys filed by Nokia owned stock in Apple when the suit was lodged in 2010. Judge William M. Conley of the U.S. District Court for the Western District of Wisconsin disclosed the potential conflict of interest in a letter to both parties dated Aug. 27.

"Judge Conley informed me that it has been brought to his attention that while he presided over the case he owned stock in Apple," writes Joel Turner, the court's chief deputy clerk. "His ownership of stock neither affected nor impacted his decisions in this case."

It is unclear how many shares Judge Conley possessed during the case, but ownership of company stock in any capacity would have required his recusal under the Code of Conduct for United States Judges.

An advisory from the Judicial Conference Codes of Conduct Committee explains that disqualifying factors should be reported "as soon as those facts are learned," even if the realization occurs after a judge issues a decision.

"The parties may then determine what relief they may seek and a court (without the disqualified judge) will decide the legal consequence, if any, arising from the participation of the disqualified judge in the entered decision," Advisory Opinion 71 reads, as relayed by Turner.

Apple and Nokia are invited to respond to Conley's disclosure by Oct. 27 should they wish to seek redress, though the companies are unlikely to take action considering the case was not a lynchpin in Nokia's overarching strategy.

In hindsight, the 2011 settlement was a favorable outcome for Nokia, whose phone business withered and was sold first to Microsoft before landing at Foxconn . Once the world's dominant cellphone manufacturer, Nokia — the corporate entity — is no longer a player in the mobile market. It has, however, licensed its name to smartphones built by HMD .

Nokia saw more success in court when it leveraged owned and purchased patents against Apple in a 2016 legal blitz that led to a settlement involving a $2 billion payment and multi-year IP licensing agreement.

What a novelty. Someone performing their job without bias despite having a financial interest.

jayhalleaux said: What a novelty. Someone performing their job without bias despite having a financial interest. There are many who can and do, they just don’t make headlines. I suspect the judge probably had a mutual fund that included Apple stock so he didn’t even realize it. 

jayhalleaux said: What a novelty. Someone performing their job without bias despite having a financial interest. And just how do you know that he performed his job without bias? Because his clerk said so? The clerk who could (would) lose his job if he said otherwise? Interesting.

jayhalleaux said: What a novelty. Someone performing their job without bias despite having a financial interest. How exactly does any politician perform their job without having a financial interest in the results? The US president doesn't have to cede control of his assets to be president to a third party (Trump did; Biden didn't.) One answer to the problem is called an election. Another answer is impeachment.

fred1 said: jayhalleaux said: What a novelty. Someone performing their job without bias despite having a financial interest.

Because Nokia pretty much won the case?

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Nokia vs Apple Case Study

Reference this

2.1 Apple’s Mission Statement:

2.2 apple’s strategy:.

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2.3 Apple’s market:

3. overview of the multimedia download market:, 4. key factors to success for apple:.

• The company’s wide and always up-to-date range of downloadable files.
• The companies fresh and exiting presentation of services and devices that delivers the attitude towards the customer that downloading is fun.
• Design and fashion have proved highly important for the company, as their products are being regarded as “hip” and “stylish”.
• The ease of use for its products and services.
• The company’s innovative technologies.
• Strong branding that attracts new customers, keeps older ones and creates additional value.
• Highly effective advertising
• Many formal and informal cooperations with big multinational firms

5. PESTEL-Analysis:

6. porter’s 5 forces:, 7. the industry life cycle:, 8. four links model – lynch:, 9. swot-analyses:, 10. 1 about nokia:, 10.2 nokia’s mission statement:, 10.3 nokia’s new n-series compared to apple’s iphone:, cite this work.

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