Why Nokia Failed? business Case Study Of Nokia

Why Nokia Failed? business Case Study Of Nokia business model of nokia nokia failure case study nokia case study in detail business mistakes made by nokia.business lessons from Nokia

Intro to Nokia | What is Nokia

Nokia was one of the largest phone companies in this world. the mobile phone market worldwide. Nokia was started as a paper mill and soon expanded into multiple businesses until they realised that great potential lies in the mobile market. Nokia started making portable handsets in 1983 which soon became real popular and in the early 1900s nokia started to dominate big players like Ericsson and motorola with its value proposition of delivering compact handy affordable mobile handsets. Some fate was wrong and soon nokia started seeing a downfall times changed when steve jobs launched Apple iphone in 2007 and the world started to move towards the smartphone Era. Stephen elop joined Nokia in 2010 as the new CEO but even he failed to pull up Nokia. This article is a complete business case study on Nokia’s failure. The article answers the question Why nokia failed? This article highlights a lot of business and marketing strategies used by nokia which turned them into a multi-billion dollar telephone giant. This article also highlights alot of business mistakes made by nokia. This article also includes some powerful business lessons which one can learn and implement into their own business.

Nokia was the company who introduced portable mobile handset. You will get shocked to know world’s first SMS was ‘Merry Christmas’ sent from Nokia phone. Till 2005, Nokia captured mobile world’s 70% market share. And there was no company who could beat Nokia. But the question is how this powerful 50 Billion Dollar’s company failed ? Many people still think Nokia failed b’coz of Apple and Google. ‘ Didn’t adapted Android so it failed.’ Well this is not the case. Reality is different. Shockingly, how a company whose net worth was more than 50 Billion Dollars sold at 7 Billion Dollars only ? And most importantly what are those business lessons we can learn and implement in our business ?

How Nokia Started?

So story starts 150 years ago, when Fredrik Idestam of Finland noticed that there’s lots of forestry in Finland. And after seeing this, he started a paper mill in Finland. He takes help of his friend Leo Macallen to expand paper mill business. Time by time, they expand and started many mills. After starting many mills, they both decide to enter in Electricity Business. They start an electricity generation plant near the bank of Nokianvirta river and supplied electricity during World War. And from here they named ‘Nokia Ab’. After World War their business almost stopped as electricity demand was reduced. And from here only, Nokia decides to expand in various businesses. And then Nokia expanded in tubes, chemicals, plastics, gas masks. And then a major twist came in this story. At that time, Telephone was a luxury and why not b’coz people neither had money nor resources.And then finally in 1960s, Nokia entered in telephone business. At that time radio phones were used, which were in cars or in military. Common people had no access to telephone.

Nokia’s first Phone

In initial years, Nokia started working on its 1G network. And launched their car phone mobile whose name was Mobira Senator. But the problem was that the phone was of 10 kgs so no one could use it anywhere except cars.

Nokia’s second Phone

After sometime in 1987, Nokia finally launched their first portable phone – ‘Mobira Cityman’. This 800 g phone amazing but common man could never afford it. Interestingly, Mikhail Gorbachev – USSR’s President was spotted many times using Mobira mobile phone. And from here, Mobira became the symbol of power and status. Many less of you would be knowing that world’s first 2G call was done on a Nokia phone by Finland’s PM Harri Holkeri.

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How Nokia became popular

And then in 1994, Nokia played a masterstroke. At that time Nokia launched Nokia 2110 and they predicted 4 lakh orders of it but more than 2 Crore orders came. Nokia boomed, everyone said only about Nokia in phone market. And Yes, my first phone was of Nokia. Now the question comes that…

Why innovation king of phone market – Nokia failed and could it have been stopped from falling ?

Yes, it could have been saved from failing. The question is How could nokia be stopped from falling?

To understand this listen to this few things carefully. 2003-2005 were golden years for Nokia. In these years only Nokia launched their Nokia 1100 and 1110. These phones were ruling the market it wondered like they have won a lottery. They were innovating daily . There was such a storm in the market that 7 out of 10 phones which were sold were of Nokia. What Ericsson or what Motorola Nokia ripped everyone. But then there was a big twist in the market. That was management turnaround. Management Turnaround is considered to be good for most of the companies . But proved very dangerous for Nokia. Ex vice president Frank Nuovo of Nokia says that Nokia never lacked innovation In fact Nokia was the first one to develop first Touchscreen Smart Phone and Tablet. But management never permitted to launch those in market. Now the question is Why ?

Why management never permitted to Launch Nokia’s touch screen phones and tablets in market?

The answer is hidden in company’s decision making process . Now whenever Nokia has to take decision regarding technology they used to approach the engineers b’coz finally they have to develop the tech. First they used to take inputs from tech team and then innovate those. When the product was ready they used to launch or reject according to their opinion. There was a big gap in this process and that was Higher Orbit. That means design thinking and this work was done by management not tech team . But sadly half of the innovative decision were taken by engineers in Nokia . As long as management used to think and innovate meanwhile China used to develop and even sell the product. Whatever changes in business world but one truth never changes – Its the people who builds number.

In 2006 when management of Nokia was changed, at that time Nokia was running N series flagship. Then there was a huge explosion in the market. In 2007 Steve announced that Apple is entering in mobile market. Iphone was announced in front of whole world . At that time Iphone was not less than a revolutionary item to people. Before launching Iphone in market there were buttons or single touched phones. But Iphone was the world’s first fully touched screen multi touch phone. Seeing this, why will Google remain silent. Google launched Android. To compete with these two Nokia launched NS800 which was a total hit. After the launch of NS 800, then people agreed on one thing that Nokia was the king of the market before and will continue to be. But if everything was going so well then why no one from us doesn’t use Nokia phone ?

why people don’t use Nokia phone ?

So the reason is Behavioural Shift. So in every market there is time when consumer starts getting bore from their things. Now they need a change. But in this also there is a twist . New doesn’t mean innovative but something which get them rid of the ongoing behaviour and build in something new . Previously we used to make all transactions in cash . Then PhonePe and PayTM has hitted the market. There was no innovation but first we used to carry cash now we carry phones. The work of money is same but your behaviour has been changed. Similarly in those days people got bored by featured phones. No matter how good the hardware was, software was exciting the people.

Nokia’s phones were very good but because of slow software people started experiencing bad. At the same time person using android os or IOS was not facing any difficulty. But why would Nokia give up. Nokia wasn’t called a world’s biggest company like this. To compete with android and IOS Nokia launched their own operating system named MEEGO OS. Meego was so good people started leaving Apple and android and started shifting to Nokia. This move by Nokia shook the market. Then enters Stephen Elop in this game. Before joining Nokia from 2008 to 2010 Stephen Elop was MS office’s Internal Business Head in Microsoft.

Development when Stephen joined Nokia

In 2010 when Stephen joined Nokia, he first focused on research and innovation. At that time Nokia used to spend 5 million dollar on research and innovation which was 30 % of the market. He used to travel the world by saying that he was gathering best technology for Nokia. But there is a saying that when intentions are wrong then hard work has no value. When Meego was going good , in Feb 2011 Stephen Elop met Steve Ballmer who was CEO of MIcrosoft. Together they took decision that Nokia will use Microsoft operating system in its phone. This was ok but along with this they discontinued Meego . After Elop and Ballmer decision Nokia launched their Lumiya series. But people were not liking it and the reason was Complexity. I usually say that people don’t take good decisions but take convenient decisions.Every person like their convenience and simple things, no one wants to take complex things . And you already know how simple windows is in phone.

When Nokia started felling down?

By 2013 Nokia was going out from people’s heart and mind. Nokia had 24 % revenue drop and loss of more than 4 Billion $ yearly loss. And then such thing happened that Nokia could not rise from it. On 3rd Sep 2012 Microsoft acquired Nokia in 7 Billion dollars. Shockingly, how a company whose net worth was more than 50 Billion Dollars sold at 7 Billion Dollars only ?

Why Nokia was sold in so cheap price(7 Billion $) only?

So the reason is Dirty Politics. The time from when Stephen Elop joined the company Nokia didn’t made any profits. So the question arises that despite being a competent man how was this going in the company ? A company which was more than 50 Billion dollars was made to get sold at 7 Billion dollars to Microsoft. And after company was sold he got 19 Million Dollars Bonus. From this 2 things you can clearly identify Stephen Elop’s hidden agenda.

Nokia logo

Reality of Stephen (Ceo of Nokia when sold)

From this 2 things you can clearly identify Stephen Elop’s hidden agenda. He didn’t wanted to grow Nokia but to sell company to Microsoft and become CEO as Steve Ballmer was soon going to retire. When Satya Nadella became Microsoft’s CEO, he clearly stated – ‘Microsoft’s biggest mistake was to acquire Nokia’ And then Satya Nadella sold Nokia to HMD Global and shifted to their core business. And most importantly what are those business lessons we can learn and implement in our business?

What are those business lessons we can learn from Nokia and implement in our business?

  • 1) Complexities can cause you a Fortune The more complex things, more time it takes to structure them. Whether they are business processes or operating system. When business processes are complex it takes time in decision making. And this same thing happened with Nokia. When your product has many complexities and then if your competitors provides same thing in simple way then customer will shift.And this is why I say – ‘People love to take Convenient Decisions’ And this brings us to 2nd business lesson.
  • 2) Interdependency is better than moving alone Samsung, Motorola, OnePlus and Xiomi are ripping off the market b’coz they adopted Android ecosystem on time. While Apple built such a strong ecosystem that once you buy Apple product then you will use Apple product only. Nokia didn’t did anything from this, neither they adapted Android nor could create their own ecosystem. But they could survive by creating interdependency. This brings us to most important lesson.
  • 3) Character First and Competence Later Whenever you hire an employee, see character first and competence later. B’coz competence without character is very dangerous for company. Stephen Elop is a living example of it. Competence was amazing but due to lack of character ruined the company. One bad employee can destroy the whole company.

FAQs Related to Nokia’s Case study

Why did Nokia Failed?

in those days people got bored by featured phones. No matter how good the hardware was, software was exciting the people.Nokia’s phones were very good but because of slow software people started experiencing bad. At the same time person using android os or IOS was not facing any difficulty.

Is Nokia owned by Microsoft?

By 2013 Nokia was going out from people’s heart and mind. Nokia had 24 % revenue drop and loss of more than 4 Billion $ yearly loss. And then such thing happened that Nokia could not rise from it. On 3rd Sep 2012 Microsoft acquired Nokia in 7 Billion dollars. Shockingly, how a company whose net worth was more than 50 Billion Dollars sold at 7 Billion Dollars only ?

Who destroyed Nokia?

The time from when Stephen Elop joined the company Nokia didn’t made any profits. So the question arises that despite being a competent man how was this going in the company ? A company which was more than 50 Billion dollars was made to get sold at 7 Billion dollars to Microsoft. And after company was sold he got 19 Million Dollars Bonus. From this 2 things you can clearly identify Stephen Elop’s hidden agenda.

What is the net worth of Nokia?

Till 2005, Nokia captured mobile world’s 70% market share. And there was no company who could beat Nokia. Currently Nokia’s net worth is 50 Billion $

What made Nokia successful?

in 1994, Nokia played a masterstroke. At that time Nokia launched Nokia 2110 and they predicted 4 lakh orders of it but more than 2 Crore orders came. Nokia boomed, everyone said only about Nokia in phone market. And Yes, my first phone was of Nokia.

why people don’t use Nokia phone ?

So the reason is Behavioural Shift. So in every market there is time when consumer starts getting bore from their things. Now they need a change. But in this also there is a twist . New doesn’t mean innovative but something which get them rid of the ongoing behaviour and build in something new . Previously we used to make all transactions in cash .

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