Nokia was once a king of the world of mobile phones. So Why did Nokia fail? What was the reason behind Nokia Downfall? You will get to know all of this with the help of this article.
1) Why Nokia was so popular back then?
First let’s give a brief look at Nokia company’s progress and what made Nokia a success. Nokia is the main brand that was on the market when the early mobile phones were known to us. Nokia remained on the lookout for 10 years and occasionally presented new models of the phone. In the early days of its success Nokia emerged as one of the successful mobile phone manufacturers.
Nokia started its revolutionary journey in the telecom sector with the launch of its first car phone Mobira Senator Carphone in 1982. This device weighed 10 kilos and was marketed as a car phone. Later nokia launched Mobira City Man mobile which was the first of its kind and nokia was all set to revolutionizethe world. Nokia was the world’s best-selling cell phone brand in october 1998.
Nokia’s operating profit went from 1 billion in 1995 to almost 4 billion by 1999. The number one mobile phone of all time the Nokia 1100 was created in 2003. By 2007 and had a 50 share of the market for cell phones. By the end of 2007 half of all smartphones sold in the world were Nokia’s. While apple’s IPhone had a mere five percent share of the global market.
The company’s young and enthusiastic leadership was the reason for success. Initially among some of the reasons for success were emerging technologies, the desire to digitalize and creativity.
2) Reasons for Nokia Downfall. Why did Nokia mobile fail?
The factors that responsible for Nokia downfall and failure in the mobile phone industry are:
a) Change in Management relating to Nokia downfall
Jorma Ollila, Finnish businessman was succeeded as CEO in 2006 by Olli Pekka Kallasvuo. Nokia smartphones and basic phone operations were combined by the new management relying more on standard phones rather than experimenting with new technologies. With a company facing fierce competition nokia downfall fail started reporting financial losses and started losing grip on the market.
Olli Pekka Kallasvuo as president and CEO saw the company’s rise to become the world’s mobile brand but was also at the helm as Nokia fail distantly behind a new wave of competition. He was seen off by the management and he was succeeded by Stephen Elop on September the 21st 2010.
b) Overconfidence and underestimating the competition
Apple jumped into the game of smartphones in 2007 and launched the popular IPhone. Nokia declined to recognize apple as a threat to its strong sales figures. Apple phones were also deemed inferior as they ran on 2g technology whereas Nokia cell phones ran on 3g technology.
The android operating system OS was launched by google in 2008. Apple’s IOS was becoming popular by this time and its sales were steadily rising. Nokia should have moved to android to resolve the thread but it did not. Traditional phones have been transformed to smartphones but nokia stopped innovating.
It was the initiator of early smartphones. However in 2002 Symbian smartphones were launched but the company was unable to sustain the speed of changing technology. That’s the reason nokia failed. It continued to produce the old version of the mobile while its competitors began to pour money into highly sophisticated smartphones.
These smartphones were inexpensive and eventually affordable for consumers. The whole culture had moved towards them. Nokia did not know that.
Even then imagine if Nokia would have jumped onto the android opportunity right on time we never would have purchased phone insurance for our devices. While it was not totally unexpected what caught it off guard is the rate at which competitors were innovating new technology. Since the launch of the iphone and android phones nokia failed to keep up with the industry while others kept proceeding ahead aggressively by hook or by crook.
Nokia primarily failed to innovate attractive technology and feature. For example though nokia had touchscreen phones it did not attract customers asmuch when compared to apple iphones. The software being developed was using old development models and newer concepts such as user experience and user interface were being neglected.
c) Nokia was basically more focused in hardware than software which lead to Nokia downfall
We have seen a number of memes on the Nokia phone’s durability. It did not give importance to hardware and software equally. Unlike Steve Jobs apple that always paid attention on every aspect since the beginning. Despite the fact that nokia invested lots of time and money on research and development, it still failed to realize what consumers wanted.
Android started dominating the market but nokia was in illusion still that consumers wouldn’t accept the changes. It was reluctant towards making change. The operating system of nokia was out of date and it needed to shift to other operating systems which wasn’t possible due to the requirements of lots of investment.
Starting from the core was impossible and shifting from symbian to android was like insulting its own creation. It had lots of bugs that needed to be fixed. The introduction of every new version of its OS didn’t help either. Nokia mobile did introduce the touchscreen but it failed to deliver a good processor that allows multitasking plus better ram and hard disk space.
Introducing internet on mobile phones wasn’t a new thing to knock you either but it could not deliver proper display of web pages. This part can not be entirely blamed on the handset itself but also the network bandwidth which wasn’t friendly either. Many handsets had issues with connecting to wi-fi. While android provides the facility of switching off the internet whenever the user wants to.
So that unnecessary balance isn’t taken away if not recharged for special internet plans. In the case of nokia it was mandatory to allow internet running 24 7. This meant everyone having to recharge his or her phone every time the internet plan expired. Remember all these bugs and features likewise there were many other bugs as well that weren’t resolved ever.
It was overestimating its brand value and thought it would survive the nokia downfall but it had no idea that it would be gone forever. This all happened because of their disinclination towards accepting the latest technology.
d) Organization problems and deal with Microsoft
Once a substantial amount of progress is obtained by the organization. Then mostly the workers change their attitude they get complacent and don’t concentrate on work. As a result the decline of such a company is unstoppable. This attitude makes the organization less efficient. The public comments of a few executives showed that the company and its workers were in the same condition as it collapsed.
Nokia downfall accelerated by 2011 and was acquired by Microsoft in 2013. Another reason for nokia’s failure was the ill-timed deal with Microsoft. The company sold itself to Microsoft at a time when the software Behemoth was burdened with losses. Its sales screamed the mobile phone maker’s inability to survive on its own. Apple and Samsung were making significant strides in innovation and technical developments in parallel .It was too late for nokia to adapt to the dynamic and rigorous changes in the market.
Microsoft’s acquisition is considered to be one of the biggest blunders and final nail in the coffin fruitful for neither side.