What caused Nokia's downfall?

What caused Nokia's downfall?
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The Finnish company, Nokia was riding high for a good number of years. It was once the world's largest mobile phone maker and a dominant player in the emerging smartphone market. But it failed to keep pace with the changing dynamics of the industry and lost its market share to Apple, Samsung, and other rivals. It sold over 1.2 million phones every month in 2007 and was right behind Apple in terms of smartphone sales in 2009. But a couple of years ago, the company was forced to make some heavy changes like laying off thousands of people and selling its headquarters. Why did it happen? What drove the manufacturer towards such significant changes? I'll answer it at the end of this article.

Nokia was once dominating the mobile phone industry with no real competition. It was the king of the hill. They had it all — brand recognition, products that were staples in various countries, and a market share you could only dream of obtaining. But just like any other business decision whether it be from their end or from investors and product testers, things change. Product quality has fallen, acquisitions haven't turned out as expected or strategic for the company, other brands have released products that surpass Nokia's own offerings, and investors started losing confidence in Nokia's ability to recover from previous mistakes as well as make future ones less avoidable.

Nokia's downfall can be traced back to one pivotal moment: The introduction of the iPhone was a game changer.

The iPhone was first released in 2007, but it wasn't until 2010 that it started to make serious waves in the smartphone industry. That year, Apple sold more than 15 million iPhones and became the world's most valuable company by market capitalization -- a title Nokia had held since 1998.

I get a rare opportunity to try the iPhone X purchased directly from Apple Orchard. My friend stayed 2 nights in front of the Apple Store to be the first iPhone X user list in Singapore.
Photo by Bagus Hernawan / Unsplash

Apple CEO Steve Jobs famously dismissed Nokia's Symbian operating system as "a piece of junk" during an interview with The Wall Street Journal in 2007. His comments were widely reported by media outlets around the world and contributed to Nokia's loss of credibility among consumers who were looking for better devices at lower prices.

Nokia's corporate culture failed to evolve. The company didn't anticipate the rapid rise of smartphones and was slow to respond to changing consumer tastes and demand for new features like touch screens.

Nokia's downfall has been chronicled in books such as "The End of Nokia" by Mikko Hypponen and "Burning Platform" by former CEO Stephen Elop. The company was founded in 1865 as a pulp mill operator called New Forests Co., but changed its name to Nokia in 1967 when it decided to enter telecommunications equipment manufacturing.

It remained focused on building phones that were good enough for most people, but not as good as what Apple and Samsung were producing. Nokia also had a hard time competing with Chinese upstarts like Xiaomi and Huawei, which offered good hardware at low price points.

Photo by Kamil Kot / Unsplash

Nokia was slow to embrace smartphones. The company's attempts at innovation were misdirected. Instead of developing software that would allow phones to connect to the Internet, Nokia focused on creating its own browser, maps and email services. This made sense at the time because Nokia was still selling millions of feature phones every quarter. But when Apple launched the iPhone in 2007, it became clear that smartphones were where the industry was headed — and that Nokia had missed its chance to be an early adopter.

"There was no doubt about it," said Jan Dawson, chief analyst at Jackdaw Research. "Apple came out with something that changed the world."

Nokia did eventually launch its own smartphone platform called Symbian S60 in 2003, Nokia's Symbian operating system also lacked apps compared with Android or iOS platforms at that time -- making it less appealing for consumers who wanted more functionality from their phones (and didn't want to download third-party apps).

Nokia failed to develop its own operating system named MeeGo but this never took off either because there weren't enough apps available on it.

The company also tried to launch its own line of Windows Phone smartphones, but they were too expensive compared with rivals like Samsung and HTC - which meant that consumers didn't buy them as much as expected., leaving it unable to compete with Apple and Google Inc.'s Android software. — but not until after Microsoft had already introduced Windows Mobile 5, which later evolved into Windows Phone 7 and 8. The company also failed to make significant improvements to Symbian over its 10-year lifespan; critics said it was too slow and too buggy compared with competitors like Android or iOS.

That left Nokia scrambling for market share against newer entrants like Samsung Electronics Co Ltd and HTC Corp.

Nokia's rapid decline in the mobile phone industry is partly due to the rise of China's mobile phone industry. The Chinese government heavily subsidizes its domestic companies, making it possible for them to develop cheap phones and win over consumers in emerging markets like India and Africa.

The company was also slow to realize that consumers were gravitating toward touchscreens as opposed to physical keyboards, which were a key feature on Nokia phones.

Nokia E72
Photo by Thai Nguyen / Unsplash

Nokia's downfall is a lesson for all companies. Nokia was once a global leader in the mobile phone industry, but it failed to adapt quickly enough and Nokia was too slow to respond to the threat of Apple and Android OS. Here are some of the major reasons why Nokia became obsolete:

  1. Nokia’s inability to innovate with new products.
  2. Lack of marketing strategies that would have helped Nokia reach out to customers.
  3. Lack of clear vision on how to compete with other smartphone manufacturers like Apple and Samsung.

Again, why did it happen? What drove the manufacturer towards such significant changes? The answer is that it took too long to adapt to the changing market; there were overly optimistic strategies, a lack of suitable apps combined with an inability to accommodate cheap Android handsets from emerging markets have all combined to lead to their downfall.

Nokia's downfall was key to the rise of smartphones, and it goes to show that you need to keep up with the times. This is especially true in the tech industry where a company's lifeblood is innovation and staying ahead of the competition.