first the smartphone and then the tablet, bringing to market the same zeal, elegance, consistency, and ecosystem advantages that have made the Mac the only PC with a growing market share. But Apple had done that with the original Mac, yet was still beaten by others. The fact that Apple's mobile products are truly the best doesn't explain why the competitors' products are generally so bad. The answers have to do with an essential flaw found in most companies: They can't easily change gears because doing so means dropping the focus on what has worked and brings in the money now for an unproven, untested, risky shift. Clayton Christensen captured and described this phenomenon wonderfully in "The Innovator's Dilemma," an often-cited business book most businesspeople don't seem to actually follow. When Apple introduced the iPhone in 2007, it seemed to be a left-field change for the Mac maker, a bet that it could enter and succeed in an alien market. That wager paid off, with Apple now the highest-valued public technology company in the world. But in 1999 or whenever CEO Steve Jobs decided to shift from being a PC maker into a consumer device maker (2001's iPod was the result, which led Apple to the iPhone and now the iPad), that proposition had very long odds. At the time, Apple was in critical condition, so the company had the freedom to take its chances. RIM, Nokia, Microsoft, and Dell haven't been desperate enough to truly think different. When the iPhone came out, they all pooh-poohed it as a toy that would at best appeal to Mac loyalists. (Never mind the example of the iPod.) Today, iPads already outsell Macs 4 to 3 and iPhones outsell Macs 5 to 1 -- that shows why mobile is so important to computer vendors. In addition, iPads are credited with torpedoing the netbook market and shrinking the PC market.
#2. Nokia’s Rise and (Relative) Fall. What Lessons for European Innovation Policy?
The tale of Nokia being squeezed from the top by Apple and Google and from the bottom by companies from Taiwan and India holds just as important lessons for European innovation polices as it does for Nokia. The Nokia story in recent years is on the surface about the struggle to build winning software platforms around OVI, Symbian and MeeGo. This is a story, which already has been told by BloombergBusinessWeek, the Economist and many others. What has not been so much in focus is what lessons Nokia’s story holds for Nordic and European innovation policy makers. I will argue here that Nokia’s slide in competitiveness towards notably Apple and Google holds important insights into the stickiness and path dependency of national innovation systems and related policies within education as well as the supply base of entrepreneurs and partners in the innovation eco-system.
The vantage point of this article is that of two interrelated questions: First, why is Nokia being squeezed out of their own game from both US companies like Apple and Google and Chinese, Taiwanese and Korean companies like Huawei, MediaTek and Samsung? Second, how did European innovation policy fail in respect to Nokia’s decline, and how can European innovation policies use the Nokia case to better prepare for tomorrow within new industries? Nordic Mobile Telephony and Nokia – A Success Unfolding From the standpoint of innovation policy and supporting institutions the success of Nokia and mobile telephony originated with the Nordic decision to create the common standard Nordic Mobile Telephony (NMT). This provided Nokia with a common Nordic market of 20 million techno savvy customers before anywhere else in the world. And it provided a perfect platform for ‘infant industry development’. When Nokia had grown sufficiently large on the back of this market it was blessed by the European Union’s decision to create a common European standard for mobile telephony – GSM. Nokia was among the best positioned companies to take advantage of this the then world’s largest uniform market for mobile hand sets. Moreover, the US market didn’t manage to develop a common standard, which prevented US companies like Motorola from competing on par with Nokia globally. Moreover, Nokia’s management did all the right things. It understood that design and being user friendly was more important than being over-engineered and Nokia mobiles appealed to more age groups and customer segments than any of its competitors. Finland’s innovation policy was a good match with a long history of supporting and nurturing design innovation and a world-class business framework conditions. In addition a vibrant ecosystem of Nokia supporting start-ups and entrepreneurs emerged in Finland and Europe. Indeed, creating a world-beater within mobile phones like Nokia did, out of a company with a history in rubber galoshes and cable works, could not have been done without bold management, timing and a conducive innovation eco-system. For almost twenty years Nokia enjoyed being the undisputed global market leader in mobile handsets. This fortunate situation has, however, come to and end. An end which for Nokia particularly came to a halt with Apples decision to enter the market with its smart phone – iPhone and related i-Tune platform for music and applications of all sorts. In addition, as chips for mobile handsets became more and more powerful the mobile handset went from a mobile phone to a mini computer with increasing possibilities for software applications ranging from banking to gaming and city maps. Consequently, the physical mobile
handset is today the least important part of a mobile phone and where the least added value accrues. Hanging On The Mobile Phone The answer to the first question as to why Nokia suddenly finds itself squeezed out of its own game starts from the vantage point of mobile platforms. In today’s competition within the mobile phone industry the key issue is to have a platform for developers and to add new applications. This is so because the mobile phone has apart from communication also become a device for banking, gaming, education, music and the list goes on. Apple and Google’s mobile platforms attract today developers from all over the world and these developers constitute a global eco-system of entrepreneurs and for innovation of new applications. The 2010 IBM Tech Trends Survey was conducted online and covered responses from 2,000 IT developers and specialists from 87 countries. More than half (55 percent) said they think mobile software application development will eclipse development on all other traditional computing platforms by 2015. The findings are in line with a recent analysis by Gartner, the ICT research firm. Gartner forecasts big spending on mobile development over the next several years. Gartner expects around $29 billion to be spent on mobile applications in 2013, a growth rate fivefold from 2010 in three years. Developers cite cloud computing as the other significant game changer within the coming years. Nokia’s management apparently failed for too long to understand these game-changes going on within the mobile industry and failed to install a sense of urgency for change throughout the organisation. The management stuck for too long within its ‘comfort zone’ of design and superior mobile cameras. And it seems that Nokia forfeited a connection with mobile software developers and thereby missed out on the opportunities of getting new applications from global co-creation among entrepreneurs and innovation eco-systems. Incidentally, the most successful app for i-Phone is the game ‘Angry Birds’ developed by a Finnish company. #3 Three reasons why Nokia failed
With Samsung taking the cellphone crown from Nokia, we dig into possible reasons that led to downfall of the smartphone pioneer News | BANGALORE, INDIA: There was a time when Nokia ruled, Samsung struggled and Apple was no where in the phone market. Now the roles are reversed and Nokia is struggling hard not be nowhere. Samsung has surpassed Nokia in cellphone sales, thereby ending Nokia’s 14-year rule as a
leading handset maker, according to IHS iSuppli and Strategy Analytics. Nokia shipped 83 million handsets in Q1 2012, while Samsung shipped 92 million handsets. It's not just about those numbers. Standard & Poor has also downgraded Nokia’s bonds to a grade of BB+/B. Nokia became the world's largest cellphone maker in 1998 when it overtook Motorola - at a time when Samsung had just entered the industry - and it controlled around 40 per cent of the market for years before Apple Inc's iPhone was unveiled in 2007. "After 14 years as the largest global mobile phone maker, getting knocked off the top spot will come as a bitter blow to Nokia," says Ben Wood, head of research at CCS Insight, who has followed the industry since the 1990s. But what's the reason behind Nokia's fall? Here are the possible things that went wrong with Nokia. COMPLACENCY- As a market leader for over a decade, Nokia didn't really plan for the future as it seemed a bit complacent with its products. When Apple launched the iPhone in 2007, the first touch phone, Nokia was still priding in its E-series by when the definition of smartphone had undergone a tremendous change. That was least expected from the pioneer in the smartphone market. The success of iPhone didn't have any significant impact on Nokia, unlike Samsung, which experimented with off-the-shelf technologies and managed a transition to smartphones much faster than expected. And Nokia, which had launched its first smartphones through its Symbian series 60 in 2002, remained a pioneer with no better future prospects. Nokia failed to anticipate, understand or organize itself to deal with the changing times. LACK OF INNOVATION- While Samsung comes up with new phones almost every year with a slight modification from the previous launch, Nokia's Windows phone which came in 2011 lacked some basic technology essential to drive its sales. Nokia's Lumia series was launched with a bang, but didn't click. Reasons can be its design, which wasn't as attractive as Samsung phones or the iPhone. Today the sale of phones is dependent on how shiny or trendy it looks. Leave aside the looks, Nokia phones didn't have the front camera, which makes it not even 3G enabled. And we are on the threshold of entering the 4G era. So, Nokia's latest phones were feature ready, but not future ready. FROM SYMBIAN TO WINDOWS- Nokia was solely dependent on Symbian till it entered into a partnership with Microsoft recently. But its shift to Windows was considered a tad too late as by then Apple and Samsung had established their dominance. The operating system space was nearly occupied by Android and iOS leaving not much role for Windows. But that cannot be translated into a failed partnership. “Nokia and Microsoft are no weaklings, they do have assets. We believe that there is a good chemistry there with that partnership, and ultimately long-term
Windows Phone will be successful,” Wayne Lam, IHS senior analyst, was quoted by Wired. Hence what's advisable for Nokia is to adopt multi-operating systems to make the most of all. #4 Innovate Or Die: Nokia’s Long-Drawn-Out Decline
Ask a European about Nokia and a faraway look will come into their eye, a wistful tone creep into their voice. During the late 1990s and early 2000s the 147-year-old Finnish company became a global technology star: the world’s No. 1 mobile maker and the first brand of phone everyone owned. In some emerging markets, so the story goes, the word ‘Nokia’ became a generic term for ‘mobile phone.’ But becoming synonymous with phones is where it all went wrong. There can be little doubt that Nokia’s mobile glory days are behind it. Korean electronics giant Samsung now occupies the once Mighty Finn’s former throne at the top of the global mobile tree, while Google’s Android OS is the dominant smartphone platform (Android overtook Nokia’s legacy smartphone OS Symbian at the end of 2010, according to Canalys). In Q3 this year, Android was on an average of three out of every four smartphones sold worldwide (IDC’s figure). In October, IDC also noted Nokia’s exit from its top five global smartphone vendors – the first time the Finnish company had dropped out of the top five since IDC started tracking vendors in 2004. Even if Nokia’s strategy of switching from its legacy smartphone platform, S ymbian, to Microsoft’s Windows Phone OS — a strategy it outed in February 2011 — ends up being relatively successful, in terms of profitability and device shipments, the company will never hold sway over the industry as it once did. Now it’s just a passenger on Microsoft’s train. However many fancy apps Nokia adds to Windows Phone, the underlying platform is directed in Redmond, not Espoo. FROM HERO TO ZERO- The Nokia of today is a very different, much diminished company compared to the giant of the mid 2000s. If not a spent force, then certainly a much reduced one: smaller, less profitable, with fewer assets, and resources at its command — and dwindling cash reserves (net cash fell to €3.6 billion by the end of Nokia’s Q3 2012, down from €4.2 billion in its Q2). It doesn’t even own its own headquarters any more: earlier this month it agreed to sell and lease back the building to raise €170 million. Rumours of Nokia being an acquisition target continue to swirl — helped by the company’s historically low share price (currently around $3$4, it has dropped as low as $1.33 this year) — with Microsoft and even Apple named as potential buyers. Since Nokia’s first non-Finnish CEO, Stephen Elop, was appointed in 2010, job cuts have been a regular headline story for the company. Nokia now has 44,630 employees in its mobile and location division — down from 60,995 in Q3 last year. The company’s changing shape is the result of Elop ‘realigning’ the business to fit the new strategy of using Microsoft’s OS, rather than developing smartphone platforms in house — leading to various in-house software efforts to
be discontinued from Qt, to Meltemi, to Maemo/MeeGo. But Nokia’s CEO has also had to slash costs as profitability plunged. If you look at any of the handset manufacturers that have had really hard times and they come back — they come back half the company they were. Nokia swung to an operating loss of €1.073 billion 2011 and has reported a string of quarterly operating losses this year: €1.34 billion in its Q1; €826 million in its Q2; and €576 million in its Q3 – with a “challenging” Q4 expected. A full-year 2012 loss of more than €3 billion looks likely. Combine those losses with dwindling cash reserves — and Nokia’s apparent failure to ignite significant consumer interest in its Windows Phone-based Lumia line of smartphones and the company’s very survival looks to be at stake. Nokia hasn’t broken out sales of its new Windows Phone 8 devices yet, but sales of WP 7.x devices have been unimpressive to date: Nokia reported 2.9 million Lumia sales in its Q3; 4 million in its Q2; and more than 2 million in its Q1. (For context, worldwide sales of smartphones rose to 169.2 million units in Q3 alone this year, according to Gartner.) Yet wind the clock back five years and Nokia was riding high as master of its own mobile hardware and software, and a hugely profitable business (its 2007 operating profit was €7.985 billion). Today it’s neither profitable nor in control of its own destiny. Its smartphone business depends on Microsoft’s fortunes. And, in a market dominated by Android and iOS, even a company as typically bullish as Microsoft can only talk about trying to become the “third ecosystem” (in the event, Windows Phone still trails Symbian’s global marketshare: 2.4 percent vs. 2.6 percent, according to Gartner’s Q3 figures). In short: Nokia had it all, and now it’s gone. “Overall if you look at the dominant market position that Nokia had – 40 percent marketshare, if you go back a couple of years — there is no way even with a successful Windows Phone 8 story, and even with the strategy they laid out, that they’re ever going to return to that kind of marketshare, that kind of dominance,” says Adam Leach, principal analyst at Ovum. Leach is better placed than most to comment on Nokia’s decline, having previously worked at Symbian – including on projects such as the Nokia Communicator: arguably the world’s first commercial smartphone (a device that included the ability to download apps — some 10 years before Apple ‘invented’ the iPhone App Store). “Even if they achieve their plans and achieve them well, it’s unrealistic to think Nokia is going to come back anywhere near like the company they were. If you look at any of the handset manufacturers that have had really hard times and they come back — they come back half the company they were,” he adds, name-checking the likes of Motorola and Sony Ericsson. NOKIA’S BIG MISSTEP- So where did it all go wrong for Nokia? The cause of the company’s decline looks very simple with hindsight: Nokia should have moved off its smartphone platform Symbian and onto its next-generation platform, MeeGo, much sooner than it did. Years sooner.
By the time Nokia released its first MeeGo-powered smartphone – the N9, in 2011 — it was far too late to compete with Android and iOS. In any case, by that point Nokia had already publically committed to Microsoft and in starting down the Windows Phone path, Elop made the decision to abandon in-house alternatives such as MeeGo – meaning the N9 was effectively DOA. “Nokia needed to have MeeGo ready to go into the market two years or even now perhaps three years ago,” says Leach. “They needed to be on their new platform probably round about 2008, 2009. If you think 2008 was just when Android entered the market, it was just a year after iPhone was finding its feet. Nokia really needed to be there at that point with its platform for growth — offering some kind of computing experience on the device.” Leach describes the mindset he encountered when working at Symbian, between 1999 and 2004. “Symbian was always very phone-centric,” he tells TechCrunch. “In my own experience of being at Symbian working with Nokia there was always a frustration of [Nokia saying] ‘it’s got to be a phone first, it’s a phone, phones sell.’ And we’d be saying ‘there is different stuff you can do, you can adopt more of these kind of computing paradigms’ — and they really didn’t want to hear that.” The core problem that brought Nokia low is not unusual for successful public companies that have worked their way into a position of marketplace dominance over a period of years (see also: BlackBerry maker RIM, for instance). Nokia’s business was cooking on gas in the mid 2000s, with massive profits and phone shipments keeping their shareholders happy and clamouring for more of the same. But this success evidently made it harder for them to change their business to react to the looming threats from internet-focused companies. You could also argue their view of the landscape ahead was clouded by their “blinkered, phone first” view, as Leach puts it. Point to the CEO — apart from Steve Jobs – who relishes telling the shareholders it’s time to retire the gravy train, and start out afresh on a hand-cranked cart. But that, in effect, is what Nokia needed to have begun doing in the mid 2000s to survive disruption by a new generation of web companies who understood the future was data, not voice. “What Nokia was looking at was their feature phones, which were still selling healthily then,” says Leach. “That mid-range feature phone market was the sweet spot and [their view was that] Symbian had to, in some way, be a feature phone with a little bit extra. That thinking really stifled them. And the problem then, when they realised they needed to do more, was that Symbian was a bit too old and wasn’t extendable enough to do the things they really needed to do.” IHS Screen Digest analyst Daniel Gleeson makes a similar point: Nokia wasn’t thinking big enough when it really counted – and without a grand plan they weren’t able to act decisively to fix the strategic weaknesses that were being exploited by others. “Their emphasis was on incremental innovation of existing products rather than aggressively pushing a disruptive
innovation,” he says. “Their smartphone strategy was muddled at the time to put it politely,” he adds. “Symbian was the principal OS, but with Maemo/MeeGo also in development; Nokia was far from clear in its long-term commitment to either platform. Even if it could execute well, overly risk-averse management prevented Nokia making this decision. By attempting to juggle both, Nokia showed another fundamental problem, it did not understand the importance of ecosystems.” THE SIGNIFICANCE OF SOFTWARE- Dig a little deeper, and Nokia’s problems with its smartphone OS strategy are evidently problems with software more gen erally. The company fundamentally didn’t get software, says Gleeson — so they didn’t understand the crucial significance of apps and building an ecosystem around apps. “Nokia has almost always produced high quality hardware; but it was its software that was the weakness,” he says. “Nokia vastly underestimated the importance of third-party applications to the smartphone propo sition. Each Symbian UI required its own custom build of the OS which limited the addressable market of any third-party apps.” “Furthermore, Nokia had a blasé attitude towards compatibility of apps; breaking backwards compatibility on OS upgrades on multiple occasions e.g. S60 third edition, Windows Phone 8; and developing phones incapable of using some games available for earlier devices (e.g. Nokia 500, Lumia 610),” he adds. “Consumers are attracted to smartphones for their ability to b e more than just communication tools, and so the lack of apps hinders adoption. One can simply look at the lack of some key apps such as Spotify from Nokia’s latest flagship as a continuation of this problem (Spotify is available on the Lumia 800 and 900 however).” Nokia has almost always produced high quality hardware; but it was its software that was the weakness. Gleeson argues that Nokia still hasn’t fixed its attitude to software — evident in the recent issues with the schism between WP 7.5 and 8. “This is an issue that Nokia has not fully addressed yet,” he says. “While this may seem to be Microsoft’s problem now, Nokia were well aware that there was going to be a break from WinPho 7.5 to 8.” It’s not too surprising that a company that started life as a paper mill, way back in the 1800s, might be more comfortable with physical, tangible things, than digital stuff. But the problem for Nokia wasn’t just that it was slow on the update where software was concerned, it was also now competing with companies born and bred in the digital era – with bits and bytes in their blood. Nokia’s decision to open source Symbian in 2008 to try to compete with Android was of course too little too late. The platform itself was not competitive with next-gen rivals in the ways that counted: It still put the phone function first, rather than Internet-connected services. Regardless of how technically powerful Symbian was – something die-hard Symbian fans will always point out (yes it could have apps and ‘true’ multitasking) – there was no getting away from the
problem that it was legacy technology, built in and for an earlier mobile era when phones were phones first, not pocket computers. As Gartner analyst Carolina Milanesi puts it, Nokia was guilty of “ trying to fix Symbian for too long.” It was also too busy worrying about not upsetting the apple cart of its current customers to start making the disruptive changes needed to win future ones, she says. Or to put it another way, Nokia was fiddling while its platform burned. FORESIGHT WITHOUT LEADERSHIP- Despite clinging on far too long to Symbian — and not having the quicksilver thinking of a native web company — you can’t accuse Nokia of lacking ideas. Nokia has a history of coming up with new stuff. The company started life as a paper mill in 1865 but it didn’t stick with pulp forever, turning its hand to cranking out rubber boots, tyres and cables, among other things, before moving on to electronics and finally mobile phones. In mobile too Nokia has not been short of new ideas. The company pioneered various key mobile concepts that are now absolutely mainstream — from cameraphones and music mobiles to apps and tablets. But despite getting its futuregazing right in one sense – by coming up with the ideas in the first place, often years before others got there — Nokia the company was still stuck in the past, mired in its phone-first mindset, which meant it failed to recognise and deliver on the true potential of its creations. Nokia’s R&D held the key to unlocking the future success of its business – but the corporate culture of the company failed to turn futuregazing into an agile strategy to advance its business by breaking with the lucrative present. Without visionary leadership and exceptional execution good ideas are just a series of disconnected dreams. There’s no doubt Nokia had plenty of dreamers within its walls but it desperately needed a visionary CEO capable of turning its ideas into the future of the business. Nokia had done it with paper and boots and even mobile phones, but the leap to mobile data proved a leap too far. “The ‘phone first’ mindset ran through everything they did,” says Leach. “And although the R&D guys came up with some great innovative things they were slow to get those to market. So they were very good at coming up with concepts – ‘this is what the future’s going to look like; in the meantime what’s selling in the market is these feature phones with additional Internet capabilities,’ and they were kind of caught between the two. And I think they never really got that leap right to R&D working to breed products to market as opposed to just being all the blue sky activity.” “It’s difficult to comment on Nokia’s internal management structures, as all I hav e to go on is speculative and the complaints of disgruntled ex-employees but it is likely that issues [such as underestimating the importance of apps and ecosystems] would be symptoms of a management with no clear long-term vision and the resulting in-fighting between product teams,” adds Gleeson.
Leach points to the example of the Nokia Communicator – a pioneering forerunner of today’s smartphones, which launched way back in 1996 — as an example of how Nokia failed to deliver on its own great potential. While the device included the ability to download apps, Nokia missed the opportunity to capitalise on them long before anyone else could have. “Nokia felt that downloading apps and all of that was only something a minority of people would do,” he says. “It wasn’t really the main point, no one would get that concept. And then a couple of years later you have Apple doing a mainstream TV commercial about downloading apps to your phone. “Now the tragedy really is that Nokia had that capability. If they had been a bit more confident with it – confident that this is where the future was, they could have had that market, they could have been there. But looking at that TV ad of downloading apps to your phone there’s no way anyone in Nokia would have ever believed that it was mainstream enough to get to do that sort of advertising around it.” Nokia had the scale, the connections with manufacturers, the relationships with operators and the brand strength to ‘out iPhone the iPhone’ — if it had reacted fast enough. “Nokia’s cardinal sin was not as many would suspect lack of foresight about the development of the market such as touchscreens, large displays and tablets,” adds Gleeson. “Nokia had the scale, the connections with manufacturers, the relationships with operators and the brand strength to ‘out iPhone the iPhone’ — if it had reacted fast enough. Samsung’s success has shown that being a ‘fast follower’ is a viable strategy for a market leader to avoid being usurped by early movers.” The key line there is if it had reacted fast enough. Nokia was simply not capable of matching the speed of innovation of a Google or an Apple – hardware was in its blood, not software. So, as Gartner’s Milanesi points out, Nokia got bogged down in the alien detail of the task facing it — platform transition and building a sustainable software ecosystem — and therefore wasted time. Time that could have been spent on developing MeeGo from, in her words, a “good platform (N9 demonstrated that),” to a competitive ecosystem. IHS screen digest analyst Ian Fogg describes Nokia’s fatal flaw as a failure of execution. “Historically Nokia repeatedly saw the future and adopted a strategy to seize the opportunity but failed to execute,” he says. “For example: they saw the importance of smartphones and secured a smartphone OS when they invested in Psion’s software division to create Symbian way back in 1998. But their Symbian smartphones were a pale shadow of what they had bought: they took a touch screen UI and converted it to a keyboard-only OS.” As another example of forward thinking but flawed delivery, Fogg points to Nokia’s prescience around mobile gaming. “Nokia realised mobile games was a massive opportunity. Twice they tried to become the dominant mobile games player with Ngage and twice their execution let them down,” he notes. And when Nokia began pouring even more effort into mobile services – with the Ovi app store and initiatives such as Comes with Music – its plans were still “full of holes in execution.”
WINDOWS PHONE VS. ANDROID- Fogg believes Nokia’s current set of problems with Windows Phones are not explained by a failure of execution; now it’s their strategy that’s the problem. While Elop “rightly saw” that mobile was becoming a “war of ecosystems,” choosing Windows Phone to fight the dominant players of Android and iOS has simply dragged Nokia down, he argues. “Now it’s Windows Phone that is holding Nokia back. Windows Phone is proving a hard sell because of the success of Android and iOS.” Adopting Windows Phone also means Nokia is now reliant on Microsoft’s execution — and Redmond continues to lag behind the pace of development on the dominant smartphone platforms. “Microsoft has been slow to innovate with Windows Phone, which has held Nokia back,” says Fogg. “The current version, Windows Phone 8, is little different in consumer features to Windows Phone 7 of two years ago. In the meantime, Apple and Google have piled on numerous more features to iOS and Android.” “Elop chose Windows Phone also because he could reduce costs by lowering the number of Nokia staff working on content and services. Ironically, Nokia is having to stimulate the Windows Phone ecosystem by content deals to attempt to get the platform moving,” Fogg adds. Choosing Windows Phone was of course not the only option open to Nokia: There is one more lost opportunity to add to Nokia’s case file. With the benefit of hindsight, Leach believes it’s possible to say that Nokia should have adopted Android — and that by not doing so it missed the opportunity to be the company Samsung is now. Ironically that is also the company Nokia used to be: the dominant force in the mobile industry. Also ironic: Google’s Android could have saved Nokia, instead of helping to bleed the company of its blue blood. Nokia was mobile royalty – now it’s just Microsoft’s foot soldier. “Samsung has been the victor over Nokia more than Apple has,” Leach argues. “Success for Nokia now would be being Samsung – if, at that key point in 2008, 2009, they’d made that step to adopt Android. It wasn’t really clear at the time that was the right thing for them to do — at that time they really needed to be on their next-gen platform; that was clear. They needed to have MeeGo ready and in the market. But, if we put on our hindsight vision, we could say that rather than MeeGo, probably the best thing to have done would have been Android… With hindsight it’s a lot clearer.” Fogg hammers this point home by arguing that differentiating its smartphones on Windows Phone has actually been harder for Nokia than it has been for its rivals to make a success of adopting Android. “Elop argued that Windows Phone would make it easier for Nokia to innovate and differentiate its phones than if Nokia had adopted Android. Ironically, Microsoft’s UI rules have made it hard for Nokia to do this while Sony, Samsung and HTC have successfully built custom user interfaces and applications on top of Android.” Success for Nokia now would be being Samsung – if, at that key point in 2008, 2009, they’d
made that step to adopt Android. It’s hard to beat Nokia up for not predicting how successful Android was going to be; few would have predicted how swiftly Google would take over the smartphone space. But it’s easy to accuse Nokia of complacency at a time when there were plenty of warning signs the winds of technology change were whipping up a storm. Nokia even saw what was coming — what smartphones were becoming — sooner than most, but they failed to realise how quickly they needed to change, or that the time they had to prepare for their next business leap was shrinking exponentially. And, finally, when they did realise they needed to turn their business upside down, choosing Windows Phone over Android was a flawed strategy that kicked the company into the long grass. No matter how well they executed, Windows Phone could not turn their business around because the race for smartphone dominance was being run by Android OEMs and Nokia wasn’t even in the running (leaving the field clear for Samsung to rise and rise). What’s even worse for Nokia is that the story of its long-drawn-out decline is not a new tale. And the lesson it teaches is not original. Put simply it’s this: Innovate or die.
#5. Nokia's failure to innovate
As Nokia sinks into a sea of red those at the helm of the company must surely be hoping that the worst is over. However, this optimism will also no doubt be tinged with a profound regret that its’ current predicament could have been avoided. Overnight, Nokia posted a net loss of $1.68 billion, about four times their loss of $433 million during the same period a year earlier and more than double the loss anticipated by analysts. The good news is that the company isn’t burning through its cash in quite as rapid a rate as the market had predicted. This wisp of positivity should, however, be tempered by the revelations of Frank Nuovo, a former chief designer at Nokia, who has told the Wall Street Journal that Nokia had a smartphone and a tablet in the works a decade before Apple burst into the scene. Essentially, Nokia had seen the mobile future but did nothing about it. Nuovo’s comments to the WSJ, reveal that a research team at Nokia had shown management a touch screen phone almost seven years before the iPhone was released. That’s not all, Nuovo claims that Nokia also had everything it needed to build a tablet computer a decade before the iPad became the poster child of a new generation of computingfailure to "Oh, my God," Nuovo told the paper. "We had it completely nailed."
A lament that will no doubt be uttered by a multitude of Nokia shareholders - who are no doubt appalled at how things really played out. So what happened? Why did these devices not find their way into the hands of customers, who were already in thrall of Nokia’s phones? There are a number of painful lessons here that are not just unique to the mobile market, or Nokia. Research in Motion finds itself in a similar situation as it failed to translate its dominance in the corporate sector, especially in the security space, to success. The failure to translate cutting edge research into tangible products is a product of a short-term outlook that makes the incumbents lazy, where the focus is squarely put on ensuring that the next set to financial results are better than the last one. That’s easy to do when you are a dominant player in the market and there’s easy money to be made. But to stay on top a company to figure out a way to stake its claim on the next big game changer and that takes more than just by spending billions of dollars in research. Nokia reportedly spent $US40 billion on research and development over the past decade but as the WSJ reports the research efforts were hamstrung by internal rivalries and disconnect between the research and the strategy teams. It’s not just a case of Nokia failing to bring innovative products into the market, it made a strategic call that the ‘low end’ of the mobile market will remain a secure base for a substantial time. That punt did not pay off as the iPhone wowed the consumers. Nokia spend billions building operating systems (Symbian) only to discard them, while a company like Samsung immediately jumped on the chance to join forces with Google and Android. What we have here is a failure to take a risk and persevering with a path that in the long run would have paid off. There is no guarantee that Nokia would be sitting in Apples’ position but at least it wouldn’t be in it the position it finds itself in now. The one good thing to come out all that R&D for Nokia is that it is sitting on a $US6 billion pile of patents, which will provide Nokia the breathing space it needs to see if its belated alliance with Microsoft will pays dividends. As Nokia’s boss Stephen Elop gets ready to systematically sell the patent portfolio every sale will highlight the high price that the company has had to pay for its complacency. #6. The Three Pillars of Nokia Strategy - Have All Failed. Why Nokia Must Fire CEO Elop Now
This is not complex stuff. If your company has a strategy built on three pillars, and all three are working - congratulations! You are in the rare position of succeeding in all you do, please do promote your head of strategy and give your CEO a big bonus, you may even have a young Steve Jobs in your organization. Your company is grabbing massive market share, you make huge profits and you are growing beyond your wildest dreams. Congratulations, enjoy this, it
won't last forever. If you have two of your three pillars working in your strategy, but one is failing, then you quietly shift away from the one failing part, you emphasize the two that are strong, and focus there. You don't fire your strategy guy, he got it more right than wrong, and you celebrate your CEO. You then quietly, behind the scenes, do a 'recalibration' of your strategy, where you find a new third leg to replace the failing one, but you do this quietly, behind the scenes. Because most of your strategy is succeeding, its full steam ahead. The CEO is doing a good but not stellar job, keep him, but don't give him any big bonuses for this performance. This, by the way, is kind of typical of most companies, part of the strategy is working but not all. This company should be profitable and growing. But its likely only to be growing at the pace of the industry, ie it would be holding its own roughly, in market share. If you have two of your three pillars in your strategy failing and only one working, then its time to do the mea culpa, announce clearly that you are in trouble, and rapidly shift away from the two failing parts but convince your investors that yes, the one good part will keep you alive, please stay with us, this will be turned around. The strategy guy who cooked up this failing mess needs to be reassigned to non-strategy work and the CEO is probably over his head, you probably need a new CEO. But if you really belive the CEO is up to the task, he or she should be a change CEO and at this stage, the existing strategy MUST BE changed, it cannot bring success to the company if two of your three legs are failing. The one succeeding part cannot sustain you for long. This kind of company is in trouble, or on the brink of trouble, it is probably bleeding market share and probably making losses. It may even be shrinking in size already. If you have three of your pillars in your strategy failing. All three failing, you must IMMEDIATELY STOP pursuing that strategy, as every day in it, brings you closer to death, to yes, bankruptcy, to oblivion, to complete failure, to junk status as a company, to being a takeover target. If your three pillars in your strategy are failing, you must fire immediately the strategy guy and replace not just the strategy head, but your whole strategy. If every leg of your strategy fails, then yes, ANY new strategy is better. Whatever you did before is better, whatever your competitors are doing is better, anything is better than pursuing a strategy that is 100% failing. The CEO who executed a strategy where all three legs fail, is clearly incompetent, and must be fired immediately. If the Board waits, then the Board is either asleep at the wheel, or incompetent, or in collusion with the incompetent CEO. If the Board waits in firing the CEO of a company where the whole strategy is failing - that Board must be fired instantly as well. This is elementary stuff. A company that finds its three pillars of its strategy all failing, is shrinking in size, is losing customers, is losing market share, is losing consumer and investor confidence, finds its share price rated junk, and is obviously generating increasing losses. This company is at least on the brink of bankruptcy and depending on how much cash it has on hand, it may prolong its life a little, but as long as the company pursues a 100% failing strategy - the company will kill itself.
If your CEO looks at his strategy and sees, that all three legs in his strategy are failing - and openly admits each of his three legs in his strategy are failing - then the CEO admits to being an utter failure and should resign immediately. And obviously the Board must accept his resignation. If you have three pillars in your strategy and you clearly state each of those three are failing - and you somehow then state that you will continue on that path anyway - that is the textbook definition of insanity - doing the exact same thing, and expecting a different result. If your CEO looks at the strategy built on three pillars, and all three pillars are failing - and if he even once utters the words 'lets proceed with this strategy anyway' - it means - yes literally it means - your CEO is not incompetent, he is a lunatic. He is literally crazy. He is insane. Yes, literally, insane. To look at all three parts of the strategy as having failed, and saying - yes, I will proceed in this direction anyway. It failed already, is failing currently, but if I do the exact same thing again, it will succeed. This CEO is the most dangerous there can be in corporate governance. #7. Why Nokia Failed at Smartphone Segment Against Apple?
By haticeiremgunes According to my project I am going to explain two companies; which one of them is successful at producing and selling Smartphone and one of them is, can not success at production and sale of Smartphone. Firstly I am going explain Nokia which is leader of communication industry but going to fail at Smartphone sector and after that, I am going to explain Apple, that is best at producing Smartphone and proved its quality in last 4 years. I am going to explain briefly Nokia’s history and position in industry and explain marketing strategy deeply. Soon, I’m going to explain Apple and its product Iphone and how being successful at communication industry with explaining marketing and production strategy. At the end of project I am going to compare these two companies and their actions. NOKIA Corporation is a Finnish multinational communications corporation that is headquartered in Keilaniemi , Espoo, a city neighboring Finland's capital in Helsinki Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries. And Nokia has got over 132,000 employees in 120 countries, sales goods in more than 150 countries and global annual revenue of over €42 billion and operating profit of €2 billion as of 2010. Nokia Corporation is the world's largest manufacturer of mobile phones: its global device market share was 23% in the second quarter 2011. Nokia has sites for research and development , manufacture and sales in several countries; Nokia had R&D situate in 16 countries and employed 35,870 people in research and development, representing approximately 27% of the group's total workforce . The Nokia Research Center, founded in 1986, is Nokia's industrial research unit consisting of about 500 researchers, engineers and scientists; it has sites in seven countries:Finland , China , India , Kenya , Switzerland , the United Kingdom.
