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Nokia and the Adaptive Cycle of Change Arne Beentjes Universiteit Van Amsterdam

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Nokia and the Adaptive Cycle of Change Arne Beentjes Universiteit Van Amsterdam Nokia and the Adaptive Cycle of Change Arne Beentjes Universiteit van Amsterdam Keywords. Nokia, adaptive cycle of change Introduction The first mobile phone I ever laid eyes on was the Nokia 3310. At that time (somewhere around 2002) Nokia was, in my eyes, the only manufacturer of mobile devices. Also in the beginning of time of the smartphones, Nokia was a market leader. I remember saying to a friend: “Wow! Nokia must be the biggest company in the world” (I was very young at that time). Yet today, you rarely see a Nokia smartphone. This is a great opportunity to dig into the history of Nokia in the past decennium and see where they made good and bad choices when it comes to their mobile phones. This paper describes the last 10 years of the Nokia mobile phones in the terms of the Adaptive Cycle of Change through the eyes of (a) consumer. 1. Equilibrium When Nokia launched the Nokia 1100 handset in 2003 it was both the best-selling mobile phone of all time as well as the best-selling consumer electronic product [1]. Nokia created small, robust and cheap devices; catchy because of the simplicity. At this stage there were a lot of companies developing mobile phones (LG, Motorola, Ericsson) so the competition was high. Because of the fast growth of technology Nokia knew, even though in a state of equilibrium, that they had to move forward. Staying with simple cell phones would lead to a decrease in market value. They focused on changing the look of cell phones and penetrated the smartphone market. In the first years of the smartphone era Nokia was by far the biggest smartphone vendor [2] but this state of equilibrium changed because of the fast growing competition. 2. Crisis Because of the big competition in the cell- and smartphone market Nokia was trying all kinds of new developments. This change of state is marked by the shift from quadrant 1 to 2, the state of crisis. The first action taken place in this state were the unusual forms of the cell phones. This failed to excite the market completely. They also tried to combine gaming with the use of cell- and smartphones. This also failed because of the high competition (mainly due to Gameboy) [3]. After these attempts there were 2 other major events which changed the market position of Nokia completely; the introduction of the iPhone in 2007 and the rise of the Samsung smartphones [4]. Nokia saw a fast rising of competitors mainly because of the operation system they used on their smartphone (cellphones were almost entirely swiped from the market by smartphones by now). Because of the lack of the operation system Nokia uses, they established a Windows Phone partnership. This would be the new combination to bridge the gap between Nokia and Apple and Samsung. 3. New Combinations The partnership with Windows Phone backfired on Nokia. After the partnership announcement in 2011 Nokia’s share price fell about 14% [5]. While being the world’s largest smartphone vendor in the beginning of 2011 they fell to a tenth position in 2 years [6]. So what was planned as the ultimate new combination turned out to be a mistake which brought Nokia back (well actually kept Nokia) into the state of crisis. 4. End of Nokia’s Mobile Devices In September 2013 Microsoft announced that it would acquire Nokia’s mobile device business which is the end of the Nokia mobile devices [7]. In terms of the adaptive cycle you could see this as a new combination or as the end of Nokia. I personally consider this as the end of the Nokia mobile device business. 5. Reflection You can see clearly in the above description that Nokia failed to create a positive situation in the state of crisis. They have tried it with many different options but the competition was too much at the end. Eventually it led to a complete take-over of Nokia’s mobile device business. While Nokia was the market leader in the mobile device business they are almost completely vanished within a timeframe of 3 years. This short case description shows the importance of the second and third stage of the adaptive cycle of change. If you are unable to create a positive situation in the state of crisis your business is bound to fail. 6. Notes In the case of Nokia there are a lot of different factors which has led them to this position. This case description is written through the eyes of the consumer. A full case description of the last 10 years of Nokia could have the size of a master thesis. References [1] Virki, Tarmo (5 March 2007). "Nokia's cheap phone tops electronics chart". Reuters. Retrieved 14 May 2008. [2] "Gartner Says Worldwide Smartphone Sales Reached Its Lowest Growth Rate With 3.7 Per Cent Increase in Fourth Quarter of 2008". Gartner. 11 March 2009. Retrieved 3 September 2013. [3] Saylor, Michael (2012). The Mobile Wave: How Mobile Intelligence Will Change Everything. Perseus Books/Vanguard Press. p. 304. [4] "Gartner Says Worldwide Smartphone Sales Reached Its Lowest Growth Rate With 3.7 Per Cent Increase in Fourth Quarter of 2008". Gartner. 11 March 2009. Retrieved 3 September 2013. [5] ben-Aaron, Diana (11 February 2011). "Nokia Falls Most Since July 2009 After Microsoft Deal". Bloomberg. [6] "Gartner Says Asia/Pacific Led Worldwide Mobile Phone Sales to Growth in First Quarter of 2013" (Press release). Gartner. Gartner, Inc. 14 May 2013. Retrieved 21 July 2013. [7] "Microsoft buys Nokia's Devices and Services Unit, unites Windows Phone 8 and its hardware maker". The Verge. Vox Media. Retrieved 3 September 2013. .
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