Nokia Rise and Fall EMSE 6005.10 – Organizational Behavior For The Engineering Managers Professor Andy Sakka Abhishek Thakur Akshat Amrut Oswal Nokia history: Nokia was founded by Fredrik Idestam, a mining engineer in 1865. The name Nokia was decided in 1871 when he opened his second paper mill on the bank of Nokianvirta river. Nokia started out with making paper which incidentally was one of the very first technologies used for communications. Fredrik Idestam was the chairman of the company till 1896 when he retired, and Leo Mechelin took over as the chairman. Under Mechelin, Nokia started a new business unit of electricity generation. In 1898, Eduard Polon founded the Finnish Rubber Works, which later became Nokia’s rubber business. They were making everything from galoshes to tires. In 1912, Finnish Cable Works was established by Arvid Wickstrom, which later became Nokia’s cable and electronic business. In 1967, all three of these jointly owned companies came together to form the Nokia corporation. Nokia’s first thrust in telecommunications came when they began developing radio telephones for the army and emergency services. During this period, the company was involved in many businesses including paper products, tire manufacturing, footwears, communication cables, televisions , electricity generation machinery, robotics , chemicals, plastics and many more. By 1987,, Nokia became one of the leading manufacturers of TV in Europe. By 1990, Nokia decided to concentrate its efforts on the fastest growing business of telecommunications & leave all other companies behind. They sold out all other business divisions. An Era of Communication Nokia was not a new player in telecommunication field when they started concentrating on it in 1990’s. Instead, they had the ball rolling from 1979 when they created a radio telephone company Mobira Oy as a joint venture with one of the leading TV maker Salora in Finland. They started with the Nokia DX 200 which was a digital switch for telephone exchanges. They worked on the development of a version of exchange & Nordic Mobile Telephony network was born. Source: http://www.Nokiamusuem.info In 1987, GSM (Global System for Mobile communications) is adopted as the European standard for digital mobile technology. This new technology revolutionized the telecommunication industry with its high-quality voice calls, international roaming and support for text messages. The Growth of a Mobile Giant Nokia truly entered a new age GSM cell phone time with their Nokia 1011 model which was launched in 1992. During this time, Finland was undergoing a severe economic meltdown and Nokia was also in a severely crunched economic situation. In 1994, Nokia launched their 2100 series phones which were the first phones with the now famous Nokia ringtone in them. Nokia had planned a target to sell 400,000 of these phones which was a big number at that time, but they got lucky and it turned out to be such a huge success that they sold over 20 million devices worldwide. This was truly the start of the ride for Nokia atop the cellphone business. Source: ETLA – The Research Institute of the Finnish Economy As the graph, clearly depicts, Nokia was the clear the gorilla in the cellphone market in 1990’s, with almost 100% market share. As the time, moved towards the next century competition for Nokia grew but still they were able to hold onto their market leader position. From 1996 to 2001, Nokia’s turnover increased almost fivefold from EUR 6.5 billion to EUR 31 billion. With the start of the next century Nokia just kept on growing bigger & bigger becoming the leader in the mobile technology. In 1999, Nokia launched the Nokia 7110 which was the first phone capable of rudimentary web-based functions including emails. Within 2 years Nokia launched its first phone with a built-in camera and again in September 2002 they came out with a phone capable of capturing videos i.e. the Nokia 3650. During this time, there was a huge number new patented technology coming out from the Research and Development division of Nokia, which was helping their share prices soar to the sky. source:http://envisionip.com/blog/2012/07/19/530/ Nokia launched the 6650 with 3G technology in 2002 and by 2005 Nokia had sold its billionth phone which was a Nokia 1100 in Nigeria.In 2007, Nokia was recognized as the 5th most valued brand in the world. The Stumbling Giant Originally in 2007 after the release of iPhone, Nokia smartphones like Nokia N95 with Symbian OS outsold the iPhone and had a dominating 62.5% market share in Q4 of 2007 ahead of Microsoft’s Windows mobile OS and RIM’s BlackBerry. As the competition grew fierce in 2008, Apple’s iPhone 3G hit the market which started the rise of the new kind of smartphone within the cellphone space. As Nokia felt intimidated, Olli-Pekka Kallasvuo, CEO of Nokia, tried everything in his power to tackle this new threat but Nokia’s pie was being snatched away slowly. The graph below shows how Nokia was affected when Apple started manufacturing iPhones in 2008. But when the iPhone 3rd Generation phones hit the market with the new refined iOS operating system it quickly doubled the market share for Apple and reduced the Nokia’s share along with others. Nokia was still the market leader with a 40.8% market share in Q4 2008 with its new smartphone like Nokia 5800 Xpress music and Nokia E71 but was declining. In 2008, Nokia bought the Symbian operating system and the following year made it open source so that more & more apps could be developed for Symbian operating system. But this step couldn’t turn the fortunes of Nokia as in 2009 their market share of Symbian fell to 46.1% in Q4 2009 from 52.4% in Q4 2008. But in 2010 everything started to fall apart for Nokia as Google with its Android operating system along with Apple with the iOS started to eat into Nokia’s business, and the other Symbian makers including Samsung and Sony Ericsson decided to take up Android as their new operating system. In mid-2010, Nokia was the only OEM to manufacture devices with the Symbian OS while they were contemplating to adapt to newer Operating Systems. WHAT WENT WRONG? We will take use the 3 primary lenses which enable the process to analyze where Nokia possibly went wrong. Nokia made choices, we feel, it shouldn’t have and will note these in our analysis below. I) Strategy Symbian OS was created by Symbian Ltd., which was a joint venture between Psion, and phone manufacturers Ericsson, Motorola and Nokia. Symbion was the most popular smartphone OS on a global average till Q4 2010 with Nokia having Symbian as the OS in its all flagship phones. In June 2008, Nokia acquired Symbian Ltd. under a decision to make the Symbian OS open-source platform so that more developers can use it to develop their mobile apps. In February 2010, it was officially made available as open source code. But it was a little too late as Android, which was already open-source and freely available, and iOS has already started to eat into Symbian market pie with their advanced platforms & a huge number of support applications on the smartphones. On February 11, 2011 Nokia announced partnership with Microsoft and carry their OS i.e. Windows OS in their smartphones. A study in June 2011 showed that over 39% of the mobile developers using Symbian had planned to abandon the platform for either Android or IOS. By June 2011,, Nokia had made a deal with Accenture for Symbian based software development and support services through 2016 which also saw 2800 of Nokia employees moving base to Accenture. II) Technology Nokia was a pioneer of technology in mobiles and cellphones. Nokia came a long way to reach that state, but only due to aging staff and technology could not stand to the new wave of competition. Nokia. Nokia had the Mobira series from 1982-1990 which were very popular during its times. From 1990- 1999, Nokia sold the Original series of phones, which also saw the inclusion of a newly developed GSM technology. Nokia later went forward to production colour screen phones, digital camera featured phones and even music capable phones. Nokia also had a gaming series of phones which were selling like hot pancakes amongst teenagers. They indirectly took over Sony’s walkman, Apple’s iPod and other related product’s market share. Nokia later had business series phones with push email and other corporate benefitting features. .