Vii) Nokia

In the early 90's this Finnish conglomerate decided to bet everything on new, unproven digital technology for mobile phones known as GSM. Over the next 4 years Nokia divested everything from rubber boots to diapers to consumer electronics.

Nokia turned the mobile phone from a clunky brick into a sleek piece of branded electronics. It dominated the industry with 30%+ market share in the late 1990's and led the likes of Motorola, Sumsung, etc.

Since 2000, Nokia's revenue has flattened. To restore the company to double-digit revenue growth, Nokia plans to re-invent itself, and transform from mobile phones to an IT consumer electronics powerhouse. The aim is to sell devices that will allow people to do everything from playing video games to sending e-mails via cell phones. This involves a new business model which will depend upon the widespread availability of big, wireless data pipes linked with 3G (a new wireless broadband technology).

In 2003, Nokia began taking sales from the digital camera industry by making a phone that shoots and sends pictures. It made Nokia the world's largest camera manufacturer.

Furthermore, the company has been re-organized to focus on 2 new promising areas: those devices with multimedia capabilities and those that also effectively function as pocket-sized mobile PCs. In early 2004, this accounted for around 15% of Nokia's revenue. At the same time it is maintaining its position in the cellular network equipment market

"...whether Nokia can reinvent itself again affects not just it but the entire telecom industry, which has been laid low by bankruptcies, accounting scandals, and plain bad business..."

Janet Guyon, 2004

To handle the new products, Nokia will have to learn how to partner with the software industry and to sell business directly to the public, not just to mobile phone operators.

Nokia's Lumia smart phone that uses Microsoft's Windows software has not competed successfully against products from Apple and Samsung

Nokia aims to revitalise its crucial smart phone business with a number of flagship launches in 2013; this includes a move into the super-sized tablet phone market. This is different from Apple which focuses on one phone per year. One of Nokia's innovative devices can work as a phone and tablet (phablet) and is similar to Samsung's popular Galaxy Note. This will be Nokia's first move with Lumia into the larger screen mobile smart device markets currently dominated by Apple Samsung. Other launches will be

- Lumia smart phone using advanced Pureview imaging technology, ie a handset with 40 megapixel camera and flash

- lighter and more advanced versions of the existing flagship Lumia 920

Other activities will include continued availability of Windows phones, working closely with mobile operators to encourage sales with exclusive phone launches, and new devices in the feature phone business. But the last one is coming under pressure from cheaper smart phone companies in Asia.

Apple with iPhone hit Nokia significantly, ie in 2007 Nokia was the leading global handset maker - selling around 400 million units. Its share price nearly doubled but had fallen by 75% in early 2009.

It is claimed that Nokia became the victim of its own success and size, ie focused on protecting and servicing its successful products, eg smart phone. As a result it missed opportunities like

- the 8 inch tablet computers before iPad emerged

- touchscreens before Apple introduced them.

Nokia wanted to maintain its position rather than innovate. Nokia wasted chances by focusing on servicing existing products at the expense of fresh innovation.

In 2013, Microsoft bought Nokia (handset business) for $7.1 billion as computers are going mobile and Microsoft wants to protect its core business (Windows operating system, Office & Software) from the likes of Apple, Google, etc. In 2015 Microsoft writes-off it Nokia investment as a "dud".

 

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