is a Finnish multinational communications, information technology and consumer
electronics company that was founded in 1865 by Fredrik Idestam, Leo Mechelin
and Eduard Polon. It is mostly known for the production of mobile phones. For
almost more than a decade it dominated the phone industry, but then, all of a sudden,
its market share has plunged from 46.7% to just 9.5% in 7 years (Sam Oliver,
apple insider). What caused such dominant firm to lose its market share that quickly?
During the same year, Nokia met its new competitor, Apple. In 2007 Steve Jobs,
founder of Apple, introduced to the world a new phone called iPhone. Was this
the main reason of Nokia’s failure? What did the Apple do that Nokia did not? Is
it a failure of the Nokia brand, or maybe a result of a bad corporate strategy?
This essay aims to find the main causes that caused Nokia to fail.

    In 2007 Nokia’s phone market share was as
high as 49.4% according to Gartner’s research. From that year onwards, Nokia’s
market share has been decreasing every year to 43.7% then 41.1% and 34.2% until
it reached 9.5% in 2014 (BBC). Apple, as well as Samsung were definitely one of
the main causes leading to that failure. Both companies just took over the
phone market share. Nokia was falling behind as they rocketed. Why is Apple so
successful? There are many reasons why Apple is so successful compering to its
competitors. One of the reason is that Apple’s approach is towards creation of
products is different. Often engineers create something because
they can, whereas Apple engineers are creating their products for themselves.
When Steve Jobs was alive, he represented the “real consumer” of Apple
products. What is more, Steve Jobs was innovative, he was able to see the
future unlike his competitors. During his announcement of the first iPhone he
showed the world how easy his product is to use which actually had a huge
impact on its success. Also, apple keep making things simple. Unlike the
majority of phone makers Apple has just one product, in this case iPhone.
Thanks to that it minimizes the decision making for the consumers. This
may seem limiting given the number of smartphones available to users however, the
truth is the revers. According to Tim Bajarin “Our company has done
consumer research for over 30 years, and consumers constantly tell us that
while choice is nice, in reality they want the process of choosing a tech
product to be simple and not complicated by a plethora of choices.”
Furthermore, Apple was not inventing new products but they were recreating existing
products they just made smartphones better and were at least two years ahead of
the competition. They had the vision of future smartphones. They were
innovative which undoubtedly was the major key of their success.

We already know
that Apple and Samsung crushed Nokia, but are they the only reason why Nokia
failed? Did Nokia’s corporate strategy fail? What were Nokia’s decisions during
that period. In order for a company to work it must analyse the behaviour of
competitors, or evaluate the company’s share price or consider different ways
to expand the business. A company must seek for strategic long-term activities
of their business which is known as strategic
management. The firm needs to have competitive
advantage which are the various factors, such as lower costs or a better
product (like Apple), that give a firm an advantage over its rivals. It also
should take into account internal strategic analysis, what stages or activities
should company take to help to create product value (value chain). Such as
marketing and sales, service etc. (ECON BOOK)

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Apple and Samsung
obviously have surpassed Nokia, however Nokia at a time was surprisingly an
adaptive company. They were not falling behind with technology, they created
their first smartphone back in 1996. They also spent huge amount of money on research
and development, however what they were struggling with is to transform all
their spending of research and development into something that people might
actually want to buy. Nokia lacked innovation. They could not see the
future of smartphones and what is more, they are more of a hardware company
rather than a software company meaning that its experts building physical
devices like etc. but not programs that could run those devices. (the new Yorker).
Because of that Nokia did not see how important software will be in future so
in did not increase its research in this particular field. On the contrary,
Apple saw both hardware and software as really important and that they need to work
together in order to create the perfect product, the product wanted by
consumers. Phones were changing to quickly and Nokia could not keep up with it,
it started to fall behind as it underestimated the transition to smartphones. Furthermore,
Nokia overestimated its brand, it thought that it could easily catch up with
their lateness in the smartphone game. They thought that thanks to their
hardware design customers would stay loyal to them. For some reasons Nokia could
not progress with the technology and when it moved from Symbian software to
Windows in 2011 it was already considered too late since Apple and Samsung took
over the market. (the new Yorker) Another problem that caused Nokia’s failure
according to Quy Huy, was the inside misunderstanding between top managers and
middle managers. Middle managers were afraid to disappoint top managers with
their ideas. Historically, the top managers were not really liked by the middle
ones. They had a bad reputation and regularly shouted at people. Because of
that middle managers did not propose new ideas or if something was going in the
wrong direction and everyone knew about it they wouldn’t tell it to the top
managers. (Who killed nokia).

Nokia and Apple
saw the world differently. Nokia’s goal was to create the best speaking
devices, whereas Apple’s goal was to reinvent the phone through the
revolutionary touch interface. By that time Nokia was one of the biggest
company and Apple was at its edge. Apple needed a break-through product since
that was its last chance to stay in the game and in order to do that they had
to change the game. Nokia, on the other hand, had everything. It was an amazing
manufacturing company focused on the product and features and its quality as
well as prices and features of their mobile phones were unbeatable. However, they
didn’t focus on consumers’ needs, felt too confident and stick to their Symbian
operating system instead of trying to improve, push forward. In 2002 Nokia
produced a similar device to the iPhone but there wasn’t much about the product
other than the fact that it had a touchscreen, allowed users to browse the web,
find restaurants and play games. Two years after, in 2004 Apple begun the creation
of iPhone by employing one thousand people to work on a secret “Project Purple”.
Apple really believed that they could change the world. (Daniel Hodges)

The biggest phone
company that dominated the market share for over ten years has collapsed due to
new competition as well as bad decision making and inner problems. In 2007
Apple revolutionised the phone market by introducing the iPhone that is way
smarter than any smartphone and very easy to use. Since that year Nokia’s
market share has been decreasing each year. Nokia lacked innovation. Its
competitions were progressing so fast that they could not catch up with it, so they
started to fall behind. Unlike Apple, Nokia did not have the vision of future
smartphones and focused just on making best speaking devices. They underestimated
the importance of the transition to smartphones and failed to recognize the
increasing importance of software. Even with all the research and development Nokia
was unable to fulfil consumers’ needs. And the inner conflict between the top
and middle managers was an obstacle for Nokia to progress. The brand itself
could not harm Nokia’s market share. Nokia, as I mentioned before was already
the pioneer in the phone industry, however lack of innovation as well as bad
corporate strategy led to an unfortunate failure.


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