Transcription
Foreign, over 83.32% of the global population uses smartphones. That's over 6.64 billion people. If you're like most of them, your smartphone is likely the first thing you see each morning when you wake up and the last thing you see before you go to bed. This little device is your primary means of connecting with the world. It allows you to unlock new learning opportunities, stay updated on the latest events, and continue working while you're on the go. It's your tool for education, entertainment, information, and much more.
However, your smartphone wasn't always quite so smart. For iPhones and Samsungs of today to take the world by storm as they did, a different device had to pave the way. Nokia, once one of the biggest brands in the mobile industry, today scarcely anyone remembers it, apart from a few meme creators who want to trigger your nostalgia. So what happened? How did a mobile giant who succeeded in climbing so high fall down so low, so fast? As you might have expected, it's not just a single instance of bad luck. It's one poor decision after another that led to its downfall. Let's start the story from the beginning to see what we can learn from it.
Nokia had a windy road to becoming a household name in the mobile industry. It had its roots as a humble paper mill operation on the banks of the Tamarkosky River in Finland, all the way back in 1865. Led by Frederick Edistam, a mining engineer, it expanded its operation by 1868 to include two mills, one located in the vicinity of the town of Nokia, after which the company got its name. Edistam partnered with his friend and politician Leo Michelin to transform Nokia into a public limited company, retiring just a few short years later. Michelin took the opportunity to expand the company further in Edistam's absence, moving into the electricity business.
Over the coming years, the company kept expanding to new, diverse markets. After verging on bankruptcy post-World War I, the company was overtaken by Edward Pulkkinen and his Finnish Rubberworks business. By 1932, Pulkkinen acquired the Finnish Cable Works company as well, merging the three businesses into one. Nokia was a jack of all trades by 1967, manufacturing everything from paper to tires, footwear, capacitors, cables, consumer electronics, and even military equipment. All the while, experts and researchers within the company were encouraged to keep innovating and developing unique projects. Ultimately, that led to the introduction of the first Nokia phone in 1987: the Mobira Cityman 900. The 1.7-pound phone was known for its relatively poor coverage but an excellent signal nonetheless.
While the Mobira Cityman was considered a luxury device, Nokia slowly started introducing more convenient solutions, creating a heightened demand for handheld mobile phones. The Nokia 1011 came out in 1992, and the world quickly grew crazy for it. It was the first ever device in the Global System for Mobile Communication network (GSM). So, the company soon found itself supplying mobile enthusiasts the world over. The very first phone call on the GSM second-generation network was made by none other than Finnish Prime Minister Harri Holkeri, who used Nokia's prototype.
Although Nokia wasn't the first brand to release a smartphone (that title belongs to IBM with its IBM Simon), it was one of the first brands to popularize them. By 1996, the Nokia 9000 had the highly sought-after QWERTY keyboard. It could send and receive faxes and email, and it came with a web browser and useful business programs. Despite its hefty price tag of over a thousand dollars (equivalent to about two thousand dollars today), the phone was in high demand, and that just might be the beginning of Nokia's downfall.
The hype around Nokia's devices only continued growing as the company kept releasing one advanced new gadget after another. By 1998, the brand held the biggest market share in the mobile phone industry, but things slowly started to crumble. Creating demand for mobile phones is one thing; who doesn't want to experience interesting new gadgets? However, meeting that demand is an entirely different story. Everyone wanted to have a Nokia phone for a while, especially after the release of the Nokia 3310, to this day one of the most recognizable devices to come from this company. The series sold over 126 million units and even now, it's lauded for its extraordinary durability and resilience.
The problem was that Nokia couldn't keep up with its rapid growth. Supply chain issues and rising demand for more Nokia phones meant that the company leaders had to focus on improving their mass production processes instead of following the path of technological innovation, as was at the core of the business in the beginning. They prioritized streamlining their production of their tried-and-tested devices. In the process, the company lost sight of what its consumers wanted, leaving room for brands like Apple and Samsung to take over and fill in the newly created gaps in the market.
In the early 2000s, Nokia experienced significant diminished sales. There was a sudden and unexpected drop in demand that the leadership wasn't prepared for. Still, everyone quickly recuperated, only to encounter a similar situation again in 2004. By then, Nokia's market share had gone from over 50% to 35%. Not an entirely bad outcome, but a problem nonetheless. In an attempt to regain control, the company underwent dramatic leadership changes, appointing Jorma Ollila as the new CEO. The change of leadership seemingly caused rifts within the organization. The management started struggling with resource allocation. The upper management started setting increasingly heightened demands. The departments couldn't reconcile disparate product development programs, and virtually everything went haywire. The company needed a better software architecture and experts who could ensure the success of new product launches. The attempts to restructure the organization failed to deliver the desired result. Ultimately, some of Nokia's key executive team members resigned, leaving the company with inexperienced staff scrambling to deliver subpar products.
With the lack of expertise in the organization, things started breaking into pieces. The top management believed that touchscreen smartphones were just a fad, that consumers still preferred the QWERTY keyboards, and that Android systems were nothing but a passing trend. They failed to understand their consumers and address their wants and desires. Being overconfident in customer loyalty, they failed to deliver the experiences their customers wanted and expected from a brand like this. The quality of the products declined, and even the most loyal Nokia users started transitioning to the newly released Apple and Samsung products.
While Apple and Google started rolling out devices based on the iOS and Android operating systems, Nokia remained dedicated to its now-outdated Symbian OS. As a device-centric system, the Symbian OS left much to be desired. Every new phone launch required the Symbian code to be changed and tested on that specific device. Naturally, this only added to the problems within the company and further delayed new product launches. By the time 2009 rolled around, Nokia had no less than 57 Symbian OS versions, none of them compatible with one another.
When Stephen Elop took over the reins from Jorma Ollila and became Nokia's new CEO, he tried to keep the company in the race by partnering with Microsoft. As Microsoft was already looking to get into the mobile industry, it didn't take much convincing. In 2013, Microsoft bought Nokia's mobile branch for around 7 billion dollars. However, the acquisition brought no benefits to either company. After all, they were both too late to enter the game. Samsung and Apple had already put down their roots, delivering improved user experience and wowing the audiences with innovations. While both Microsoft and Nokia struggled to meet customer expectations, Microsoft's Windows Phone could have been a hit, but no developer wanted to invest in building a platform without a big enough user base. On the other hand, no user wanted to invest in devices without well-developed platforms, sending Microsoft's phone business into a vicious cycle. Adopting the Windows Phone, Nokia got stuck in the middle of this, ultimately losing the battle against brands already on the Android/iOS bandwagon.
Still trying to stay competitive and build up its user base, Nokia launched new products. However, the way it handled these launches ultimately led to its downfall. Today, I'd like to introduce to all of you the next chapter in smartphone photography. Apple and Samsung, for instance, had become known for their consistency. Both brands had highly predictable product launches, adding new and improved versions of their already well-respected series. Apple had and still has its respectable iPhone. Samsung saw success with its Galaxy series. Nokia was the odd one out, launching disparate products, different models, and new series, which all seemed a bit too chaotic. The consumers couldn't help but feel confused by the options presented by the company. Without an umbrella branding strategy, Nokia only kept falling behind its competitors.
So, as it became clear, it wasn't just one instance of bad luck that brought Nokia's mobile business to its knees. Internal issues and disagreements, overconfidence in its own strength, resistance to smartphones, the inability to assess the consumer's needs and meet expectations, and poor marketing choices – these are all to blame for Nokia's failure. In the simplest terms, Nokia just stubbornly failed to diversify. Once it tried to make a comeback, it was already too late. Its users had moved on to bigger and better things.
Today, the company is back to its roots, focusing on its network business. Whether it will ever attempt to break into the mobile industry again remains to be seen. What do you think of the fall of Nokia? Could it have been prevented? Share your thoughts in the comments below, and don't forget to like and subscribe for more content like this.