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The Downfall of a Giant - An analysis
Shailesh Gururani

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Submitted to : Ms.
Lisha Diwan
Context
 Introduction
 Preview
 What went wrong?
 Bibliography

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Preview
Every company has to go through a life cycle. With the birth of any
organisation, it has to go through different phases through growth to
decline stage. For any company to avoid this decline stage they need to
come up with some sort of innovation or with any new product. Nokia,
once a king of the mobile market, had the largest market share throughout
the world. Now, it seems like the game is over for this company. Apple and
Samsung has come up as the biggest competitor of this company. Just over
a decade ago, the Finnish mobile phone maker Nokia was the darling of
the technology sector. Smartphones are new choice of the consumers in
present scenario. Surprisingly, Samsung has topped the chart with 32.6 %
market share followed by Apple with 16.9 % market share, Nokia is in the
third place with just 6.6% market share.
Whatever went wrong, but now we can see that Nokia, the Finnish
mobile giant, is now in danger of becoming part of the history, which i am
sure nobody would've expected some 4 or 5 years ago. The dramatic
change in the mobile phones market brought about by the companies like
Apple, Samsung etc which gave the world millions of apps we know them
as IOS and Android and it seemed like Nokia was caught unaware. even
though they were in the smart phone market since 2002 with their Symbian
platform they couldn't capitalize on it and were lost in the highly
competitive market. . The other platforms like IOS and Android proved to
be far superior when compared to their own Symbian. Samsung which was
not even in the picture is now the market leader in smart phones category
showing their readiness to adapt to the changes happening and

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adaptability towards innovations. So what lead to the downfall of Nokia is a
big question everyone would be asking.
Introduction
Nokia Corporation is a Finnish multinational communications and
information technology corporation headquartered in Keilaniemi, Espoo, Finland.
Its principal products are mobile telephones and portable IT devices. It also offers
Internet services including applications, games, music, maps,
media and messaging through its Ovi platform, and free-of-charge digital map
information and navigation services through its wholly owned subsidiary Navteq.
Nokia has a joint venture with Siemens, Nokia Siemens Networks, which
provides telecommunications network equipment and services. Nokia has around
122,000 employees across 120 countries, sales in more than 150 countries and
annual revenues of around €38 billion. As of 2012 it is the world's second-largest
mobile phone maker by unit sales (after Samsung), with a global market share of
22.5% in the first quarter. Nokia is a public limited-liability company listed on
the Helsinki, Frankfurt, and New York stock exchanges. It is the world's 143rd-
largest company measured by 2011 revenues according to the Fortune Global 500.
Nokia was the world's largest vendor of mobile phones from 1998 to
2012. However, over the past five years it has suffered declining market share as a
result of the growing use of Smartphone, principally the Apple iPhone and devices
running on Google's Android operating system As a result, its share price has
fallen from a high of US$40 in 2007 to under US$3 in 2012. Since February 2011,
Nokia has had a strategic partnership with Microsoft, as part of which all Nokia
Smartphone will incorporate Microsoft's Windows Phone operating system
(replacing Symbian). Nokia unveiled its first Windows Phone handsets, the Lumia
710 and 800, in October 2011.On May 4th, 2012, Nokia investors filled a class
action against Nokia because of the disappointing Windows Phone sales. On
August 22th, 2012, Nokia Finnish investors started considering gathering
signatures to get CEO Elope out of the company.
"Nokia is the world's leading mobile phone supplier and a leading supplier of
mobile and fixed telecom networks including related customer services." That is a

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quote directly from their web site Nokia.com. That is a big statement so are they
really as big as they claim. Especially, considering the emergence of Apple into the
phone market.
Nokia are a multinational corporation from Finland with a global annual revenue
of over 40 billion euros and over 130000 employees worldwide.
Type Public
Industry Telecommunications equipment
Internet
Computer software
Founded Tampere, Grand Duchy of Finland (1865)
incorporated in Nokia (1871)
Founder(s) Fredrik Idestam
Leo Mechelin
Headquarters Espoo, Finland
Area served Worldwide
Key people Risto Siilasmaa (Chairman)
Stephen Elop (President & CEO)
Products Mobile phones
Smartphones
Mobile computers
Networks
(See products listing)
Services Maps and navigation, music,messaging and media
Software solutions

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(See services listing)
Revenue €38.65 billion (2011)
Operating € -1.073 billion (2011)
income
Net income € -1.164 billion (2011)
Total assets €36.20 billion (2011)
Total equity €11.87 billion (2011)
Employees 122,148 (2012)
Divisions Mobile Solutions
Mobile Phones
Markets
Subsidiaries Nokia Siemens Networks
Navteq
Vertu
Qt Development Frameworks
Website Nokia.com

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What went wrong?
To remain competitive in the market, every organisation has to take
strategic steps time to time to achieve and sustain competitive advantage
and therefore attain industry average profit.
However, since both the business environment and individual firms are
dynamic systems, continuously in flux, it is a big challenge to achieve a fit
between these two systems and therefore get the competitive advantage.
On the process of Nokia’s development company achieved success and
when it failed to do so the company immediately suffered fall in 2004, lost
market share and decreased market revenue. However, company quickly
recovered because it followed the market trend. Now at the end of financial
year 2011-12, Nokia There were many reasons which proved to be
disastrous to Nokia.
Nokia failed to create a coherent application ecosystem, and failed to
cascade rich applications to mid-range and lower end phones. Nokia
pioneered downloadable applications, using Java and Symbian C++, but
the platform remained horribly fragmented as individual devices were
allowed to create dozens of incompatible flavors of the platform. Nokia also
did not create a smooth process for users to discover, purchase, and install
applications, until it was way too late. Nokia always had a good program for
developers, but since the application distribution model was missing, they
faced a fragmented go-to-market model and of course struggled with
fragmentation of the device base. Applications were perceived as
something crucial for the high end users, but the vision did not extend to
the large middle tier of users adopting third party apps, with the possible
exception of simple Java games.

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Nokia's service ambitions got into the way of embracing winning Internet
services. Part of this was a function of the US market, from which Nokia
was largely absent in the 2005-2011 period, leading in consumer Internet
service adoption and thus creating a blind spot for Nokia on where
consumer trends were headed. The other reason was the ambitious (or
megalomaniac, depending on your point of view) belief that Nokia could
come to become a strong player in a number of Internet service categories,
including maps, music, and social networking, which made the company
very reluctant to enable emerging leaders such as Facebook and MySpace
on its products. Other vendors such as Samsung and Apple had no such
restraints and were quick to deliver mobile clients for these services to their
customers.
Nokia was stuck with a rigid technology management model that made it
difficult and slow to create products that did not draw heavily on existing
platform features. These platforms had been a strength between 1995-
2005 and enabled Nokia to exercise unparalleled scale in the industry, but
became an Achilles heel when the disruptive ideas such as thin, touch, and
apps started to surface. Part of this was a classic innovator's dilemma - the
platform was loaded with features that Nokia "knew" market wanted and
without which a product would fail, and when RAZR and iPhone became
market successes without having some of these features, at least in their
first iterations, Nokia was genuinely shocked.
There was general hubris around the company that caused it to overlook
emerging competitors and downplay the importance of continuing to push
the innovation envelope. Nokia overestimated the momentum advantage
that its brand, technology assets, and distribution network posed over
competitors such as Apple and Samsung. Nokia had, and continues to
have, armies of very smart and visionary people who were among the first
to dream up concepts such as mobile social networking and touch screen
UIs, but the lack of sense of urgency on bringing truly novel concepts to the
marketplace caused these ideas to wither on the vine.

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Nokia had been watching the Symbian software as it was created, since
the mid-1990s, and licensed the operating system before Symbian was
even created. Symbian proved to have many advantages over the recent
competition in some important areas. With its mature and well-debugged
phone stacks, it is better for phone calls than any other smartphone: it
drops fewer calls, the calls sound better, and it uses the antenna better.
Symbian's power consumption and performance on comparable hardware
are also best of class, despite the baroque middleware added over the
years by Nokia. Yet Nokia's phones were considered uncompetitive in the
marketplace, because new products from Apple and Android had raised the
bar for ease of use, particularly for new data applications, and Nokia's user
experience was awful. Apart from that Symbian’s development was too
slow, it was too late to the smartphone arena.
In the beginning of this year in February Nokia switched to Microsoft.
Switching to a new mobile operating system was always going to cause a
lot of necessary financial pain. Some experts say Nokia choosing Microsoft
was a wrong decision The choice was simple. Android or Windows Phone.
Whichever would give Nokia the most benefit in the medium to long term
would be the sensible choice. Android would have allowed Nokia to turn
around a new handset in short order.

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Share Price patterns of Nokia in last 10 years
Going through this figure we can easily identify that the share prices of
nokia considerably fell in the year 2009 and continues to decline till now.
Future looks bleak for Nokia but recent patent war between Apple and
Samsung has given some opportunity to Nokia but we are yet to see
whether Nokia will be able to grab this opportunity or not.

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References :
Wikipedia
Nokia website
Google
www.forbes.com