Nokia is a Finnish telecommunications, consumer electronics, and information technology company founded in 1865 which by 1998, had overtaken Motorola to become the world’s largest mobile phone brand. The Nokia brand is now controlled by HMD Global – a company founded by former Nokia employees that released a line of smartphones in 2017. The company’s failure to keep up with software-based iOS and Android operating systems made it lose its market leader position.
Aspect
Description
Founding and Early Success
Nokia, founded in 1865 in Finland, began as a pulp mill and evolved into a diverse conglomerate with interests in various industries. However, it gained global recognition for its foray into mobile phones and telecommunications equipment in the late 20th century. Nokia became the world’s leading mobile phone manufacturer, known for its durability and innovation.
Dominance in Mobile Phones
During the late 1990s and early 2000s, Nokia dominated the mobile phone market, capturing a substantial market share. Iconic phones like the Nokia 3310 became cultural symbols of the era, known for their reliability and long battery life.
Challenges from Competitors
Nokia faced increasing competition from companies like Apple and Samsung, which introduced smartphones with touchscreens and advanced operating systems. Nokia initially struggled to adapt to the rapidly changing mobile landscape.
Strategic Partnership with Microsoft
In 2011, Nokia announced a strategic partnership with Microsoft to use the Windows Phone operating system in its smartphones, effectively discontinuing its Symbian platform. This move aimed to revive Nokia’s smartphone business by leveraging Microsoft’s software expertise.
Decline in Market Share
Despite the partnership, Nokia continued to lose market share to competitors, particularly Android-based smartphones and iPhones. The transition to Windows Phone faced challenges, and the ecosystem struggled to gain traction.
Acquisition by Microsoft
In 2014, Microsoft acquired Nokia’s Devices and Services division, effectively bringing an end to Nokia’s reign as a standalone mobile phone manufacturer. The acquisition aimed to integrate Nokia’s hardware with Microsoft’s software to create a more competitive smartphone ecosystem.
Nokia’s Focus on Networks and Technologies
Following the acquisition, Nokia shifted its focus to its other businesses, including network infrastructure and patent licensing. It became a major player in the telecommunications equipment industry, supplying infrastructure for 5G networks and beyond. Additionally, Nokia continued to generate revenue by licensing its extensive patent portfolio.
Return to Mobile Phones
Nokia made a return to the mobile phone market by licensing its brand to HMD Global in 2016. HMD Global produced Nokia-branded smartphones and feature phones, leveraging the nostalgia associated with the Nokia name. These phones ran on Android, marking a departure from the Windows Phone era.
Ongoing Innovation
Nokia remained active in network technology innovation, including 5G and beyond. It also continued to explore emerging technologies such as Internet of Things (IoT) and cloud networking.
Legacy and Impact
Nokia’s legacy in the mobile phone industry endures through its historic dominance, iconic devices, and contributions to mobile technology. While it faced challenges in the smartphone era, Nokia’s focus on other business segments allowed it to maintain a presence in the technology sector.
Nokia is a Finnish telecommunications, consumer electronics, and information technology company founded in 1865 by Fredrik Idestam, Leo Mechelin, and Eduard Polón.
Nokia is perhaps best known for its mobile phones which dominated the industry before the invention of the smartphone. Not only were Nokia products built to last with long battery life, they were also a fashion statement.
As is often the case, however, a meteoric rise is followed by a similarly meteoric fall.
So what happened to Nokia?
Hardware focus
Nokia was great at building device hardware, but a device built on software was the way of the future.
When the company realized this fact, Apple and Android had already developed their own app-based software and were years ahead.
Nokia would forever remain trapped by its unwieldy, device-centric operating system called Symbian. With each new Nokia mobile phone, there were release delays as code had to be developed and then tested. By 2009, the company was using 57 different and incompatible versions of its archaic operating system.
And indeed, in its falling history, Nokia also counted one of the worst selling phones. The idea was pretty good (combining gaming with phones), but the UX and the timing not as good:
Operating system resistance
When Google entered the smartphone market in 2008, peers such as Samsung, Huawei, and Motorola switched to the Android operating system to remain competitive.
Nokia remained reluctant to do the same until 2011 when it partnered with Microsoft to secure Windows Phone as its primary OS. Unfortunately, Android can now be found in 80% of all smartphones while Windows Phone no longer exists.
Nokia belatedly switched to Android in 2014, but the damage had been done.
Mismanagement and poor culture
In a paper titled Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle, researchers published the results of 76 interviews with Nokia management staff.
Among the revelations were that:
Nokia suffered from organizational fear with temperamental leaders and frightened middle managers being the status quo.
Some management staff intimidated their subordinates by accusing them of not being ambitious enough. Others lacked technical competence which influenced their assessment of technological limitations during goal-setting. In comparison, similar positions at Apple were all held by competent engineers.
Senior leadership was afraid of not meeting quarterly targets.
Executives were also afraid to publicly acknowledge or comment on the inferiority of Symbian.
Top executives were wary of admitting inferiority to Apple for fear of losing investors, suppliers, or customers.
Aside from the poor culture, the decision to move from an organizational structure to a matrix structure in 2004 also harmed Nokia. Power struggles ensued with many key personnel departing the company soon after.
Nokia today
Unlike many other companies, Nokia’s failure to innovate did not lead to bankruptcy or acquisition.
Today, Nokia appears to have left mobile phone development in the past. The Nokia brand is now controlled by HMD Global – a company founded by former Nokia employees that released a line of smartphones in 2017.
The company still manufactures hardware and is involved in the roll-out of the 5G wireless network, among other things.
It also earns a considerable income from the hundreds of patents it owns and licenses to mobile phone vendors.
Key takeaways:
Nokia is a Finnish telecommunications, consumer technology, and information technology company founded in 1865. It enjoyed 51% of the global market share for mobile phones in 1998.
Nokia’s device-based hardware system was cumbersome and outdated, but the company persisted with it while competitors developed the software-based iOS and Android operating systems. By the time Nokia phones offered Android, the company had been left behind.
Corporate mismanagement within Nokia was rife and culture suffered as a result. Internally and externally, the company failed to acknowledge its diminishing relevance and market share.
Timeline
Nokia’s Rise to Dominance: Founded in 1865, Nokia became the world’s largest mobile phone brand by 1998, overtaking Motorola, and secured 51% of the global market share.
Failure to Embrace Software: Nokia excelled in hardware but failed to keep up with the software-based iOS and Android operating systems, which became the future of the mobile industry.
Struggles with Symbian OS: Nokia remained trapped by its unwieldy operating system called Symbian, leading to release delays and the use of multiple incompatible versions.
Reluctance to Adopt Android: While competitors embraced Android, Nokia was hesitant and only partnered with Microsoft for Windows Phone in 2011, which proved less successful.
Mismanagement and Organizational Issues: Nokia suffered from mismanagement, a poor corporate culture, and resistance to acknowledge weaknesses, hindering innovation.
Transition and Brand Control: Nokia’s failure to innovate did not lead to bankruptcy; instead, the brand is now controlled by HMD Global, founded by former Nokia employees, releasing smartphones in 2017.
Focus on Patents and 5G: Nokia shifted its focus away from mobile phones and remains involved in manufacturing hardware and deploying the 5G wireless network. It earns income from its extensive patent portfolio licensed to other mobile phone vendors.
Year
Event
Description
1865
Nokia founded as a pulp mill in Finland.
Nokia, originally a pulp mill founded by Fredrik Idestam, Leo Mechelin, and Eduard Polón, transitions into a diverse conglomerate with interests in various industries.
1998
Nokia becomes the world’s largest mobile phone brand, overtaking Motorola.
Nokia achieves global recognition in the mobile phone industry, surpassing Motorola to secure the position as the world’s largest mobile phone brand with a substantial market share.
Late 1990s
Nokia dominates the mobile phone market, known for iconic devices like the Nokia 3310.
Nokia experiences significant success in the mobile phone market, capturing a substantial market share and becoming synonymous with durable, reliable devices like the Nokia 3310.
2000s
Increasing competition from smartphones with touchscreens and advanced operating systems.
Nokia faces growing competition from companies like Apple and Samsung, which introduce smartphones with touchscreens and advanced operating systems, challenging Nokia’s dominance.
2011
Nokia announces a strategic partnership with Microsoft to use Windows Phone OS.
Nokia partners with Microsoft to adopt the Windows Phone operating system, discontinuing its Symbian platform, in an effort to revive its smartphone business and leverage Microsoft’s software expertise.
2014
Microsoft acquires Nokia’s Devices and Services division.
Microsoft acquires Nokia’s Devices and Services division, marking the end of Nokia’s standalone mobile phone manufacturing business as it integrates Nokia’s hardware with Microsoft’s software.
2016
Nokia licenses its brand to HMD Global for smartphone production.
Nokia licenses its brand to HMD Global, a company founded by former Nokia employees, to produce Nokia-branded smartphones, marking a return to the mobile phone market after the Microsoft acquisition.
Ongoing
Nokia shifts focus to network infrastructure and patent licensing.
Following the Microsoft acquisition, Nokia focuses on network infrastructure and patent licensing, becoming a major player in the telecommunications equipment industry and generating revenue from its patent portfolio.
WeWork is a commercial real estate company providing shared workspaces for tech start-ups and other enterprise services. It was founded by Adam Neumann and Miguel McKelvey in 2010. WeWork’s business model was built on complex arrangements between the company and its landlords. There were also several conflicts of interest between Neumann and WeWork, which provided the impetus for the failed IPO and significant devaluation that would follow.
Netscape – or Netscape Communications Corporation – was a computer services company best known for its web browser. The company was founded in 1994 by Marc Andreessen and James H. Clark as one of the internet’s first and most important start-ups. The Netscape Navigator web browser was released in 1995 and became the browser of choice for the users of the time. By November 1998, it had been acquired by AOL, which tried unsuccessfully to revive the popularity of the web browser. Ten years later, Netscape was shut down entirely.
Musically, or Musical.ly as it is officially known, was a Chinese social media platform headquartered in Shanghai. After passing 200 million users in May 2017, the platform was shut down by tech company ByteDance in November. After its acquisition, ByteDance suggested Musical.ly would continue to operate as a standalone platform. Company representatives noted that it would be able to leverage ByteDance’s AI technology and enormous reach in the Chinese market. Musically was ultimately absorbed into TikTok in June 2018, with the app no longer available in August of the same year. Existing users were offered technical support and several new features as a sweetener.
Vine was an American video social networking platform with a focus on looping video clips of six seconds in length, founded by Dom Hofmann, Rus Yusupov, and Colin Kroll in 2012 to help people capture casual moments in their lives and share them with their friends. Vine went on to become a massively popular platform. Yet by 2016, Twitter discontinued the mobile app, allowing users to view or download content on the Vine website. It then announced a reconfigured app allowing creators to share content to a connected Twitter account only. This marked the end of Vine.
CNN Plus was a video streaming service and offshoot of CNN’s cable TV news network that was launched on March 29, 2022. The service was ultimately shut down just one month after it was launched. Trouble began for the platform when parent company WarnerMedia merged with Discovery. The latter was unimpressed with paltry viewer data and, with $55 billion in debt to clear, was not interested in funding CNN+ moving forward. Other contributing factors to CNN Plus’s demise include a lack of compelling content and streaming service market saturation.
Clubhouse is a social app that allows thousands of people to communicate with each other in audio chat rooms. At one point, the company was worth $4 billion and boasted users such as Mark Zuckerberg and Elon Musk. Clubhouse declined because it rode the wave of pandemic lockdowns and suffered when people resumed their normal routines. The decision to remove the invite-only feature also caused a rapid influx of new members and removed any exclusivity. Clubhouse management also failed to define a business model and was unaware of the components of a successful social media site.
Carvana is an American online used car retailer headquartered in Tempe, Arizona. The company – which sells cars in unique vending machines – was the fastest-growing used vehicle retailer in the United States, with revenue of $3.94 billion in 2019. Yet by 2022, on $12.8 billion in revenue, the company reported almost $2.9 billion in net losses.
Houseparty was an app-based group video chat platform for mobile and desktop. Released in February 2016, the platform rapidly grew to hundreds of millions of users and was the #1 social app in 82 countries by May 2020. Less than 18 months later, however, owner Epic Games announced that it would be shutting down the app in October 2021. Let’s explain the reasons for Houseparty’s demise below.
ChaCha was a human-guided search engine founded in 2006. The platform provided a valuable service at a time when traditional search engine algorithms were unreliable and less developed.
When algorithms did become sufficiently developed, they provided answers to questions for free and much more rapidly than ChaCha could. The ChaCha business model was also unscalable, with employees overworked as the company tried to stay ahead of innovation.
ChaCha’s demise was also compounded by the smartphone, which provided another avenue for consumers to find information. A belated attempt to restructure and cut costs followed, but the company could not service its debt past 2016.
RadioShack is an American electronics retailer founded by brothers Milton and Theodore Deutschmann in 1921. The company enjoyed market dominance in the 70s and 80s but faded fast after a slew of missed opportunities.
RadioShack operated over four thousand stores in the USA, but many were placed too close together which caused sales cannibalization. These stores were also often small and had a confusing inventory mix.
RadioShack sold the first mass-produced personal computer with much success. However, the company saw no future in personal computers because of the high cost of hardware. It then instructed sales managers to intentionally keep PC sales under a certain threshold.
Compaq was an American developer and producer of computer products and services. After strong initial success, the company was acquired by HP in 2002 with the Compaq brand retired in 2013.
Compaq’s short-sighted acquisition of DEC provided the catalyst for its decline. While the company was dealing with the ramifications of the acquisition, competitors such as Dell and Gateway increased their market share.
Compaq also experienced a loss in revenue after the dot-com bubble burst. This was exacerbated by the standardization of chipsets and motherboards by Intel.
Kodak is an American photography product and service company founded in 1892 by George Eastman and Henry A. Strong. After dominating the photographic film industry for decades, the company filed for bankruptcy in 2012.
Kodak was not ignorant of digital camera technology. But it did fail at various stages to commit to digital products entirely despite overwhelming evidence that the technology would prove profitable.
Kodak was also the victim of the changing retail landscape and consumer sentiment toward foreign products in the United States. Blind in its devotion to printing, it also missed an opportunity to create a Facebook-style photo-sharing website three years before Facebook itself was conceived.
Friendster was a social networking site that then transitioned to a gaming platform. Ultimately, Friendster failed to capitalize on its early success as one of the first social media platforms to experience mass uptake.
When Friendster became a gaming platform, it failed to notify its user base. This set in motion the migration of users to Facebook which would continue for some years.
Friendster’s decision to raise funds via venture capital funding populated its board with investors who were not interested in technology or innovation. The company was acquired by MOL Global in 2009 who then sold its patents to Facebook soon after.
xStumbleUpon was an early social network founded by Garrett Camp, Geoff Smith, Justin LaFrance, and Eric Boyd. At one point, the platform was responsible for half of all social media traffic in the United States.
StumbleUpon suffered intense competition from the likes of Pinterest, Digg, and Reddit – both in terms of site functionality and monetization strategy. After a failed partnership with eBay, Camp bought back the company and instituted a major redesign to limited success.
The StumbleUpon user experience became outdated as consumers preferred to waste time scrolling through news feeds. Upon this realization, Camp shut down the service in 2018 to focus on a more modern iteration called Mix.com
Altavista was a pioneering search engine developed by a group of Digital Equipment (DEC) researchers. It was originally created to showcase the power of a then-revolutionary DEC supercomputer.
After an ominous partnership with Yahoo in 1996, AltaVista underwent a series of acquisitions and format charges as several companies tried to make it profitable. In the process, the search engine lost market share to up-and-comer Google.
Yahoo acquired AltaVista in 2003 and absorbed the technology behind the search engine into its own platform. AltaVista was formally put to rest ten years later.
Blockbuster was an American movie and video game rental chain. The company went from industry leader to filing for bankruptcy with $1 billion in debt in less than a decade.
Blockbuster relied on late fees to drive a high proportion of revenue. This strategy proved uncompetitive after Netflix offered fee-free movie rentals by mail. Blockbuster lost significant market share to Netflix in the ensuing years and experienced a decline in profit after abolishing late fees in an attempt to remain competitive.
Blockbuster’s demise is mostly due to an inability to innovate. Although passing on the offer to purchase Netflix is noteworthy, the company failed because of a myopic focus on its outdated rental franchise model.
Napster was a peer-to-peer music-sharing software application. It was the first such platform to provide free access to the full history of recorded music online.
Napster quickly attracted the attention of music artists, with Metallica instigating court proceedings against the company for copyright infringement and the distribution of unreleased music.
Napster was forced to shut down after the Recording Industry Association of America won a court injunction. Mounting legal fees and compensation costs led to the company filing for bankruptcy in 2002.
BlackBerry is an iconic smartphone brand owned by Canadian company BlackBerry Limited. The company enjoyed first-mover status in the smartphone industry, but ultimately squandered its advantage.
BlackBerry was ignorant and in some ways disrespectful of competitors in the industry. It was more concerned with protecting its proprietary technology than innovating to stay relevant.
Though profitable to some extent, BlackBerry’s focus on enterprise customers came at the expense of the far more lucrative consumer market. Government opposition to censoring information also eroded one of the core strengths of the company’s smartphone.
Nokia is a Finnish telecommunications, consumer technology, and information technology company founded in 1865. It enjoyed 51% of the global market share for mobile phones in 1998.
Nokia’s device-based hardware system was cumbersome and outdated, but the company persisted with it while competitors developed the software-based iOS and Android operating systems. By the time Nokia phones offered Android, the company had been left behind.
Corporate mismanagement within Nokia was rife and culture suffered as a result. Internally and externally, the company failed to acknowledge its diminishing relevance and market share.
Xerox is an American corporation selling print and digital document products and services worldwide. The company failed to capitalize on revolutionary research performed at its PARC R&D center.
Xerox was visited by Steve Jobs in 1979 who gained access to PARC in exchange for Xerox receiving shares in Apple. He then purchased the rights to a Xerox GUI and used it to produce the Apple Macintosh.
Xerox released the Xerox Star personal computer in 1981 in a rare example of the company selling an innovative product commercially. However, the Star was prohibitively expensive, targeted the wrong market, and was a decade ahead of its time.
Quibi was an American short-form streaming service for smartphones. Unfortunate timing with the onset of the COVID-19 pandemic is at least partly responsible for the failure of the platform.
Despite billions being invested in securing high-end talent and production studios, Quibi content was generally poor quality. In any case, there was no way for consumers to share or engage with the content they did enjoy.
Quibi was not helped by its pricing strategy and the presence of established competitors offering more for less. It was also improperly and inadequately marketed.
Business model innovation is about increasing the success of an organization with existing products and technologies by crafting a compelling value proposition able to propel a new business model to scale up customers and create a lasting competitive advantage. And it all starts by mastering the key customers.
The innovation loop is a methodology/framework derived from the Bell Labs, which produced innovation at scale throughout the 20th century. They learned how to leverage a hybrid innovation management model based on science, invention, engineering, and manufacturing at scale. By leveraging individual genius, creativity, and small/large groups.
According to how well defined is the problem and how well defined the domain, we have four main types of innovations: basic research (problem and domain or not well defined); breakthrough innovation (domain is not well defined, the problem is well defined); sustaining innovation (both problem and domain are well defined); and disruptive innovation (domain is well defined, the problem is not well defined).
That is a process that requires a continuous feedback loop to develop a valuable product and build a viable business model. Continuous innovation is a mindset where products and services are designed and delivered to tune them around the customers’ problem and not the technical solution of its founders.
Disruptive innovation as a term was first described by Clayton M. Christensen, an American academic and business consultant whom The Economist called “the most influential management thinker of his time.” Disruptive innovation describes the process by which a product or service takes hold at the bottom of a market and eventually displaces established competitors, products, firms, or alliances.
In a business world driven by technology and digitalization, competition is much more fluid, as innovation becomes a bottom-up approach that can come from anywhere. Thus, making it much harder to define the boundaries of existing markets. Therefore, a proper business competition analysis looks at customer, technology, distribution, and financial model overlaps. While at the same time looking at future potential intersections among industries that in the short-term seem unrelated.
Technological modeling is a discipline to provide the basis for companies to sustain innovation, thus developing incremental products. While also looking at breakthrough innovative products that can pave the way for long-term success. In a sort of Barbell Strategy, technological modeling suggests having a two-sided approach, on the one hand, to keep sustaining continuous innovation as a core part of the business model. On the other hand, it places bets on future developments that have the potential to break through and take a leap forward.
Sociologist E.M Rogers developed the Diffusion of Innovation Theory in 1962 with the premise that with enough time, tech products are adopted by wider society as a whole. People adopting those technologies are divided according to their psychologic profiles in five groups: innovators, early adopters, early majority, late majority, and laggards.
In the TED talk entitled “creative problem-solving in the face of extreme limits” Navi Radjou defined frugal innovation as “the ability to create more economic and social value using fewer resources. Frugal innovation is not about making do; it’s about making things better.” Indian people call it Jugaad, a Hindi word that means finding inexpensive solutions based on existing scarce resources to solve problems smartly.
A consumer brand company like Procter & Gamble (P&G) defines “Constructive Disruption” as: a willingness to change, adapt, and create new trends and technologies that will shape our industry for the future. According to P&G, it moves around four pillars: lean innovation, brand building, supply chain, and digitalization & data analytics.
In the FourWeekMBA growth matrix, you can apply growth for existing customers by tackling the same problems (gain mode). Or by tackling existing problems, for new customers (expand mode). Or by tackling new problems for existing customers (extend mode). Or perhaps by tackling whole new problems for new customers (reinvent mode).
An innovation funnel is a tool or process ensuring only the best ideas are executed. In a metaphorical sense, the funnel screens innovative ideas for viability so that only the best products, processes, or business models are launched to the market. An innovation funnel provides a framework for the screening and testing of innovative ideas for viability.
Tim Brown, Executive Chair of IDEO, defined design thinking as “a human-centered approach to innovation that draws from the designer’s toolkit to integrate the needs of people, the possibilities of technology, and the requirements for business success.” Therefore, desirability, feasibility, and viability are balanced to solve critical problems.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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