NOKIA: HOW THE MIGHTY FELL

Olayiwola Olawunmi
Managing Editor

In our part of the world the story of the telecommunication giant Nokia is well known maybe by few or by majority but for those of us that don’t know let me bring the story home.

NOKIA started out with a paper mill operation in 1865, this organization seems to have tested many waters, evolving per time and with consumers demand.  Nokia’s sector-by-sector success over the years has mirrored its geographical rise: from a Finnish-focused company until the 1980s with a growing Nordic and European presence; to a bona fide European company in the early 1990s; and onto a truly global company from the mid-1990s.

Nokia was a key developer of GSM (2G) (Global System for Mobile Communications), the second-generation mobile technology that could carry data as well as voice traffic. In 2000 Nokia came to the lime light of a wider audience with the release of Nokia 3310 which became one of the most popular device of all time, Costing as high as thirty thousand Naira in the Nigeria Market at that time.

The Nokia 1100 handset which launched in 2003 shipped over 200 million units. This device happened to be the bestselling mobile phone of all time and the world's top-selling consumer electronics product, and it contributed immensely to the company's rise in developing markets.

Nokia was one of the first to recognize the market opportunity in combining a game console and a mobile phone (both of which many gamers were carrying in 2003) into the N-Gage. The N-Gage was a mobile phone and game console meant to lure gamers away from the Game Boy Advance, though it cost twice as much.

Symbian was popular among the smartphone market during the 2000s and it was Nokia’s main smartphone OS until 2011.  Meanwhile in 2007 Apple's iPhone originally launched, the fall of Nokia mobile market began.  Although Apple iPhone was initially outsold by Nokia N95, but with the launch of iPhone 3G in 2008 Apple’s market share doubled.

Nokia released the N96 in late 2008 to compete with the iPhone 3G but this proved to be much less successful.  Nokia 5800 XpressMusic was although considered to be the iPhone 3G's main rival in some quarters. The success of the business-oriented Nokia E71 was not enough to halt the decline of Nokia's smartphone market share. June 2008, Nokia bought the Symbian operating system and the next year made it open source.

Symbian's market share however dropped from 52.4% in the fourth quarter of 2008 to 46.1% a year later. Blackberry increased its market share during the period from 16.6% to 19.9%, while Apple increased its share from 8.2% to 14.4%. Android grew to 3.9%.

In 2010, pressure on Nokia increased dramatically as Android and iOS continued to make gains. Other Symbian OEMs including Samsung Electronics and Sony Ericsson chose to make Android-based smartphones instead of Symbian by mid-2010 Nokia was its only OEM outside Japan. Nokia developed Symbian^3 to replace S60, but it never became popular. By the fourth quarter of 2010, Symbian's market share dipped to 32%, surpassing Android's at 30%. Despite losing share, the smartphone unit was profitable and smartphone unit sales increased every quarter during 2010

February 2011, Stephen Elop and Microsoft's CEO Steve Ballmer jointly announced a major business partnership between the two companies, which would see Nokia adopt Windows Phone as its primary platform on future smartphones, replacing both Symbian and MeeGo. As Nokia was the largest mobile phone and smartphone manufacturer worldwide at the time,  it was suggested the alliance would help Windows Phone. The deal also included the use of Bing as the search engine on Nokia devices, and the integration of Nokia Maps into Microsoft's own mapping services. Nokia announced that it would still release one device running the MeeGo platform in 2011, but that it would devote fewer resources to future development of the platform, and that it would phase out Symbian entirely.

On October 26, 2011 at its Nokia World conference Nokia unveiled its first Windows Phone 7-based devices, the mid-range Lumia 710 and high-end Lumia 800, after this announcement, Nokia's share price fell about 14%, its biggest drop since July 2009. Nokia's smartphone sales, which had previously increased, collapsed. From the beginning of 2011 until 2013, Nokia fell from #1 to #10 in smartphone sales.

Amid falling sales, Nokia posted a loss of 368 million euros for second quarter of 2011, whereas in second quarter 2010, it had realized a profit of 227 million euros. On September 2011, Nokia has announced it would cut another 3,500 jobs worldwide, including the closure of its Cluj factory in Romania.

Nokia was overtaken by Apple as the world's biggest smartphone maker by volume in June 2011. In August 2011 Chris Weber, head of Nokia's subsidiary in the U.S., stated "The reality is if we are not successful with Windows Phone, it doesn't matter what we do (elsewhere)." He further added "North America is a priority for Nokia (...) because it is a key market for Microsoft.”

In December 2012, Nokia announced that it would be selling its headquarters Nokia House for €170 million, and leasing it back in the long-term. This decision was taken to slash costs as the company was during a financial crisis of falling revenues.  In total, Nokia laid off 24,500 employees by the end of 2013.

On September 2, 2013, Microsoft announced that it would acquire Nokia's mobile device business in a deal worth €3.79bn ($4.25bn), along with another €1.65bn ($1.85bn) to license Nokia's portfolio of patents for 10 years; a deal totaling at over €5.4bn ($6.05bn).

During the press conference to announce NOKIA being acquired by Microsoft, Nokia CEO ended his speech saying this “we didn’t do anything wrong, but somehow, we lost”. Upon saying that, all his management team, himself included, teared sadly.   They didn’t do anything wrong in their business, however, the world changed too fast. Their opponents were too powerful. They missed out on learning, they missed out on changing, and thus they lost the opportunity at hand to make it big. Not only did they miss the opportunity to earn big money, they lost their chance of survival.