CHAPTER 5 THE EXTERNAL ENVIRONMENT 139 a short-term respite in the death spiral of the com- pany's mobile phone business. Nokia was increas- ingly ghettoized in the low end of the market, where margins are extremely thin and open to competition from low wage economies such as China. In 2007 a Korean company, Samsung, introduced a smart- phone called the Galaxy, This phone put Samsung at the forefront of people's minds and the company has been highly successful in all corners and price ranges of the Android market from the Galaxy S series phones, through to the Note series of tablets. In the technology market, consumers will gravitate towards the newest and trendiest usable technology they can afford. By being boxed in at the low end of the market, Nokia was setting itself up to be at the trailing edge of the market: the choice of consumers who weren't really choosy about their phones (and who would be very unlikely to be trendsetters). The recent history of industrial development in high wage economies such as that of Finland shows that there is really only one way to succeed: by taking the high road, seeking the type of complex, innovative, high value niche which had formed the initial foundation for Nokia's success in the 1990s. Nokia's problems were compounded because it stuck with the ageing Symbian operating system on its smartphones through to 2011, while competitors had jumped ship to Android several years previously Thus, again, relatively impressive-looking figures in 2009, nearly half of all smartphones shipped world- wide by all companies had Symbian OS) concealed dark clouds on the horizon. Between 2009 and 2010 alone, Symbian market share fell from 47 per cent to 37 per cent. Years of revenue growth and consistent profits came to a shuddering halt. In 2012 the com- pany had losses of over $3 billion, and share prices dropped 61 per cent in a single year. Could Nokia escape its death spiral? The twin giants of iPhone - launched in 2007 and dubbed by some in the media as 'the Jesus phone' - and Android - launched in 2008 and effectively a Google initiative - left little room for other operating systems: a problem that also brought Blackberry to its knees. Adopting Apple's iOS is not an option, because it is a closed system that Apple does not licence out. Android was a possibility, but it was increas- ingly dominated by Samsung, with other players like HTC seemingly being squeezed out. Also, the Android market is increasingly the domain of lower priced offerings such as China's ambitious Huawei brand, which in 2013 announced what it claims is the world's fastest phone. In February 2011, Nokia's new CEO Stephen Elop released his famous 'burning platform memo to employees, announcing the abandonment of Symbian (Exhibit 5.1 below). Nokia's choice was effectively to link up with another wounded giant'. Microsoft (a victim of the shift to cloud-based com puting spearheaded by Google), and work with the Windows Phone OS. The company unveiled its new Lumia series based on Windows OS in 2011, to generally positive reviews, though the Windows Phone platform was widely criticized for its relatively weak touch features and apps availability com- pared with the Android and iOS systems. In 2013 Windows launched version 8. integrated with the release of its overall Windows 8 computer operat ing system. It was at this point that Nokia decided to pull out of mobile phones, selling out in 2014 to Microsoft, a strategy that fitted with Microsoft's desire to shift into mobile devices as Apple had so successfully done. While the 5.44 billion that Nokia received was far less than the mobile phone business had been worth a few years previously, it turned out to be a good move. By 2015 Microsoft had written off the purchase price of its investment and sharply cut back the size and ambitions of the division. The future of Windows Phones altogether seemed in the balance. In May 2016 Microsoft sold its Nokia-branded feature phone business to HMD Global Meanwhile Nokia refocused its energies on net working equipment, successfully building a smaller but focused business, with 2015 revenues of 12.5 billion, only a quarter of its 2007/2008 peak, but with a healthy 61 billion plus profit. The company even made plans to go back into mobiles once its no-competition deal with Microsoft expired in 2016 While Nokia is no longer the giant household name that was as well-known as its home country, after some serious mistakes in the first decade of the 21st century, it has managed to reinvent itself and contin- ues to be one of Finland's largest employers. It has done this through much investment in 5G technology However, just as with smartphones, another compet- itor, this time from China - Huawei - provides Nokia with stiff competition in 5G. GIAO_CHO__ 1 1 /9/201208 PM CHAPTER 5 THE EXTERNAL ENVIRONMENT 139 a short-term respite in the death spiral of the com- pany's mobile phone business. Nokia was increas- ingly ghettoized in the low end of the market, where margins are extremely thin and open to competition from low wage economies such as China. In 2007 a Korean company, Samsung, introduced a smart- phone called the Galaxy, This phone put Samsung at the forefront of people's minds and the company has been highly successful in all corners and price ranges of the Android market from the Galaxy S series phones, through to the Note series of tablets. In the technology market, consumers will gravitate towards the newest and trendiest usable technology they can afford. By being boxed in at the low end of the market, Nokia was setting itself up to be at the trailing edge of the market: the choice of consumers who weren't really choosy about their phones (and who would be very unlikely to be trendsetters). The recent history of industrial development in high wage economies such as that of Finland shows that there is really only one way to succeed: by taking the high road, seeking the type of complex, innovative, high value niche which had formed the initial foundation for Nokia's success in the 1990s. Nokia's problems were compounded because it stuck with the ageing Symbian operating system on its smartphones through to 2011, while competitors had jumped ship to Android several years previously Thus, again, relatively impressive-looking figures in 2009, nearly half of all smartphones shipped world- wide by all companies had Symbian OS) concealed dark clouds on the horizon. Between 2009 and 2010 alone, Symbian market share fell from 47 per cent to 37 per cent. Years of revenue growth and consistent profits came to a shuddering halt. In 2012 the com- pany had losses of over $3 billion, and share prices dropped 61 per cent in a single year. Could Nokia escape its death spiral? The twin giants of iPhone - launched in 2007 and dubbed by some in the media as 'the Jesus phone' - and Android - launched in 2008 and effectively a Google initiative - left little room for other operating systems: a problem that also brought Blackberry to its knees. Adopting Apple's iOS is not an option, because it is a closed system that Apple does not licence out. Android was a possibility, but it was increas- ingly dominated by Samsung, with other players like HTC seemingly being squeezed out. Also, the Android market is increasingly the domain of lower priced offerings such as China's ambitious Huawei brand, which in 2013 announced what it claims is the world's fastest phone. In February 2011, Nokia's new CEO Stephen Elop released his famous 'burning platform memo to employees, announcing the abandonment of Symbian (Exhibit 5.1 below). Nokia's choice was effectively to link up with another wounded giant'. Microsoft (a victim of the shift to cloud-based com puting spearheaded by Google), and work with the Windows Phone OS. The company unveiled its new Lumia series based on Windows OS in 2011, to generally positive reviews, though the Windows Phone platform was widely criticized for its relatively weak touch features and apps availability com- pared with the Android and iOS systems. In 2013 Windows launched version 8. integrated with the release of its overall Windows 8 computer operat ing system. It was at this point that Nokia decided to pull out of mobile phones, selling out in 2014 to Microsoft, a strategy that fitted with Microsoft's desire to shift into mobile devices as Apple had so successfully done. While the 5.44 billion that Nokia received was far less than the mobile phone business had been worth a few years previously, it turned out to be a good move. By 2015 Microsoft had written off the purchase price of its investment and sharply cut back the size and ambitions of the division. The future of Windows Phones altogether seemed in the balance. In May 2016 Microsoft sold its Nokia-branded feature phone business to HMD Global Meanwhile Nokia refocused its energies on net working equipment, successfully building a smaller but focused business, with 2015 revenues of 12.5 billion, only a quarter of its 2007/2008 peak, but with a healthy 61 billion plus profit. The company even made plans to go back into mobiles once its no-competition deal with Microsoft expired in 2016 While Nokia is no longer the giant household name that was as well-known as its home country, after some serious mistakes in the first decade of the 21st century, it has managed to reinvent itself and contin- ues to be one of Finland's largest employers. It has done this through much investment in 5G technology However, just as with smartphones, another compet- itor, this time from China - Huawei - provides Nokia with stiff competition in 5G. GIAO_CHO__ 1 1 /9/201208 PM