Read the attached case study and answer the following questions:

1. What factors enabled Nokia to establish leadership in mobile phone business in 1990s and early 2000s

2. In your opinion shy did Nokia lose it mobile phone market share by and after 2004. If you where the CEO of the Nokia Company what strategies would you have implemented to save the companys mobile phone business.

3. From the case study identify and quote/list the statements that show that Nokia could not adapt well to the changing environment which became the reason for the loss of its mobile phone business.

138 PART 3 OPIN SYSTEM DESIGN ELEMENTS A LOOK INSIDE Nokia the most dramatic in corporate history. Starting off as a forestry company in the town of Noki, south western Finland. In 1865, by the mid 1980s the com pany had diversified into various areas ranging from rubber boots to telecommunications. It was in tele communications and specifically mobile phones that made its mark. In 1991 the company achieved the world's first GSM mobile phone call From then until 1998 the company rose to become the world's big gest mobile phone company with its 1100 model the best-selling phone of all time. But by 2004, Nokia had hit serious turbulence, losing nearly a fifth of its 35 per cont global market share. Revenue growth shifted into reverse and the stock took a nosedive, What went wrong? For one thing. Nokia was either very unlucky or showed very poor timing in its decisions on moving to more advanced technol ogies for phones. At the beginning of the new mil lennium, the company decided to invest heavily in a completely new phenomenon, the smartphone. This device permitted users to surf the web, play video games, listen to music, and watch movies and TV shows, something that seems commonplace today. Nokia developed some devices that were, for their time, incredibly advanced of horrendously expen- sive and by today's standards, real bricka). But the company was several years ahead of the curve. Most of all the network infrastructure necessary to make smartphones really work was not in place, even if users of Nokia's first generation smartphones had been able to overlook some of the obvious draw Dacks, like phones so big they would only fit into reinforced pockets! Although the 3G network fast enough to make intensive internet use feasible was first operationalized in 2002, it took several years before a significant proportion of the mobile phone population was connected. In fact, when the 200 millionth 3G subscriber worldwide signed up in June 2007, that still represented only 6.7 per cent of the world's mobile phone users. In other words, mass smartphone usage only became feasible from 2007 onwards at the earliest In the meantime, other mobile phone solutions made more sense. For the ordinary consumer, medium priced but cosmetically attractive devices called "fea ture phones like Motorola's Razr clamshell phone introduced in 2003 - which included a camera and music player functionality - made the most sense and sold rapidly in the middle years of the 2000s. For the business user, the Blackberry was the perfect device of the time. It used the internet primarily for emails which can perform adequately with even slow, 26 connections and was small and light While there is always a degree of luck in the out- come of any business decision, there are strong Indications that Nokia ignored or misread what it was being told by key informants, such as the major mobile phone networks, which are the ones dealing with phone customers most of the time. For exam ple, Orange SA, France Telecom's wireless unit, pushed for customized phones with special features that their customers wanted, but Nokia was slow to respond. Their attitude was that given their size, they didn't need to listen to us, said an executive at one European mobile operator Analyses of Nokia's prod. uct development processes at the time suggest that It was highly centralized and perhaps therefore more Inward-looking than outward-looking. Perhaps, ideas that seemed good to developers and company insid ors who spent their time thinking about mobiles were too optimistically translated to the average consumer who tends to adopt now uses for technology slowly and on a need to know basis. These circumstances allowed rivals to gobble up market share. To get Nokia back on track, its top management prioritized the introduction of a com petitive range of new midrange feature phones such as the Asha, slashed costs on low-end models for developing countries and promised mobile oper ators to tailor phones to their specifications. From 2005, Nokia's market share rebounded sharply, as the clamshell phones went out of fashion, high-end phones shrank to pocket size and consumers finaly warmed to the extra functionality internet phones provided. By 2007 market share was back up inbove 33 per cent of a much bigger global market and the company's profit graph was rising impres- tively. However, the apparent good news was only a nhort-term respite in the death spiral of the com priced offerings such as China's ambitious Huawei pany's mobile phone business. Nokia was increas brand, which in 2013 announced what it claims is the ingly ghettoized in the low end of the market, where world's fastest phone margins are extremely thin and open to competition In February 2011, Nokia's new CEO Stephen from low wage economies such as China. In 2007 Elop released his famous burning platform' memo a Korean company, Samsung, introduced a smart to employees, announcing the abandonment of phone called the Galaxy. This phone put Samsung Symbian (Exhibit 5.1 below). Nokia's choice was at the forefront of people's minds and the company effectively to link up with another wounded giant has been highly successful in all corners and price Microsoft (a victim of the shift to cloud-based com ranges of the Android market from the Galaxy S puting spearheaded by Google), and work with the series phones, through to the Note series of tablets. Windows Phone OS. The company unveiled its In the technology market, consumers will gravitate new Lumia series based on Windows OS in 2011. towards the newest and trendiest usable technology to generally positive reviews, though the Windows they can afford. By being boxed in at the low end of Phone platform was widely criticized for its relatively the market. Nokia was setting itself up to be at the weak touch features and apps availability com- trailing edge of the market the choice of consumers pared with the Android and iOS systems, In 2013 who weren't really choosy about their phones and Windows launched version 8. integrated with the who would be very unlikely to be trendsetters). The release of its overall Windows 8 computer operat- recent history of industrial development in high wage ng system. It was at this point that Nokia decided economies such as that of Finland shows that there to pull out of mobile phones, selling out in 2014 is really only one way to succeed: by taking the high to Microsoft, a strategy that fitted with Microsoft's road, seeking the type of complex, innovative, high desire to shift into mobile devices as Apple had so value niche which had formed the initial foundation successfully done for Nokia's success in the 1990s. While the 5:44 billion that Nokia received was tar Nokla's problems were compounded because it less than the mobile phone business had been worth stuck with the ageing Symbian operating system on a few years previously, it turned out to be a good its smartphones through to 2011. while competitors move. By 2015 Microsoft had written off the purchase had jumped ship to Android several years previously price of its investment and sharply cut back the size Thus, again, relatively impressive-looking figures in and ambitions of the division. The future of Windows 2009, nearly half of all smartphones shipped world. Phones altogether seemed in the balance. In May wide by all companies had Symbian OS) concealed 2016 Microsoft sold its Nokia-branded foature phone dark clouds on the horizon, Between 2009 and 2010 business to HMD Global alone, Symbian market share feil from 47 per cent to Meanwhile Nokia refocused its energies on net- 37 per cent. Years of revenue growth and consistent working equipment, successfully building a smaller profits came to a shuddering halt. In 2012 the com but focused business, with 2015 revenues of 12.5 pary had losses of over $3 billion, and share prices billion, only a quarter of its 2007/2008 peak, but dropped 61 per cent in a single year. with a healthy 1 billion plus profit. The company Could Nokia escape its death spiral? The twin even made plans to go back into mobiles once giants of IPhone - launched in 2007 and dubbed its no competition deal with Microsoft expired in by some in the medin as 'the Jesus phone' - and 2016. Android - launched in 2008 and effectively a a Google While Nokia is no longer the giant household name initiative - Ieft little room for other operating systems that was as well-known as its home country, after a problem that also brought Blackberry to its knees. some serious mistakes in the first decade of the 21st Adopting Apple's ios is not an option, because century, it has managed to reinvent itself and contin It is a closed system that Apple does not licence ues to be one of Finland's largest employers. It has out. Android was a possibility, but it was increas done this through much investment in 5G technology ingly dominated by Samsung, with other players However, just as with smartphones, another compet: like HTC seemingly being squeezed out. Also, the tor, this time from China - Huawei - provides Nokia Android market is increasingly the domain of lower with stiff competition in 5G