What is the mistake of Nokia? Reasons for Nokia”s
Nokia’s agreement on Tuesday(September 3, 2013) to sell its handset business to Microsoft for $7.2 billion is something of a minor business coup for Nokia, since a year from now that business might well turn out to have been worth nothing. It also demonstrates just how far and fast Nokia has fallen in recent years. Not that long ago, it was the world’s dominant and pace-setting mobile-phone maker. Today, it has just three per cent of the global smartphone market, and its market cap is a fifth of what it was in 2007—even after rising more than thirty per cent on Tuesday.
What happened to Nokia is no secret: Apple and Android crushed it. But the reasons for that failure are a bit more mysterious. Historically, after all, Nokia had been a surprisingly adaptive company, moving in and out of many different businesses—paper, electricity, rubber galoshes. Coming to mobiles again, Nokia is a brand of hardware. It is wonderful in its hardware and it has to concentrate on software. It is not that Nokia has worst software, even thought it runs its boring lumia devices with symbian operating system, it would have kept its place in global market. But it introduced windows and made a blunder, it was like preparing its own coffin.
Nokia overestimated the strength of its brand, and believed that even if it was late to the smartphone game it would be able to catch up quickly. Long after the iPhone’s release, in fact, Nokia continued to insist that its superior hardware designs would win over users. Even today, there are people who claim that if Nokia had stuck with its own operating systems, instead of embracing the Windows Phone in 2011, it could have succeeded. But even though the Windows Phone has been a flop, the truth is that, by 2010, Nokia had already introduced too many disappointing phones, and its operating system had already proven too buggy, clunky, and unsuccessful to win consumers over. In 2008, Nokia was said to have one of the most valuable brands in the world. But it failed to recognize that brands today aren’t as resilient as they once were. The high-tech era has taught people to expect constant innovation; when companies fall behind, consumers are quick to punish them. Late and inadequate: for Nokia, it was a deadly combination. just that Nokia failed to recognize the increasing importance of software, though. It also underestimated how important the transition to smartphones would be. And this was, in retrospect, a classic case of a company being enthralled (and, in a way, imprisoned) by its past success. Nokia was, after all, earning more than fifty per cent of all the profits in the mobile-phone industry in 2007, and most of those profits were not coming from smartphones. Diverting a lot of resources into a high-end, low-volume business (which is what the touch-screen smartphone business was in 2007) would have looked risky. In that sense, Nokia’s failure resulted at least in part from an institutional reluctance to transition into a new era.
The following are also the reasons for failure of Nokia(the greatest in the past)
- Windows: It is the main reason for failure of Nokia because the users are fed up seeing windows in systems and laptops.Finally when the tide turned against the company, the company made the biggest mistake to take a leap of faith in Windows in 2011. At that point of time, the company already was in declining condition and trusting Windows which was new in the field to regain its status was the biggest mistake the company made. Lumia series could have been a hit for the company had they launched on the Android platform. All these phones which the company launched were comparable to other competitor devices but OS was the problem which lead to ultimate collapse of company.
- Becoming laggard in smartphone market:Stiff competition from Samsung and Apple, and lack on focus on innovation was the second big reason of collapse. Even if users could ignore the OS, the the hardware features which Nokia was rolling out were quiet late as compared its major competitors Samsung and Apple. Nokia seemed to be lagging in the race. Where Samsung from nowhere entered the race and focused on innovation as its core competence to gain the market share, Nokia was very late to realize this fact. Samsung did everything right to focus solely on product innovation and started competing with Apple in all product lines from smartphones to tablets, but Nokia failed to develop a focused device strategy
- Moved too slowly:Nokia was a pioneer in the smartphone market, literally introducing consumers to the smartphone with its initial Symbian Series 60 devices in 2002. For the next five years, Symbian phones had little trouble maintaining a leadership position in the smartphone pack. ?But in 2007, Apple introduced its iPhone. With its full touchscreen and app-based operating system, the iPhone changed the very definition of what a smartphone should be.Yet Nokia failed to respond to the iPhone and the shifting consumer demand that came with it. As the years passed, the Symbian platform aged, and that age really showed when compared to iOS and, later, Android. Simultaneously, the smartphone market exploded — more and more consumers opted for pocket-sized mini-computers instead of “feature” phones with tedious WAP browsers.
- Lack of innovation:While Samsung comes up with new phones almost every year with a slight modification from the previous launch, Nokia’s Windows phone which came in 2011 lacked some basic technology essential to drive its sales. Nokia’s Lumia series was launched with a bang, but didn’t click. Reasons can be its design, which wasn’t as attractive as Samsung phones or the iPhone. Today the sale of phones is dependent on how shiny or trendy it looks. Leave aside the looks, Nokia phones didn’t have the front camera, which makes it not even 3G enabled. And we are on the threshold of entering the 4G era. So, Nokia’s latest phones were feature ready, but not future ready.
So, these are the reasons for failure of Nokia company, By this, we can say that even a company which was on cloud 9, a wonderful company, a feature mobile manufacturer would fall to the ground when it don’t satisfy consumers, It proved that even a ferocious soldier would die if he don’t fight for his life.
–B.RAJA SIMHA(twitter: b_rajasimha)