Case Analysis of Alarm Ringing: Nokia in 2010

                                                                        Dibas Gaudel

                                                                                3/25/2017

Introduction

Nokia Corporation, known as NOKIA, is a multinational communications and information technology company, founded in 1865. Nokia is headquartered in Espoo, Finland. In 2010, Nokia employed 123,553 people, did business in more than 150 countries and operated under three business segments- Device & Services, NAVTEQ, and Nokia Siemens Networks. It operated 15 manafaguring facilities in nine countries and maintains R&D facilities in 12 different countries. Nokia had been market leader in the mobile phone market since 1998. In June, 2006 Jorma Ollila CEO of Nokia since 1991, made Kallasvuo the head of the handsets division. Same year Nokia merged with carrier- related operations of Siemens AG to form a new unit called Nokia Siemens Networks which provide equipment, services, and solutions for communications network globally. On July 10, 2008, Nokia Acquired NAVTEQ Corporation.

Nokia’s great strength was in the lover end of the market like China, Brazil, and India though the company developed high-end handsets like N-series and E-series based on 3G technology to capture a sustain share of the high-end phone market. In 2007 Nokia entered the Internet service Space with the “OVI” brand, umbrella brand for a range of Internet Services offered by Nokia- such as an online music store, online navigation, and online game store.

Problem Faced by Nokia

Though Nokia is a largest mobile phone maker with 35% market share till 2010, it starts to losing market share in the high-end mobile phone market.

The main problems faced by Nokia are as follows:

• Younger buyers of global market are interested for the smartphones, but Nokia continued to churn out the single-piece design phones called ‘Candy Bar’.
• Nokia was slow in launching smartphones with the latest version of Symbian.
• Nokia also face cultural bias from management team.
• Nokia’s does not launch expensive mobile phones except Nseries and Eseries so its consumers upgraded to more expensive brand like iPhone.
• Unsuccessful in releasing a compelling touchscreen model.
• Postpond the launch of its new smartphone called N8 in 2010. The delay generated negative image in market.
• Unable to maintain long term relationship with major wireless carriers in the US.
• Nokia give more priority to OVI store instead of building phones and mobile applications.
• Nokia has huge market in the low-end market; it gives negative image among smartphones users.
•  To hold the global market, Nokia cut the price of its handsets and shipped move to low price models.
• The potential and innovative idea was delayed or ignored by management.
• Lack of communication between different departments.
• Management team member are incompetent and they don’t have courage for managing the chain.
• BOD of Nokia thought Pekka Kalasvuo CEO of Nokia was responsible for falling profitability and replacing him will solve the problem but the new CEO also take times to understand the culture of Nokia.

Reasons for the Problem faced by Nokia

Nokia was a pioneer in the smartphone market, by introducing consumers to the smartphone with its initial Symbian in 2002. For the next five years, Symbian phones had little trouble maintaining a leadership position in the smartphone pack. But it is unsuccessful to release smart phones with compelling touchscreen model but in 2007, Apple introduced its iPhone with its full touchscreen and app-based operating system by which Nokia failed to respond to the iPhone and the shifting consumer demand that came with it. As the years passed, the Symbian platform was old, and that really showed when compared to iOS and Android. Also ‬Nokia’s huge market in the low-end part of the market was, in part, blamed for its negative image in more developed markets such as the US and among people who wanted high-end phones. In the smart-phone OS market too, competitors were catching up quickly on Nokia’s Symbian platform.‬‬

Nokia is too slow to develop new phones because its management team always ignored or delayed innovative and potential idea. Nokia didn’t market itself as an innovator, except developing OVI store for. Not only did Nokia move too slowly in the smartphone market, it didn’t anticipate competition in the lower end of the market, either. Other manufacturers like emerging in China have attacked Nokia from the low-end in developing markets like China and India.

How Nokia can make its products competitive, foster innovation and regain its market share.

Nokia is a leading company in mobile phone market but because of different reason it loses its market and decreases the share price. In 2008, Nokia’s net sales was €50,710 but in 2009, Nokia’s net sales decreases by 19% to €40,984. Till 2010 Nokia capture only 40% of smartphone market.

As Nokia main problem was its operating system that is Symbian and new innovation. Nokia mostly fails to release new technology like smartphones and touchscreen. Nokia focuses its mobile phones for only low level market. But low level market also wants smartphones.

Nokia should use smartphones technology like Android rather than Symbian because smartphone segment was the most profitable and faster growing segment in the global mobile phone market. Nokia focus the low level market and they did not focus for high level market and they also decrease the price of the mobile phones which also decrease the profitability of the Nokia. To increase the profitability and gain the market share Nokia should focuses on High end market by developing latest version of smartphone and added new features rather than focus on low level market.