Wednesday, April 16, 2014

Where NOKIA went wrong

If you would have gone to a remote village in India 3-4 years back and would have asked villages to list all the companies that manufacture mobile phones: they would have replied just NOKIA. Nokia was the world’s dominant and pace setting mobile phone manufacturer. In 2014 it is just 3 percent of the global smart phone market and the market capitalization is just one fifth of what it was in 2007. What happened to Nokia is not a secret: Apple and Android crushed it. I agree to this point but that not just the only criteria for Nokia’s failure in the fast moving Telecom/handset manufacturing space.

The costly mistakes that lead to the failure of Nokia are:

Failure of Symbian OS
Nokia thought that whatever they will touch will turn into gold. But this overconfidence killed them. When Nokia launched Symbian OS, they got good market response but as soon as iOS and Android products came to the market (they were way superior in terms of UI and applications) Symbian started taking backseat and finally collapsed completely later on. Nokia did try to save Symbian by improving its UI side and there was nothing new to look out for.  

Wrong deal with Windows

When Nokia started feeling the pinch of the competition they made the biggest mistake by making a deal with Windows. Microsoft was very interested in getting into the smartphone market but lacked applications and was a closed system. This phone would have been a massive hit if they had used Android OS as there were wide variety of applications available in the market or if they would have launched Windows version of Lumia in 2007 (then they would have got first movers advantage). OS was the major reason for Nokia’s collapse.


Laggard in the smartphone market
Intense competition and lack of innovation was another factor that led to the failure. Keeping OS aside, if we just think about hardware features (which at one point of time were their strongest point – In India Nokia was known as a phone that never breaks – but my last Nokia phone broke just by staying in the pocket) Nokia started lagging here as well and they were very lazy in rolling out their features.


Losing Market share from both the ends
Nokia’s USP was its low cost steady phone (which were extremely popular in developing countries), if you see the top mobile phones sold in the world till now (top 7 are from Nokia – See diagram below). Nokia was living in its own fool’s paradise and didn’t realize the challenge that was coming from localized companies like Micromax – India, Huawei – China etc. and started losing its base in the low end segment as well. As far as high end segment is concerned we have already discussed that it was a laggard in that field.


Weak branding strategy
Nokia had its umbrella of brands (like N series, Lumia series and Asha Series) but they failed to create buzz around their umbrella of brands unlike Apples’ IPhone and Samsung’s galaxy S series. They could have hired excellent brand consultants and strategists rather than just relying on their board members.

References:

1 comment:

  1. there have very authentic and useful Strategy Development and further very authentic information about Wrong deal with Windows. thanks for share with us,

    Branding Consultant

    ReplyDelete

Note: Only a member of this blog may post a comment.