1.

INTRODUCTION TO NOKIA

Nokia is a multinational corporation in the late 21st century headquartered in Finland.

Nokia was structured into three main business segments. Markedly, the segments included
(a) Nokia Mobile Phones,
(b) Nokia Networks, and
(c) Nokia Ventures Organization.

Mobile Phone segment included the development, manufacture, and supply of wireless
data products and mobile phones. Globally, Nokia segments services wide range of mobile
phones for the arcade analog systems to digital standards and to Jigsaw. Most recent advanced
research was on Jigsaw emulated pattern-recognition algorithms that can identify wide range of
behaviors and logs detailed than past similar applications.

More than 1.2 billion, over 5% of the world population uses Nokias device from mobile
phones to advanced smartphones and high-performance mobile computers.

Nokia integrates its

devices with innovative services through Ovi, which includes music, maps, apps, email and
more. Nokia's NAVTEQ is a leader in comprehensive digital mapping and navigation services,
while Nokia Siemens Networks provides equipment, services and solutions for communications
networks globally.

In the network segment, Nokia engaged in providing services related to the network
infrastructure of mobile and Internet Protocols (IP). Ubiquitously, the network segment was
entrenched in the areas of radio, broadband access for network providers, operators, and to core
of the internet protocol mobility. Nokia Ventures Organization was formed for the purpose of
creating new businesses outside the company's natural growth path and core segment of
operation. This segment engaged in venture capital activities associated with a portfolio of new
ventures. Essentially, these ventures included the commercial enterprises of Nokia Internet
Communications and Nokia Home Communications.

In Nokias, Nokia "made a strategic decision to concentrate on telecommunications as the

core business, with the goal of establishing a market-leading presence in every major global
market. Nokia was pouring fountain of creative newbies from golden chalice. Nokia divested
non-core businesses that were previously acquiredpaper, personal computer, rubber,
footwears, chemicals, and power plant, aluminium, and television businesses. In order to
infiltrate the U.S. market and other countries globally, Nokia collaborated seamlessly with other
companies in the telecommunications industry to supply phones and networks to potential new
markets. For example, "in 1999, Nokia penned deals to put its wireless application protocol
(WAP) software into Hewlett-Packard's and IBM's network servers" (Nokia Corporation
History from Hoover's Online).

Nokia high-risk strategic decision-TSH on telecommunication business led to gaining

market shares and profits. Remarkably, the nonlinear technological methodology and
realignment led Nokia to be the world leader in seductive mobile phones. "Nokia became a
world leader in mobile, communications worlds leading supplier of mobile phones and a leading
2

provider of mobile and IP networks". Based on the 2002 and 2003 financial information for
Nokia, mobile phones and Nokia's network make up approximately 99% of all net sales for the
company. Not resting on its laurels, Nokia continue to gain substantial market share in disruptive
mobile phones. In 2010, Nokia reports Q3 2010 net sales of EUR 10.3 billion ($13.6 billion),
with non-IFRS EPS of EUR 0.14 Mobile device ASP up EUR 4 from Q2 2010.

According to a Nokia press release dated January 27, 2004, TELESTET, who was prime
leader in mobile communications in Europe, introduced commercial 3G services to Greece.
Actions of this purchase launched the country's first WCDMA (wideband code division multiple
access) network, enabling top-of-the-line mobile services such as advanced multimedia
messaging, high-quality streaming, browsing and video calls with speed of up to 384 kbps".
Gallantly, Nokia provided the equipment used for 3G WCDMA network so that customers can
access the network via the Nokia 6650 and 7600 mobile devices. In a capitalistic market, in the
domain of creative destruction, most recently, time have overtaken some of the Nokia mobile
phones. Surreptitiously, this is where Nokia lost its mojo or its whizbang technological du jour.

Most relevantly, Masalin stated that Nokia engaged with various leading business
schools, universities and consulting firms to stimulate the employees minds, thence enhanced
thinking outside the normal boundaries-pedagogically (learning the unthinkable possibilities).
Strategically, Nokia does not appear to quash or suppressed competitors, unlike the formal
management philosophy that was once outlined as one of Bill Gates and Microsofts strategy that
sees Microsoft suffocating competitors.

Nokia core philosophy was using TSH innovate new technologies for the benefits of the
society and the company. Social responsibility was cardinal. Nokia acts proactively while
integrating programs into its core business activities as well as making a sustainable effort.
Succinctly stated, doing business in a responsible way economically makes business sense to
Nokia. Social responsibility that exemplified good corporate citizenship helped create a
sustainable product life cycle, sustainable employment, sustainable corporate reputation, and
ultimately sustainable economic growth.

Nokia invented the smartphone. It then went and re-invented the smartphone, rightfully
insisting the enterprise/corporate oriented business phone should be replaced with a bigger,
consumer smartphone market. Nokia introduced a gaming oriented app store, bypassing the
carriers something that was the prototype for Apples App Store. They offered a touch screen
smartphone two years before the iPhone. Nokia offered the worlds first phone to do the real
internet, and they offered the first phone outside of Japan to offer Wi-Fi. They brought cameras
to enterprise-oriented business phones. And Nokia was the first smartphone maker to boldly
claim that a smartphone was a real computer. Today, that is now held as mantra by all of the six
big PC makers, starting with HP and Dell.

Nokia somehow managed to offer some of the most innovative phones, with the best
customer satisfaction, while also offering many of the cheapest phones and be profitable. What
we know from applying competition theory is that it must be, that Nokia was not really facing
full competition up to 2006. Motorola was a weak rival, they were drastically lost in the
transition from 1G to 2G, and they had their brief hurrah moment with the Razr, which they
could not carry further and fizzled away. Several of Nokias traditional rivals, Siemens, Philips,
and Panasonic - quit the handset business. In Smartphones the biggest rivals to Nokia came from
North America where smartphones were still considered only to be business phones hence
RIM, Palm were the main offering. And then there was the little HTC out of Taiwan with the
quirky Microsoft Windows Mobile OS. Nokias real rivals [Samsung, Motorola, LG and
SonyEricsson] all made smartphones primarily on the Symbian operating system where Nokia
was biggest co-owner, so Nokia would never be blind-sighted by rivals doing something wild
and weird like Apple managed with its bizarre touch-screen phone.

Before 2006, Nokias market share in smartphones was a fraction of that, obviously,
being 48% for the full year 2006. Microsoft Windows Mobile based smartphones were the
second biggest platform behind Symbian with 14%. RIMs Blackberry had 8% of the market and
4

Motorola who made both Symbian and Windows Mobile smartphones had 6%. Previous global
number 2 smartphone maker Palm had fallen to 5%. The total worldwide smartphone market in
2006 was only 80 million handsets, about 8% of all mobile phones sold. Of the worlds Global
Fortune 500 brands, only 7 were involved in manufacturing or selling smartphones, so the
competition was not very fierce.

2. OBJECTIVES

Nokia was the world's number one manufacturer of mobile devices by market share and a
leader in the converging Internet and communications industries . They produce a wide range of
devices for all major consumer segments and offer Internet services that enable people to
experience music, maps, media, messaging and games.
Now a days, it is really easy to see a new style and high technology mobile phone every
single day. The story of mobile phones is not too long. There were only mobile phones ten years
ago to just make a call. After that, innovations followed each other such as testing, additional
music players, and cameras, touch screens, etc. Likewise product life cycle has been getting
shorter and shorter, because of increasing high technology. However, mobile phone companies
find themselves in a tough competition to sell more their own products and make it better profit.
In highly competitive business environments and short product life cycles and especially for high
technology producing industries, there is one way dealing with this highly pressures, which are
Research& Development and manufacturing of new products. New product development and
innovation are mainly important in industries which technology changes speedily and product
life cycle is so short. Nokia is one of the most innovative companies in the mobile phone
industry.
Nokia has largest distribution network all over the world. It is a strength for the company.
But competitors pass out the Nokia by technical factors. But Nokia recognise it. When they
found these strategy of competitors, there were many times gone. When a company doesnt
recognise the competitors strategy, the company may collapse from share market and goodwill
too.
So, in order to Nokia, within the competitive market there were need to produce
customized product. But Nokia did wrong and their shares started decreasing. Therefore
marketer needs to know what happened wrong with Nokia, why there shares decreasing. To
achieve these objectives, marketer needs to analyse the strategies of Nokia, decision taken by
them and so on.

3. COMPANY BACKGROUND

Nokia was originally a manufacturer of pulp and paper .It was founded as Nokia
Company in 1865 in a small town of the same name in central Finland. Nokia was a pioneer in
the industry and introduced many new production methods to a country with only one major
natural resource, its vast forests. As the industry became increasingly energy-intensive, the
company even constructed its own power plants.Nokia shares were first listed on the Helsinki
exchange in 1915. Originally a manufacturer of pulp and paper.

Nokia was founded as Nokia Company in 1865 in a small town of the same name in
central Finland. Nokia was a pioneer in the industry and introduced many new production
methods to a country with only one major natural resource, its vast forests. As the industry
became increasingly energy-intensive, the company even constructed its own power plants.
Nokia shares were first listed on the Helsinki exchange in 1915 .During the early 1960s
Nokia began to diversify in an attempt to transform the company into a regional conglomerate
with interests beyond Finnish borders. Unable to initiate strong internal growth, Nokia turned its
attention to acquisitions.

The government, however, hoping to rationalize two underperforming basic industries,

favored Nokia's expansion within the country and encouraged its eventual merger with Finnish
Rubber Works, which was founded in 1898, and Finnish Cable Works, which was formed in
1912, to form Nokia Corporation.
Nokia's rapid growth was not without a price. In 1988, as revenues soared, the company's
profits, under pressure from severe price competition in the consumer electronics markets,
dropped.Nokia was divided into six business groups: consumer electronics

Data
mobile phones
Telecommunications
7

 Cables
Machinery
basic industries.

In spite of these efforts, Nokia's pretax profits continued to decline in 1989 and 1990,
culminating in a loss of $102 million in 1991.Industry observers blamed cutthroat European
competition, the breakdown of the Finnish banking system, and the collapse of the Soviet Union.
But, notwithstanding these difficulties, Nokia remained committed to its high-tech orientation.
Late in 1991, the company strengthened that dedication by promoting Jorma Ollila from
president of Nokia-Mobira Inc. (renamed Nokia Mobile Phones Ltd. the following year) to group
president. Aiding this surge was the November 1997 introduction of the 6100 series of digital
phones. This line proved immensely popular because of the phones' small size, light weight, and
superior battery life. First introduced in the burgeoning mobile phone market in China. The 6100
soon became a worldwide phenomenon.Nokia sold nearly 41 million cellular phones in 1998.
Net sales increased more than 50 percent over the previous year, jumping from FIM 52.61 billion
($9.83 billion) to FIM 79.23 billion ($15.69 billion).Operating profits increased by 75 percent,
while the company's skyrocketing stock price shot up more than 220 percent, pushing Nokia's
market capitalization from FIM 110.01 billion ($20.57 billion) to FIM 355.53 billion ($70.39
billion). Acquisitions continued in 1999, when a further seven deals were completed, four of
which were Internet-related.Meanwhile, net sales increased a further 48 percent in 1999, while
operating profits grew by 57 percent; riding the late 1990s high-tech stock boom, the market
capitalization of Nokia took another huge leap, ending the year at EUR 209.37 billion ($211.05
billion).Nokia's share of the global cellular phone market increased from 22.5 percent in 1998 to
26.9 percent in 1999, as the company sold 76.3 million phones in 1999.

In terms of communication, Nokia was one of the world leaders in mobile

communications. Nokia dedication enhanced peoples living standard from exotic products to
populist ubiquitous aesthetic seductive newbies. As a disrupter, it consistently and persistently
was disrupting the disruptors during its halcyonic days. Nokia conjecturally have gone into
hiatus and hypodermically under the Apple spell. Productivity through easy-to-use and secure
products like mobile phones, solutions for imaging, games, media, mobile network operators and
8

businesses were enhanced by Nokia. Without any doubt, Nokia sells three of every 10 mobile
handsets manufactured (Brown-Humes, 1999). The company background showed European, a
company pigmented and entrenched with European culture- Finnish Group Company. Toted up,
the company has managed growth and innovation exceptionally well through the use of TSH
back in embryonic stage. Staff numbers increased from 25,000 in 1993 to more than 44,000 in
2013.

3.1 Socio-psychological view and background:

Nokias social, economic and historical analysis continued after World War II when the
Finnish Rubber-Works bought majority shares in the Finnish Cable Works. Due to the quixotic
need for power transmission, telegraph, telephone networks, the Finnish Cable Works Company
grew and expanded. Eventually, Rubber Works and the Cable Works companies consolidated and
a creative destruction machination eschewed. In 1967, the companies merged to form the Nokia
Group. Later, seed money was planted into making Nokia a global success in
telecommunications. Electronics generated 3% of the Group's net sales and provided work for
460 people (Nokia, 2008).

At the end of the 1980s a common standard for digital mobile telephony was developed
through innovative method of using TSH. Present technology standard now commonly referred
to as the GSM (Global System for Mobile Communications) was innovatively created. In 1991,
Nokia made agreements to supply GSM networks to nine European countries and by August
1997 Nokia had supplied GSM systems to 59 operators in 31 countries (Nokia, 2008).

Stephen Elop was the president and chief executive officer (CEO) who led the company
into the hands of Microsoft. Markedly, many scholarship critics contraposes how Elop made so
many gaffs by not understanding the changing environment; however, Elop is still the most
interoperable person in the world today. No need to be ad hominem against his character.
Stephen Elop was appointed the CEO on September 21, 2010, a day after the former CEO OllilaPekka Kallasvuo resigned (Nokia Corporation, 2010). In 2010, Nokia acquired Motally's mobile
9

analytics service that enables developers and publishers to optimize the development of their
mobile applications through increased understanding of how users engage. Speciously, the
service offered planned to be adapted for Qt, Symbian, MeeGo and Java developers (Nokia
Corporation, 2010a).

Historically, Nokia grew to national recognition from the 1960s and through the 1980s.
During this period, Nokia bought various companies, such as Finnish Rubber Works, Finnish
Cable Works, a Finnish telecom company, Luxor (Sweden owned electronics and computer
firm), and Ericson's Data Division, to become a powerful conglomerate in Finland. Jorma Ollila
(former CEO and later Chairman) developed the company strategy to focus more on the
telecommunications business during the 1990s. Nokia, from the pedagogical cognitive and
effective antiseptic experiences, successfully developed the first fully digital smart telephone
exchange system in Europe and the first phone anchored inside a car. Subsequently, the stage
was set for uncloaking the digital telephone deployment to customers or end-users.

3.2 Quarterly and annual information at Q3 2010-:

N e t sa le s : 1 0 2 7 1 9 8 1 0 5 % 1 0 0 0 5
3%
D ev ice s & S e rvices:7 1 7 4 6 9 1 5 4 %
p0e0ra6tin
6O 8
% g p ro fi t: 6 3 4 7 4 1 -1 4 %
6 6 0 -4 %
D ev ice s & S e rvices 7 5 0 7 8 7 -5 %
tin g m a rg in : 6 .2 % 7 .6 %
6O4p
7 e1ra
6%
6 .6 %
D ev ice s & S e rv ices 1 0 .5 % 1 1 .4 %
9 .5 %

4. VISION AND MISSION

10

4.1 Vision Statement

The vision of the Nokia is to create a world where everyone can be connected.

The basic need of a person is to communicate and share. Nokia helps people to
accomplish this need and tries to help people to remain close.

The company focuses on providing consumers with human technology that is instinctive,
joyful to use and beautiful. An individual is living in an era where connectivity is
becoming really universal.

4.2 Mission Statement

In present there are more than 1.2 billion persons, who use the mobile facility and
mobility has transformed the people's way of living, standard, society status, the
company's current mission statement is LIFE GOES MOBILE.

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4.3 Product and Services

Nokia Corporation serves their customers with various kinds of innovated products and services.
All the services and product are based on the demands and requirements of the customer with
technology and variety. Currently, there are more than 40 models with elegant and modish design
in the market. They also offer various facilities and network services to the customers such as
broadband access, core network, operation support system, etc.

4.4 Marketing Strategies

The positioning statement of Nokia is Connecting people.

By this, they aim to accomplish the primary human need for social connections and
contact. Nokia tries to build a link between people in both the situations when they are far
away as well as when they are confronting each other. It also tries to bridge the gap
between people and the information they need.

The target of Nokia is to develop a relationship with its customers in the whole world.
The Company also serves its customer with the valuable product according to their needs
and budget.

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4.5 Political factors:

Political factor is very important for Nokia. Because Nokia sales their product globally. If
government changes their laws in terms of export import the sales will be affected. Any political
harassment or political partys threat can be affected market of Nokia. Political riot is a giant
problem for any company and Nokia as well. For example in Egypt and Libya there are ongoing
a political riot and in this situation Nokia company decreased their market.

4.6 Economical factor:

Economical factor is a very important for a company. Nokias market all around the word. In this
economic rescission all over the world Nokias Market decreased in a wide range. Especially in
Europe and U.S.A Nokia loosed their market. There are other things as well such as labor share
to value added where Nokia consolidated rate is 39.8% and high rate of export duty.

4.7 Environmental and Social factors:

Some un-ethical practices are against the law and companies cannot become involved in them
but there are also some practices that aren't illegal by law but are considered highly un-ethical by
the consuming public, companies who engage in these practice's can lose a lot of market share.
In this recent year Nokia loosed their market in Asia because China and India producing their
own Nokia hand set which is cheaper on the other hand there are lot of local hand set captured
their own market. So now Socio and environment factor is a challenge for Nokia as Asia is a
giant market for Nokia.

13

5. S.W.O.T. ANALYSIS

SWOT Analysis is strategic planning method used to evaluate the Strengths, Weaknesses,
Opportunities, and threats involved in a project or in a business venture. It involves specifying
the objective of the business venture or project and identifying the internal and external factors
that are favorable and unfavorable to achieving that objective. The technique is created to Albert
Humphrey, who led a research project at Stanford University in the 1960 and 1970s using data
from Fortune 500 companies.
STRENGTH

Nokia

WEAKNESS
has

the

largest

High prices of its mobile

distribution network all over

phones compared to its

the world

competitors

INTERNAL

Nokia s phone are durable

A bad image in the

market

It has remained the top world

cell phone company

OPPORTUNITIES

EXTERNAL

Growth in demand of mobile

phones

It is able to produce better,

lighter and excellent products

new

techniques

and

knowledge
THREATS

Growth of Samsung
mobile phone market

Increase of cheap china

made phones in the
industry

Increase of Android OS

High demand of Nokia brand

phones because of durability

Very slow to catch the

5.1 STRENGTH

Due to the strong brand name and product line, the customers feel comfortable at the time of
14

using product. The strong brand name of the company and advanced technology of products with
the variety has attracted a wide area of customers towards the company.

Nokia has more than 33% market share in the industry and it is on fifth place in the world. It has
a strong financial background and it is a very big strength of the company. It is also the leading
player in its industry due to the strong brand name, various services and innovated products line.

5.2 WEAKNESS

The company is gaining a bad image in the market, as its role in Symbian is increasing. The
company provides various innovated product but it is very slow to catch the new techniques and
knowledge.

5.3 OPPORTUNITIES

Due to the growth of the company in the CDMA market and 3G games, the company could gain
many opportunities in the market. Increases in its market share and development of the product
according to the generation is also an opportunity to attract the new customers. Due to the increases
in the eco-efficiency, the company is able to produce better, lighter and excellent products.

5.4 THREATS

Samsung is a highest threat for the Nokia company.

Similarity of Nokias phones with china made phone. Therefore,

Chaina made phone very

increases in the mobile industry.

6. NOKIA BEFORE DOWNFALL

15

Comparing Nokia to other competitors, Nokias annual sales bypass all competitors.

Nokia,

however, was a better-performed company than Siemens as outlined below:

Gross profit margin was four times greater than Siemens;

Nokia had A-1 debt rating and very little debt outstanding;
Market valuation was approximately 25% greater than Siemens although Siemens

annual sales almost triple Nokias sales;

Nokia hordes cash, $US 14 billion at the end of 2007.
In 2010, Nokia reports Q3 2010 net sales of EUR 10.3 billion ($13.6 billion), with nonIFRS EPS of EUR 0.14 Mobile device ASP up EUR 4 from Q2 2010 .

6.1 You never forget your first cellphone:

It was the Nokia 5190. By today's standards, it was bulky and embarrassingly lacking in
features. It made phone calls and played the game "Snake." Forget a Retina Display; it boasted a
monochromatic screen with a green backlight. And how's this for fashionable: It came with a
freebie leather case and belt clip that I, regrettably, wore proudly. It was perfect.

Nokia is the second largest mobile vendor by making 86.3 million shipments in 4Q 2012,
after Samsung who made 106.5 million shipments. During that period, Nokia and Samsung
dominated the industry market share which was 23% and 19%, respectively. Despite having a
large improvement of net sales in the fourth quarter of 2012, Nokia experienced a net operating
loss of approximately 3,106 million.

Nokia was an industrial conglomerate in multiple areas before Jorma Ollila took over as
CEO in 1992. Prior to his appointment, Nokia was in shambles, having made several poor
investments in new businesses -- all in an attempt to transform itself from a paper supplier. Those
investments went sour after a massive recession hit Finland. At one point in the late '80s, the
board had considered selling the fledgling mobile phone business.

16

Ollila, however, convinced Nokia to not only stick with the business, but to throw its full
weight behind it and the telecommunications infrastructure unit. The company would go on to
jettison the rubber, cable, and consumer electronics divisions in the subsequent years. Ollila
made a lot savvy bets early on. Nokia played a big part in the development of GSM wireless
technology, a global phone standard still used today. He set up the company's internal
manufacturing supply chain, allowing it to quickly and efficiently build its own phones.

Nokia results for fourth quarter 2010 are as follows: For the first half of the year 2010,
Nokia grew roughly as fast as the industry. It ended 2009 with a 39% market share in
smartphones. At the end of second quarter it had a 39% market share. Then in second half of
2010, catastrophically Nokia growth slowed to a crawl. Nokias quarterly growth was the
slowest of any of the biggest six smartphone makers, and far slower than the industry. Nokias
market share crashed to 33% after third quarter and down to only 28% after fourth quarter. In six
months, Nokia destroyed 11 points of market share abandoned one quarter of its total market
in just half a year! This reminds me of the disastrous suicide-ride that Motorola embarked upon,
but even in its worst period, never did Motorola lose a quarter of its market share in any six
month period.

6.2 Market Share

There has been a sharp decline in the proportion of global market share held by Nokia
during the period from 2008 to 2012. Nokia sank to seventh place in the booming global
smartphone market in the third quarter of 2012 (Sandstorm and Grundberg, 2012) while its
competitors achieved high performance. Apples (AAPL) iOS platform had a market share of
18.8%, therefore, they remained in second place behind Android which achieved a market share
17

of 68.3% in 2012. Meanwhile, BlackBerry captured a 4.7% share of the market in 2012
(Graziano, 2013). Nokia achieved a market share of 18% in the fourth quarter of 2012. In order
to increase their market share, Nokia plans to target emerging markets with affordable low and
mid-range mobile and smart phones and introduce Windows Phone 8 handsets in developed
markets.

18

Nokia getting disconnected while connecting

people!!!!
7. DOWNFALL OF NOKIA

From 1998 to 2012, Nokia has grown to be the most prominent vendor in the mobile
device market. However, for the past few years, Nokia has been experiencing a steady decline in
market share as Apple and Googles operating system dominates the smartphone market. As of
today, Nokias share price sits at $3.42, which is significantly lower than in 2008 where their
ADR was $25.Symbian and Meego were Nokia's main smartphone operating system until 2011.
On February 11, 2011, Nokia made an announcement that it would use Microsoft's Windows
Phone OS as its primary Smartphone platform and symbian would be its franchise platform. This
was a strategic decision by Nokia to adopt Microsofts software as a differentiated and
innovative smartphone feature to attract consumers in the Android and iPhone market.

In order to see what went wrong, lets go back a little. In 2006, Nokia produced more
than half of all smartphones sold on the planet, was by far the biggest total handset maker in the
world and was making tons of profits along the way. It had astronomical customer satisfaction
and loyalty, and Nokias phones were all known for great usability. Nokia also was known for
incredibly reliable phones [a dog ate it, it emerged 'through' the dog later, and was fully
19

functional, if perhaps a bit smelly]. And in spite of this, Nokia also sold some of the ultracheapest phones on the planet. Then a funny thing happened when a computer maker called
Apple decided to release their first-ever mobile phone. A phone I called the first truly
transformational phone, that we would measure time in "Before iPhone" and "After iPhone". The
world for Nokia changed it was the end of the good old days.

Nokia has been promising us wonderful things but did not deliver. Rather, Nokia has
issued apologies and delays. Take the N8. It would have been a hot phone before the iPhone 4,
facing off against the iPhone 3GS and very early Android devices. But it got onto store shelves
competing against the Retina Display iPhone 4, magnificent Galaxy series of Samsung phones,
Motorola Droids, and vastly upgraded Blackberries and HTCs. Nokia was not fast enough, or
its rivals had learned to become faster than Nokia, whichever way you want to see it. Now what
of the truly hot new phones? Apple created the phone in 2010 that had the sharpest screen ever
produced [not Nokia]. Among the major brands, Hitachi created the worlds first phone with a
3D display [not Nokia]. Samsungs Galaxy Beam was launched in 2010 as the first phone with
built-in Pico Projector [not Nokia]. Between 2005 and 2008 Nokia top end N-Series and E-Series
phones astonished the industry with phenomenal technology remember the N93? It came out
with a QR reader, TV-out and the best one a 3x optical zoom the real zoom that only real
cameras have. A technology masterpiece, years ahead of rivals. Today, Nokia has lost this lead;
N97, N8, N900 or E7 are only me too devices, nowhere near the real global leadership. Nokia
has lost the battle in the second of the corners.

Along the way, Nokia has made many bad choices. Nokia once stood for exceptional
quality. Even the simplest cheapest Nokia phones were durable, were robust, were reliable, and
were operationally sound. Nokia also started to cut corners. Phones were built in Finland,
Germany etc. But in the past few years they moved production to the East, causing a lot of
ruckus and losing valuable governmental contracts in the process. Time and again, this resulted
in delays, problems, dissatisfaction. The N97 was not an isolated case of a bad product. Its a bit
like what happened with Mercedes-Benz cars some years ago. What once stood for ultimate
excellence, suddenly had production problems, quality problems, time and again.

20

Nokia has systematically been adopting idiotic ideas from the iPhone, which are not
industry-conforming, and in particular, which will infuriate loyal Nokia owners. Like that silly
slider keypad on the N97 and the N900 who was the genius that cut one whole line of keys to
make a weird keyboard. Its like a QWERTY but its not a real QWERTY like the worst of all
worlds! Thus, after a couple of weeks of struggling with it, many loyal Nokia owners returned
the N97s in massive numbers and told friends: dont buy it.

Today clearly Apple and Google/Android are far ahead of Nokia in customer satisfaction;
Samsung, Apple,Micromax etc are more innovative than Nokia in the speed corner.

Chart 7.1: Global market share held by Nokia in the mobile device market from 1 st quarter 2008
to 4th quarter 2012.

Nokia has been long the market leader in the mobile phone market and with its enormous
reach and huge customer base, had successfully created significant entry barriers for any new
player as such. Its symbian OS being the backbone of the whole success story contributed to a
great deal in its higher perceived ease of use. Customers used to enjoy the features, thanks to
highly simplified GUI. It ruled the middle and low end market for long.
21

But, Nokia did a blunder by being very much myopic and complacent about its
achievements and didnt envision the competition, radical innovations and high end technology
coming its way, which certainly had potential to dethrone it of its place. This was one of the
major reasons Nokia lost its market share.

Although, Apple came with its revolutionary iPhone series, this couldnt be considered a
major threat when apple started. Reason being there was very niche market of smart phone users
worldwide. First stone for the fall was paved by Samsung with its completely new, repositioned
mobile phones, which slowly and steadily started to penetrate the market in which Nokia was
enjoying the leadership. The strategies formulated by Samsung along with its world class R&D
facility; which helped it to work on its previous weaknesses as found from a market research
made sure that Samsung is here to stay.

Samsung came up with mobile phones to directly compete with Nokia in low end
segment in developing economies. This along with effective well designed marketing
communication strategies helped it to establish itself as direct competitor to Nokia in the
segment and thus posing a threat to legendary symbian enabled mobile phone market.

During this time the search engine giant Google came up with its new OS for mobile
phones, Android and this proved to be the last nail in the coffin. Android revolutionized the
mobile phone market and Google in association with many mobile phone manufacturers to come
up with low budget smart phones and nokia wasnt prepared to counteract to this.

22

Table: 7.2

If look at what Apples done really well, its organizing its phones under the iPhone
brand. Its a memorable, recognizable brand that consumers wait for. Samsung has adopted a
very similar approach with their flagship phone. Every year, consumers know that a new Galaxy
S is coming. It helps to build up anticipation and drive consumer demand.

Nokia facing challenging competition within the mobile device industry. This is evident
particularly in the Smartphone sector with their top competitors being Samsung, Apple and
Micromax. While companies such as Samsung and Micromax offer Smartphone at a premium
with higher quality, Nokia takes a more conservative approach. Although Nokia had previously
established their position as the most prominent cell phone producer worldwide, Samsung has
recently surpassed Nokias production level. This demonstrates Nokias declining position in the
mobile phone industry among its competitors.

23

8.

The term BlackBerry refers to a line of wireless handheld devices and services designed
and marketed by BlackBerry Limited, formerly known as Research in Motion Limited (RIM).
[2]

The first BlackBerry device, an email pager, was released in 1999. [3] the most recent BlackBerry

devices are the Z30, Z10, Q10, Z3, Q5 and soon the "Passport". The Z10 and Q10 were announced
on January 30, 2013, and the Q5 was announced on May 14, 2013. The interface varies by
model; most had featured a physical QWERTY keyboard, while newer generations have relied on
a multi-touch screen and virtual keyboard.

BlackBerry devices can record video, take photos, play music and also provides functions
such as web-browsing, email messaging, instant messaging, and the multi-platform BlackBerry
Messenger service.

BlackBerry accounts for 3% of mobile device sales worldwide in 2011, making its
manufacturer the sixth most popular device maker (25% of mobile device sales are
smartphones).[4] The consumer BlackBerry Internet Service is available in 91 countries
worldwide on over 500 mobile service operators using various mobile technologies. [5] As of
September 2012, there were eighty million subscribers worldwide to BlackBerry. In 2011 the
Caribbean and Latin America had the highest penetrations of BlackBerry smartphones
worldwide, with up to about 45 percent in the region having a BlackBerry device. [8] BlackBerry
was widely referred to as "CrackBerry" in the United States, which alluded to its excessive use
by its owners and is a reference to the addictiveness of crack cocaine. Use of the term
"CrackBerry" became so widespread that in November 2006 Webster's New World College
Dictionary named "crackberry" the "New Word of the Year.

BlackBerry gained marketshare in the mobile industry by concentrating on email.

BlackBerry began to offer email service on non-BlackBerry devices, such as the Palm Treo,
through the proprietary BlackBerry Connect software.

24

The original BlackBerry device had a monochrome display while newer models installed
color displays. All newer models have been optimized for "thumbing", the use of only
the thumbs to type on a keyboard. The Storm 1 and Storm 2 include aSureType keypad for
typing. Originally, system navigation was achieved with the use of a scroll wheel mounted on the
right side of device models prior to the 8700. The track wheel was replaced by the trackball with
the introduction of the Pearl series which allowed 4-way scrolling. The trackball was replaced by
the optical trackpad with the introduction of the Curve 8500 series. Models made to
use iDEN networks such as Nextel and Mike also incorporate a push-to-talk (PTT) feature,
similar to atwo-way radio.

On January 30, 2013, BlackBerry announced the release of the Z10 and Q10
smartphones. Both models consist of touch screens: the Z10 features an all-touch design and the
Q10 combines a QWERTY keyboard with touch screen features.

During the second financial quarter of 2013, BlackBerry sold 6.8 million handsets but
was lapsed by the sales of competitor Nokia's Lumia model for the first time.

On August 12, 2013, BlackBerry announced the intention to sell the company due to their
increasingly unfavourable financial position and competition in the mobile industry.[15] Largely
due to lower than expected sales on the Z10, BlackBerry announced on September 20, 2013 that
4,500 full- and part-time positions (an estimated 40% of its operating staff) have been
terminated and its product line has been reduced from six to four models. [16] On September 23,

2013, Fairfax Financial, which owns a 10% equity stake in BlackBerry, made an offer
to acquire BlackBerry for $4.7 billion (at $9.00 per share). Following the announcement,
BlackBerry announced an acceptance of the offer provisionally but it will continue to seek other
offers until November 4, 2013.

In early July 2014, the TechCrunch online publication published an article titled
"BlackBerry Is One Of The Hottest Stocks Of 2014, Seriously", following a 50 percent rise in
the company's stockan increase that was greater than peer companies such as Apple and
Google; however, an analysis of BlackBerry's financial results showed that neither revenue or
25

profit margin were improved, but, instead, costs were markedly reduced. During the same period,
BlackBerry also introduced the new "Passport" handsetconsisting of a 4.5 inches (11 cm)
square screen with "Full HD-class" (1,440 x 1,440) resolution and marketed to professional
fields such as healthcare and architecturepromoted its Messenger app and released minor
updates for the BB10 mobile operating system.

8.1 BlackBerry Messenger (BBM)

BlackBerry devices use the proprietary BlackBerry Messenger, also known as BBM,
software for sending and receiving encrypted instant messages, voice notes, images and videos
via BlackBerry PIN. As long as your cell phone has a data plan these messages are all free of
charge. Some of the features of BBM include groups, bar-code scanning, lists, shared calendars,
BBM Music and integration with apps and games using the BBM social platform.
In April 2013, BlackBerry announced that it is in the process of shutting down its streaming
music service BBM Music, which was active for almost two years since its launch. BlackBerry
Messenger Music closed on June 2, 2013.
In July 2014, Blackberry revealed Blackberry Assistant, a new feature for BlackBerry OS 10.3,
and BlackBerry Passport hardware. The feature is a digital personal assistant to help keep you
"organized, informed and productive.

26

8.2 SWOT Analysis of Blackberry-

STRENGTH

WEAKNESS

Good reputation among

corporate mobile users.

INTERNAL

Devices can be used with

any

mobile

Very aggressive as it has

rejected a sale offer and a

EXTERNAL

It can tap into 100 million

Unable to keep up with the

competition

THREATS

Competitors beat to race to

build the smartphone.

buyout offer.

Expensive enterprise software

to small business owners.

Devices are more secure than

its competitors
OPPORTUNITIES

corporate users

carriers

anywhere in the world.

A single-track focus on the

Blackberry has to fight the

customer base for its future

slack and the gloomy internal

product.

environment

Overtake the competitors by

integrating third party apps.

Table:8.1

Strengths

27

Perhaps the biggest strength of Blackberry is that it enjoys top of the mind recall and has
a good reputation among corporate users of mobiles because of its proprietary technology
that scores over its competitors especially where corporate users are concerned.

The Blackberry devices can be used with any mobile carriers anywhere in the world and
indeed, this is a key strength for the company as it goes along its business with easy
mobility and portability.

One of the main strengths of Blackberry is that its devices are more secure than its
competitors and indeed, the security features inherent and embedded in the devices are
unmatched by any other mobile maker including Samsung and Apple. This is the reason
why Blackberries are so popular with corporate users who use it to link it and integrate it
with their VPNs or Virtual Private Networks.

These strengths have made Blackberry the Smartphone of choice for many governmental
agencies in the United States including the FBI, CIA, The White House, and the State
Department. Given the fact that Blackberries come with an encrypted military grade
security platform makes it the ideal phone of choice for agencies dealing with sensitive
information.

Weaknesses

The key weakness that Blackberry has is that it went on a single-track focus on the
corporate users and enhanced its security features as a USP or a Unique Selling
Proposition. While this aspect held it in good stead as far as the corporate clients are
concerned, once Samsung and Apple came out with Smartphones for the consumers and
the everyday usage, Blackberry was unable to keep up with the competition. Indeed, both
Samsung and Apple have cornered the market share by enhancing the security features in
their Smartphones.

Given the fact that small business owners using Blackberries now had to install expensive
enterprise software, they began to switch to the rivals instead of using Blackberries.
Further, the company lost ground as the proprietary operating system used by Samsung
and Apple provided more benefits to this customer segment leaving Blackberry out of the
race.

28

As mentioned earlier, Blackberry was essentially a single pony trick with its obsessive
focus on the corporate users. With the large consumer base untouched by it, Samsung and
Apple quickly garnered this segment and by providing an easy to use user interface and
apps that were simple and effective, these companies soon began to take away even the
corporate customers of Blackberry.

Opportunities

The recent moves by the company are very aggressive as it has rejected a sale offer and a
buyout offer as well as accepted fresh infusion of capital from an Angel Investor. By
appointing a new CEO and revamping its organizational team and structure, Blackberry
has signalled that it is serious and is going all out to reinvent itself.

The company has a lucrative opportunity as far as leveraging its existing customer base
of over 100 Million users is concerned. Given the fact that the company can tap into this
customer base for its future products, there is a significant opportunity waiting for the
company.

By integrating the third party apps and features into its phones, the company can mimic
the strategies followed by Apple and Samsung and the increase in the business
partnerships with third party providers can prove to be a key opportunity for the company
as it prepares to take on Samsung and Apple.

Threats

Though Blackberries were the original Smartphones, both Apple and Samsung beat it to
the race to build the Smartphone of the future because they provided the flexibility and
ease of use that Blackberries lacked and hence, were able to corner market share and take
away its competitors.

Apart from the threats posed by its competitors, Blackberry has to fight the slack and the
gloomy internal environment, which because of the troubles that the company has been
through in recent years has resulted in lower employee morale and a general lack of
direction. Given the fact that the Smartphone industry thrives on innovation, Blackberry

29

has to rejuvenate itself and reinvent itself apart from rescuing itself from the sagging
momentum and motivation of its employees.

8.3 DOWNFALL OF BLACKBERRY

Its not just about the second-quarter earnings which showed a near $1 billion writedown for unsold BlackBerry Z10 phones. Its not about the fact that the BlackBerry
Playbook, the companys first and only tablet offering, failed. Its not about the fact that CEO
Thorsten Heins, who took over Jim Balsillie and Mike Lazaridis, was stiff and never
resonated with consumers, the media or investors. BlackBerrys downfall stems from much
more than that, going back six years.

In 2007, Apple announced the iPhone, at the MacWorld Conference, with then CEO
Steve Jobs introducing the revolutionary phone. At that time, BlackBerry was the leader of
the tech industry. With a stock price hovering around $140 per share and BlackBerry
smartphones popular all over the world. People were on their phones, checking email,
browsing the web and texting nearly 24 hours a day, seven days a week.

Apple had reinvented the digital music and computer industries, with the iPod selling
like hotcakes and the iMac and MacBook computers continuing to gain traction in the PC
market. However, the iPhone took an entirely different approach to phones, being catered
towards the consumer and not just the professional.

The iPhone, with its innovative iOS mobile operating system, touchscreen display
and beautiful aesthetics, was vastly different from the BlackBerry phones of the time.
Research in Motion had no touchscreen phones, opted for QWERTY keyboards on all of its
devices along with the infamous scroll button, and was catered towards the industry
professional.

30

Fast forward five years later to 2012. Apple was the king of the smartphone market,
having released the iPhone 4S in late 2011, despite losing its iconic CEO, Steve Jobs, to
cancer. Tim Cook took over the top spot, and the companys stock and sales took off like a
rocket ship. People were fascinated by Siri, Apples personal voice assistant, and the
continued improvements made to the iPhone, whereas BlackBerry phones were seen as stale,
and unappealing. The company continued to talk up its purchase of the QNX operating
system, later to be known as BlackBerry 10, but phones continued to be mired in delays, only
further fading RIM into irrelevance.

January 2012 saw Thorsten Heins replace Balsillie and Lazaridis as the companys
CEO, giving investors and the BlackBerry faithful a little hope. The company initiated a
CORE program, cutting costs as it tried to remain relevant. Prem Watsa, seen by many as the
Canadian Warren Buffett, joined the board. However, the company had its ups and downs
in 2012, with more downs than up. It finished the year with a slight bit of optimism, as
BlackBerry 10 was getting ready to launch.

In January 2013, RIM held a wild press conference, showing off its newest operating
system, and unveiling the Z10 and Q10 smartphones, and changed the companys name from
RIM to BlackBerry, to better align the company with investors and consumers mindsets.

The new phones had more than 70,000 available apps at launch, including popular
ones like Facebook and LinkedIn, and featured the BlackBerry Hub, integrating work and
play in one area and allowing people to switch back and forth. People thought BlackBerry
was back. The stock price rose in anticipation of sales of the new devices, the company
continued to cut costs, and if worse came to worse, its patents, services and security business
could be attractive to a prospective buyer.

8.4 PROBLEMS STARTED TO HIT

31

The Z10 wasnt selling well, with rumors that the phones were hard to find in certain
stores, and some carrier stores reported only getting a few pieces of inventory, not what
would be expected of a new launch. Then, the companys operating system, BB10, received
an update to patch serious flaws before it was released to the public.

Hit by delays, poor reviews, and a laissez-faire attitude by customers towards the
new phones, BlackBerrys sales continued to crumble. The stock price towards the summer
of 2013 took a sharp downturn, as markets began to get word that the company was in
trouble. In September 2013, the company pre-announced fiscal second-quarter earnings,
missing estimates by nearly 50%, cutting 4,500 workers, and accompanied by the news that it
was getting out of the consumer business. Shares dropped nearly 20% that day, and the
company, which had previously said that it was looking at strategic alternatives to try to
shore up its business either via a joint venture, merger or other was frantically
searching for a buyer.

Just a couple of days later, the aforementioned Watsa and his firm Fairfax Financial
Holdings, announced an offer to acquire BlackBerry for $9 per share in cash, despite not
having financing already lined up for the deal. Thats a far cry from the roughly $140 share
price BlackBerry enjoyed just five years ago, and about 50% below where the shares were
trading as recently as the beginning of the year.

The future of BlackBerry is uncertain, with the Fairfax deal still up in the air despite
Watsa being confident something than get done. No matter what happens to the company,
whether its taken private, sold piece meal to strategic investors or worse, the company has
only its leadership to blame. Resting on your laurels, watching a new competitor take your
product and vastly improve it, then watching others do the same while nothing new comes
from your operations isnt a recipe for success.
Thats not just sour grapes. Thats a poison BlackBerry

32

8.5 COMPARISON OF DOWNFALL OF NOKIA WITH DOWNFALL OF

BLACKBERRY

Irrespective of whether Microsoft closes the Nokia deal or not, the Nokia brand will
continue to survive, at least for another few years. They may launch another models in future.
For BlackBerry, the picture is even better. Even if it is acquired by Fairfax, there is a chance
that brand BlackBerry will survive for a while. But, practically, Nokia and BlackBerry are
finished. They had their glory days. They ruled the market. They sold products that millions
used. Those days are gone.
When Apple introduced iPhone in 2007, it didnt set out to sell a phone. Nokia and
BlackBerry were making fantastic phones. They were unbeatable. So Apple changed the
rules of the game. It side-stepped the battle. To take over the world, it didnt create a phone
that was also smart, something that BlackBerry, Nokia and even Microsoft were doing. It
created a smart device that was also a phone.
The iPhone that Steve Jobs introduced in 2007 was a small and pocketable computer.
It was not very powerful. But at its heart, it was a computer. Primarily it was meant to
calculate and process data, the way computers do, to carry out tasks. It could run apps, or in
other words programs. The fact that it could also connect to cellular network and make calls
was just the icing on the cake.
A year later, Android not only followed in the footsteps of iPhone but also expanded
on the idea of pocketable computers. It was even more flexible, like modern computers, and
allowed a user to do more, the way computers do.

Since then, both Apple and Google have tirelessly worked to make iPhones and
Android devices more and more powerful. They have added to what their devices can do.
They worked to enable more powerful hardware in iPhones and Androids. Nowadays, a good
Android phone or iPhone can handle many of those tasks that earlier required a laptop.
33

Nokia and BlackBerry failed to grasp this. Even years after iPhone was introduced,
they were still trying to compete in the market with phones that have smart features. They
stood no chance. They required small computers that could make calls.
Nowadays, calling or texting using cellular network is just one of the tasks people do
with a phone. In fact, for many, these are very low-priority tasks. For most consumers, more
important is how well a smartphone can tackle web browsing. Or how well it can play
videos. Or how well it can run games. Or how well it can run apps like WhatsApp and
Facebook. The devices sold by Nokia and BlackBerry excelled at making calls. But they
were not very good at some of these other things.

BlackBerry realized this, albeit late, and tried to turn its fortunes around with BB10.
Unfortunately, by the time BB10 came to the market in 2012, it was already too late for the
company.
Nokia, meanwhile, tried to hitch a ride with Microsoft and went all out with Windows
Phone. It could have succeeded but I have a theory why it has so far failed. Microsoft is a
company that thrives on the traditional computer market. The small and pocketable
computers are a threat to its core market. So even though it developed Windows Phone to
take on the iPhones and Androids, its heart has not been there. Windows Phone is utterly
gimped and lacks in features. And Microsoft has been excruciatingly slow in updating the
OS.

Compared to iOS and Android, Windows Phone still looks like a feature phone
operating system. Yes, a feature phone OS that has a beautiful user interface and some smart
functionality. Unless Microsoft significantly overhauls the Windows Phone, it will not find
any decent number of buyers in the market.

It is sad to see companies like Nokia and BlackBerry, the alpha dogs in their time, to
go like this. Unfortunately, they had not only been complacent in the wake of iPhone, they

34

utterly failed to understand the true nature of the device we called smartphone. They had it
coming.

9. REASONS - WHY NOKIAS DECLINE ITS SHARE

1. Failure of Symbian OS and Wrong Deal with Windows

Nokia launched its Symbian 60 series in year 2002 which initially had a good market
response but with the introduction of Apple iOS in 2007 and Android in 2008, the OS race was
completely taken over by the two giants. The reasons for collapse of Symbian OS are lack of
applications and UI (User Interface). After facing competition from iOS and Android, Nokia
continuously tried to improve their Symbian OS but it was mostly following the UI of Android
and iOS and was not creating something unique. Secondly, the company failed to look into the
need of available applications in gaining market share.

2. Windows 7 OS may be too little too late Microsoft was even later in latching on to the smartphone advancements than Nokia, and
thats saying something. So far, few consumers have been keen to switch to a Windows Phone 7
device. In this case two wrongs will make one huge wrong.

3. MeeGo is a NoGo Back in June it was announced that the Linux-based OS would run on the flagship N9,
but it didn't take off. There is nothing majorly wrong with MeeGo; it is just seen as a stopgap
between Symbian and Windows Phone 7.

4. Stephen Elop has done nothing to help Nokia CEO Stepehen Elop made things worse. An internal memo, which Elop sent to
staff, leaked in February. In the memo, Elop uses the metaphor of a burning oil station, referring
35

to Nokia "pouring gasoline on our own burning platform". This confirmed just how much trouble
Nokia is in.

5. The latest designs look like guess work From odd color choices to varying screen sizes, Nokia seem to have gone for a hit and
miss tactic. A more considered, researched and developed approach to hardware would improve
Nokias chances of revival.

6. Failed to live up to its own hype (new models unpopular) Nokia has deployed heavy marketing to try to boost sales and popularity of its handsets.
From the sheep social network advert to posters plastered all over bus stops, Nokia is setting
itself up for a fall, because its current crop just doesnt improve the user's experience.

7. Revenue is substantially below estimates The Finnish firm used to be a hugely profitable company, once being the only firm in the
world that had a turnover which exceeded the taxation revenue of the country it was based in.

8. Cant shake the 3310 The 3310 is the handset that springs to mind whenever anyone mentions Nokia. It
revolutionised mobile phones when it was first released and just rode the wave of success, doing
little to progress designs especially when the iPhone was released. It is now left to regret resting
on its laurels.

9. Ovi store never really took off -

36

Say the word App and consumers, as well as developers, immediately think of iTunes or
the Android Marketplace. In comparison, Ovi's selection is nowhere near as good and those apps
that are similar to offerings from Android and Apple dont run as well on Nokia devices, with
crashing being a frequently reported problem.

10. Samsung dominates the enterprise Businesses that once used to hand out thousands of Nokias to their employees have now
turned to Samsung or iPhones. The improved functionality and reliability dealt a killer blow to
Nokia and it has a lot of work to do if it hopes to regain its place in the offices.

11. Could be slow to react to future changes Its taken Nokia two years to admit it has been slow in reacting to the changes in the
sector and few people would be surprised if it is still playing catch up for the foreseeable future.
Apple and Android certainly wont be waiting for it to catch up, so the gap will only continue to
widen.

12. Hurting on Both Ends

Not only did Nokia move too slowly in the smartphone market, it didnt anticipate
competition in the lower end of the market, either. Other manufacturers like Samsung, Apple,
Micromax have attacked Nokia from the low-end in developing markets like China.

13. Execution Is Key

Where Samsung shines brighter than Nokia, and many other manufacturers, is execution.
Samsung mirrored Apples game plan by dazzling consumers with a high-end flagship line in its
Galaxy S series Android phones.

37

14. No innovationStiff 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.

15. Failure to Implement the Right Umbrella Branding Strategy

Apple was the first phone to use the strategy of umbrella branding using iPhone as an
umbrella brand and then building subsequent models each year. Samsung was quick in
identifying this concept and they started building their high end phones with Galaxy S series.
Nokia on the other hand used to have used an umbrella brand in the N series and recently
the Lumia series, but they failed to create buzz among customers which Apple created. Apple
very uniquely launches its new model in September each year and whole year it builds consumer
anticipation which drive demand.
But the problem with Nokias umbrella branding is that they didnt, or couldnt build
anticipation in users.

38

10. EFFECT OF DOWNFALL

On the above reasons, Nokia started running to grow up, but this downfall made negative
impact on the shares of Nokia Company in the Indian market as well as International market.
The competitors already overtake the company. Because of these, their profitability also
decreases quarter by quarter.

The Nokia average rate of market share decline had been historically be about 4% or 5%
per annum, and guess what it was in 2010? In year 2010, Nokia market share (annually) fell from
39% to 35% i.e. a fall of 4% in market share points Obviously Nokias annual market share
erosion was so mild, it would not register in this Top 7, in fact nowhere near the Top 10 biggest
falls in handsets.

10.1 NOKIA FALL IN MARKET SHARE ANNUALLY 2009-2012

Year

MARK
ET
SHARE
S

2009

%)
39

2010

35

2011

16

2012

(IN

39

Table: 10.1

As above mentioned, in 2009 the company share was 39 % all over the market. But some
kind of incorrect decisions taken by the company, their shares started decline from 2010. In 2010
their shares decreases by 4% and in 2011 directly decline by 19 %. In 2012, the company shares
decreases to 5% only.

These annual market shares affected the companys quarter wise market shares which are
very important to the shareholders of the company. But where companys market shares
decreases from time to time, the shareholders couldnt earn dividend as much as earlier.

10.2 NOKIA FALL IN MARKET SHARE QUARTERLY 2011-2012:

MARKET
YEARS

QUARTER

SHARES
(IN %)

2011

Q1

24

2011

Q2

15

2011

Q3

14

2011

Q4

12

2012

Q1

2012

Q2

2012

Q3

2012

Q4

3
Table: 10.2

40

In first quarter of 2011, the company share was 24%, but after that all quarter of 2011 the
companys shares couldnt increases. Same situation happened in 2012 also. During this year no
any quarter which gave market shares more than 8% in the shares market.

It teaches the marketer that the incorrect decision can affect the company even the
company might be leader of the market. With the decline of market shares, the company also
decline its goodwill which was very strong in the market. The impact of these the shareholders
didnt gave more dividends and the company fall for forever.

11. WHAT NOKIA SHOULD HAVE?

Looking at the present scenario, Nokia has started to make efforts to enter smart phone
market by collaborating with Microsoft and bring its smart phones to the market, with Nokia
lumia 800 being the recent one in the stable. However Nokia needs to do a lot of homework as
during this period it lost a lot of brand equity.

Nokia needs to focus on its long term strategy and reposition it leveraging on its glorious
past record. The strategic marketing communication will play a major role in defining its fate in
long run.

41

Nokia is still by far the biggest phone maker. They are still by far the biggest smartphone
maker and dumbphone maker. They own the biggest smartphone OS platform, Symbian, and
they have a credible migration path to MeeGo via Qt and Ovi. The Q3 results were alarming but
that could have been a temporary blip and Nokia could have recovered. Now the Q4 results tell
us that the current product portfolio, and the strategy, is not working. Nokia grew the least of all
major makers, and lost market share in all price segments. The current trends suggest that
Googles Android may pass Nokias Symbian OS during this year 2011. This is a ship which is
seriously taking in water and will sink if management doesnt turn it around very rapidly.

Nokia will be required to engage in continuous technological innovation in order to

compete effectively. Nokia targets markets in over 150 countries and operates in many
technological industries such as mobile and smartphone, GPS, tablet, and more. Nokia will have
difficulty responding to new opportunities and market demand due to the wide range of markets
and industries that they operate in. It will be crucial for Nokia to predict and recognize the
emerging demand in markets, consistently scan the environment to identify new technologies
and innovations available, and deliver their innovation through unique product functions and
features in a timely manner.

Nokia should avoid bureaucratic blindness at the time of crises. They had many
opportunities to become a leader in cellphone market again.

They should produce innovative cellphone with the help of their very intelligent Research
and development department.

42

 They should avoid internal politics and should work for becoming leader in the
smartphone market again.

12. CURRENT POSITION OF NOKIA...

In Q2 2014, Indian smartphone market sequentially grew 9%. Motorola shipped 955,650
phones beating Nokia- Microsoft, which shipped 633,720 devices. Excellent sales of Moto G help
Motorola into the top 5. But Samsung has leadership of the Indian smartphone market. On the other hand
Micromax has capturing the market.

Chart :12.1

43

Vendor

Comparison

Units

Samsung

Q1 2014

44,78,170

Samsung

Q2 2014

41,11,280

Micromax

Q1 2014

27,95,850

Micromax

Q2 2014

30,97,010

Karbonn

Q1 2014

12,96,170

Karbonn

Q2 2014

10,77,810

Motorola

Q1 2014

3,79,310

Motorola

Q2 2014

9,55,650

Nokia

Q1 2014

5,83,160

Microsoft
Nokia

Q2 2014

6,33,720

Microsoft

Its clear that Nokia is struggling to define a clear positioning. The company launched
Nokia X and XL and on the other hand, Microsoft has announced closing down Nokia X (and
Asha) series. Nokia launched its Android device, Nokia X few days back and while the company
is definitely going after the mass market which is currently captured by Micromax (plus Indian
companies), Samsung Galaxy Duo etc

For a layman, Nokia X seems to be all about Android apps. This is quite different from
how Nokia has marketed other products the company mostly takes a feature and spins off a
good story around it.

44

12.2 NOKIA (AND MICROSOFT)S BIGGEST CHALLENGE :

The biggest challenge for both Nokia and Microsoft is the lack of quality apps in the
Windows app store. Even though the two are married, the quality of apps still hasnt really
improved in the last few months. Nokia adopting Android is a welcome (and open) move but
Nokia promoting competitions best asset is definitely not. And that too when the company lacks
asset.

Chart :12.2

45

In quarter 2 of 2014, in smartphone market Nokia struggling to come up but these is very
difficult to them. Because the competitors already capture the market shares that is Nokia has
only 4% market shares where as Samsung has 25.30% ,Micromax has 19.10% market shares. So
Nokia want to be become a leader of the market again then it has to be gain more than 20%
shares from now.

13. RECOMMENDATION

The strength of the company is its customised product. Company should provide the
product what customer wants. This very fact must be highlighted in the marketing
campaign.

The company will make its place in the market when they provide innovative product in
the market.

The customer are always buying the product of that company which products are easy to
use in every aspect. It will increase the loyalty of the company in the mind of customer.

If company has internal conflict or misunderstanding between management and internal

customer, the company will not create place in the market.

When company make research of the market and develop its product at right time, it will
make big impact on the competitors.

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 The reaction towards future changes should be fast than competitors. The company will
capture the market faster than competitors.

When

company make a strategy for future it should be confidential within the

organisation only.

When a company provide customised product in the market, people may run for it and
indirectly company may increase their shares in the market.

Failure never loss the war. Hence if company fail in the market, they should learn from it
and correct the wrong things. It will help the company to make a new strategy for future.

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14. CONCLUSION

To to conclude the Nokias story, in this high tech era with change in consumer power, the
company which is missing the constant innovation has the high probability of getting
punished from the customer. The decisions taken by the companys management went wrong
that is the decision regarding operating system. Nokia adopt windows operating system,
whereas people had been used Android operating system smart phones. They didnt
recognised customers needs. If the company doesnt produced any innovative product, the
customers doesnt go with the company and they change the company to buy and used the
product. Same thing happened with the Nokia. Nokia didnt produced and sale very
innovative smartphones, the customers start used smartphones of other companys. Nokia
didnt take any positive action towards the future changes. The company should more work
on research and development area of the market. Because from these area make the
companys goodwill in the mind of the consumer.

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