Why did Nokia Phone fail? everything you need to know!
At the end of 2007, Nokia is one of the most beautiful technological stocks in the world. Weighing more than 100 billion euros on the stock market, the Finnish manufacturer produces one million mobile phones per day and represents four out of ten sales worldwide. It is the hegemony of a company founded in 1966, resulting from the merger of three industries of the 19th century (stationery, rubber and cables).
Specializing in mobile telephony since 1992, the group is at the forefront of innovation and considered one of the European flagships. A model is even used in the film Matrix in 1999. And there, Nokia is the future.
But it was before the iPhone. Between 2007 and 2009, Nokia missed the mark of smartphones and the well-oiled machine seized up.
Symptomatic of these large companies that are too sure of themselves, the giant falls asleep on its laurels and is unable to innovate again. Nokia announced on April 19 a net loss of 929 million euros in the first quarter of 2012, a result significantly worse than expected and linked to a tougher competitiveness than expected. Sales fell 30% year on year to 7.5 billion euros.
"We are going through a period of great transition for the group in an industrial environment that continues to evolve and change rapidly," commented general manager Stephen Elop, who arrived at the end of 2010. The coming years will be difficult for Nokia which has just lost its place as world leader in the sector, in favor of the South Korean Samsung.
It was the chairman of the board, Jorma Ollila, who stepped up to the plate to announce the grim news, adding however that "Nokia has been number one for 14 years and is still capable of becoming it again". Except that today, Samsung, LG and Apple are there.
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What model was behind Nokia's success?
Above all, Nokia's success coincides with the democratization of mobile telephony. A pioneer in investment in this sector, the firm based in Espoo, the second Finnish city after Helsinki, had a hollow nose.
The group then bet that the mobile phone could reach hundreds of millions of people around the world, if its price drops enough. At the time, most telecommunications manufacturers believed that mobile technology, already known and developed in the 1980s, could only benefit a limited clientele.
In 1994, to compensate for the narrowness of the Finnish financial market, Nokia was listed on the Nasdaq. The action saw its price multiplied by 600 between 1992 and 2000, period during which the group multiplied its turnover by eight and its profit by twelve.
In 2000, the legendary 3310 was released, a small phone appreciated for its robustness and impact resistance. With 126 million copies sold worldwide, it is the brand's most famous model. Precursor of the iPhone thanks to its simplicity, it compiles the assets developed for several years by Nokia. No antenna, a central button concentrating most of the commands, longer SMS and ... lots of games, including the legendary "snake".
Paradoxically, it was at this time, when Nokia was at its peak, that its rivals worked hard, eroding its share of the world market. At the time, the most serious competitors were called Motorola, Siemens, Sony and Ericsson. Today's leaders such as Samsung, Apple and RIM have not yet entered the dance scene.
The missed train
The smartphone. This is the main management error of the Finnish group. Leaving Apple's iPhone and RIM's Blackberry to take root, Nokia took a serious look at it in 2007. The group continued to benefit from good sales by offering competitive entry-level models. But in addition to missing the smartphone train, Nokia prefers to focus on Symbian, its own operating system (OS). It thus misses the Android phenomenon, the solution developed by Google which now equips a large part of smartphones (Sony-Ericsson, Motorola, Samsung, etc.), thanks to which the rivals have been able to catch up.
Google tried to convince the Finn to join its platform, without success. For Nokia, opting for Android would be tantamount to choosing a solution that is too short term and would strengthen the power of direct competitors. And to fully understand Nokia's revulsion against the Android option, Vice President Anssi Vanjoki explained in 2010 to the Financial Times that it would look like little Finnish boys
Marriage with Microsoft
Nokia preferred to ally with Microsoft, as part of a strategic partnership. The deal was facilitated by current CEO Stephen Elop, himself a defector from Microsoft, to allow the two giants to rebound in a tough market, facing relentless competitors. Thus, Nokia now offers smartphones running Windows Phone 7, the latest mobile platform from Microsoft. The Lumia 800 and Lumia 710, representing the first wave, were launched in October 2011.
If the alliance between the American and the Finnish is not a merger, Microsoft has got hold of Nokia's logistical know-how and its multitude of patents. It was the same kind of reasoning that motivated, last summer, the acquisition of Motorola by Google. "A takeover would allow Microsoft to promote the two brands and adopt an integrated approach," said Thomas Husson, Forrester, pushing back the possibility for several months.
Two million Lumia were sold in the first quarter of 2012, at an average price of 220 euros. "Clearly, the volumes and turnover do not fill the void left by Symbian," says Gartner in La Tribune. Especially since the first devices sold in the United States by the operator AT&T revealed a major bug in the software, causing cuts in Internet connections. Bill amount: $ 10 million.
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