Case Study: Why Nokia failed? – The Business Failure Story

Case Study: Why Nokia Failed?

Before we go further, let us discuss the complete story of why Nokia failed

Why Nokia failed

Basically there are two main reasons Why Nokia Failed – But first Let us hear the success story of Nokia to create a strong background of this Case study: Why Nokia failed

 

History of Nokia: Their Success Story

 

 Nokia was Established in 1865 in Finland. And in the very beginning, they acquired Mobira Company that was their best decision.  With the acquisition, they create the first car phone in 1982  with the name of “Nokia Mobira Senator” and its weight was 10kg. It was a heavy and unportable phone (check it’s image below). 

Why Nokia failed

And in 1984 Nokia came with another phone name “Nokia Mobira Talkman”. And it was their first transportable phone whose weight was 5kg. It was a portable phone, but still, it was too difficult to take and keep that phone.

Why Nokia failed

then in 1987, Nokia again came with “Nokia Mobira Cityman” whose weight was 800g. It was too light as compare to their previous brands that almost everyone was able to keep and take that phone from one place to another easily. In this way, their sales went up and Nokia became the brand name with the help of this creation.

Why Nokia failed

In 1991, PM Finland Harri Holkeri did the first GSM Call that was through Nokia Mobile phone. That means, Nokia was at its highest peak in the 19s.

In 1992, Nokia created a mobile name as “Nokia 1011” – please check the image below. It was spread in the US and Europe Market rapidly

Why Nokia failed - Nokia 1011

And then in 1994, Nokia launched the series of 1100 (You might have used these phones too). And it was the first featured phones. They expected to sell 400,000 phones but they sold more than 20,000,000 phones. Means, they were performing was above their expectation because their actual performance was 500%  (or 5 times) better than their actual expectations.

In 1992, Nokia Predicted that there will be a market of 40 million handsets by 1999, but in actual it went to 250 million. With the growing population, the demand for mobile phones was also increasing.

Nokia started to gain more market share and between 1997 & 1998, Nokia beat Motorola and became the World’s No mobile phone company ( with 25% market share). Nokia first dominated Europe and then it came to Asia.

Why Nokia failed

Between 2003 – 2005, two models of Nokia; “Nokia 1100” and “Nokia 1110”  captured 70% of the market share. It was looking like Nokia is the only company that is operating in the mobile phone industry. Nokia was everywhere, and it was the highly demanded mobile phone and its sales were in millions.

In 2008, Nokia sold 468.4 million handsets and became the leader of the world. 

 

Two Reasons: Why Nokia Failed

 

There are two basic reasons of Why Nokia Failed that we will discuss here

 

1) They were hesitant to CHANGE:

 

The first reason why Nokia failed was: Nokia was growing, therefore, they were hesitant to change.

With the entry of Google and Android in Europe and America, Nokia was reducing its market share. But Nokia was still dominant in Asia. There market sharing was going down in America and Europe but they didn’t capture this signal.

In short, Nokia reduced his market share of Europe because of Google and Apple 

And in Asia Samsung and Motorola brought flip phones in the market. Samsung launched 50 models and Motorola came with 40 models. At that time, Motorola came with a model name Moto Razr mobile phone (Image is given below) that was dominating the Asian market.

Why Nokia failed

Moreover, Chinese companies also started making millions of mobile phones every year. Chines manufacturers were providing better quality phones at low rates because of a high level of production.

China became the hub for mobile manufacturing companies. European companies, like Apple, started to open manufacturing plants in China and Asia because it was reducing their costs.

By 2009 and 2010 Google and Android had dominated the market and Nokia was losing its image. And then they thought to change themselves. 

Why Nokia failed

If I ask you why Nokia failed? then you might answer that Nokia was failed because they didn’t bring changes. But it’s not true, we will understand this in the next section:

Nokia didn’t understand that consumers are shifting from hardware to software. They want more features in their mobile phones. But Nokia was stuck on “Our Mobile won’t break even you throw it on the surface”

Apple brought almost 3 lack applications and android brought more than 1.25 lack application by 2010. But Nokia was stuck with Symbian OS that didn’t have even 20,000 mobile applications. They thought, they will improve Symbian and it was their biggest mistake.

There was a big community of google and apple users. Android gave a platform where users could create and sell their apps. Other companies understood this philosophy and they shifted towards android but Nokia was stuck with his existing software. Therefore, Samsung, LG, and other companies started to grow their shares. And Nokia was going down, they were firing their employees because of low growth and sales.

Now let’s come to the 2nd biggest reason Why Nokia failed

 

2) They CHANGED, but in the wrong DIRECTION:

 

The 2nd reason of Why Nokia failed is:

Till the end of 2010, Nokia had refused to change. And then Nokia thought that if we want to grow in the market then we have to bring change. And the first change that they brought was: they changed their CEO and hired Stephen Elop at the end of 2010.

Stephen Elop said we have to bring change to bring stability in the market. In this way, they tried to bounce back.

They decided to launch an android phone. But when they were going to create a contract with Google, they thought that its a wrong decision because it’s not unique (already hundreds of companies are using android), they thought if we accept android then we will go in a rat race, therefore, they decided to drop google and accept Microsoft.

Why Nokia failed

But they didn’t understand that Microsoft is not compatible with the Mobile phone. And it was their 2nd biggest mistake.

Nokia brought Change at the end, but they did in the wrong direction.

It good strategy to go alone and create a monopoly, but it is necessary to create an eco-system. And there was no eco-system of Symbian and Microsoft.

These two blunders lost Nokia’s Image and it became the lesson other companies.

 

Things That You can learn from Why Nokia Failed?

 

1) Adopt Change:

 

This is the common mistake that we repeat in our business as well as in our daily life. We always think that we are perfect and it’s a game of luck only. For our mistakes, we blame on other factors like environment, luck, etc. 

Why Nokia Failed

But we don’t analyze our own mistakes and operations. This was the same mistake that Nokia and it is the first lesson that you can learn from the article Why Nokia failed!

 

2) Don’t be too late:

 

This is the 2nd biggest lesson that you can learn from this article; why Nokia failed. I am sure you must have read that Nokia adopted change but it was too late at that time. 

The same mistakes we do in our business – restaurant owners don’t want to change their location in a hope that soon customers will come. They don’t want to change their taste in the hope that it might not be the reason for the decrease in their customers. 

There are more than thousands of people who miss their train every day because of one second late. And there are millions of people who miss golden opportunities because they understand it too late. 

Let me give a formula behind the success of billion-dollar companies. Do you know why Apple got success?

 It because it’s the owner – Steve Job was a visionary leader. He was apple to see the demand and market value of computers that’s why he asked his friend to start this company. 

His friend was an expert in computers but he was able to see the value of this market. 

In short, the business gets the success that is able to see the future and change themselves before times come. That means, companies change themselves before the actual time. 

So, if you want to take just one thing from the case study: why Nokia failed then I will say “Make changes in your business, understanding and forecasting the future”

 

3) Make changes in the right directions:

 

This is the most important lesson that you can learn from this case study: Why Nokia failed? 

Why Nokia failed

We some time change in our business but in the wrong direction. If you go without proper planning, proper survey, and proper strategies then chances of your failure will be much higher and higher. 

Business is not about mood – it’s about the proper understanding of customers and trends and moves accordingly.

 

4) Understand Customers’ Needs and Preferences:

 

It is the 4th and most important learning from the case study: Why Nokia failed. 

Why Nokia failed

Imagine you created a bike that goes with a maximum of 50 km per hour speed. Do you think, anyone will buy that? Surely not because it’s not the preference/need of customers. 

Because there are already too many bikes are available in the market that goes with more than 100 km per hour. Therefore, customers will not buy your bike based on this particular feature. 

But you created a bike that goes with a maximum speed of 50 km per hour but it doesn’t require any fuel or other expense then what do you think? what will be the response of customers? 

I am sure millions of people will be ready to purchase that bike for local use – it’s demand will tough the highest peak in just a few months or years. 

From this example, we can learn that we have to understand the needs and preferences of customers. You must not repeat the mistake that Nokia did. 

Nokia was stuck with its software, even when better software with better features was launched in the market. 

You must understand one thing – customers have nothing to do with your brand name, customers want to experience and benefit. 

If your product will benefit customers then customers will keep buying. And if get customers to get more benefit from another product then they will shift to that product just next day. 

Therefore, understand customers’ needs and preferences. And based on those needs, decide to launch a new product or launch a new one. I hope you got a detailed analysis of the 4th reason why Nokia failed 

 

5) Unique is always not good – It’s better to Copy Some time:

 

It is the most interesting learning from the case study: Why Nokia failed. 

You might listen to a sentence: “Try to come up with Unique idea” but here I am telling a different story. 

What I have learned from the Nokia Case study is: Unique is always not good. There are millions of other unique ideas that have been failed! Customers did give a proper response and companies got shut down in just the first year of their operations. 

Why Nokia Failed

And there are thousands of companies who just copied someone’s idea, made little changes, and got a huge success in the market. 

Let me give you an example: Uber was the first company or first mover in the industry of online taxi service. and now there are hundreds of other companies that offer exactly the same service in different countries and different cities. 

Uber purchased Careem in 2019 for more than 100 million dollars. The idea was the same, it was just replicated and it’s market value went to more than 100 million dollars. 

Nokia also did the same mistake:

Android demand was at peak – every mobile company was using android in their mobile phones. But Nokia thought if you do the exact same things then what will be different between us and other companies. 

They thought if you also adopt android that means we will replicate the exact same thing that is wrong. That’s why they decide to make contact with Microsoft. 

And it was there 2nd biggest mistake – they tried to bring something new in the market but they failed because unique is not always good – only 5% of people get success in it. 

This was the fifth and last reason for the case study: Why Nokia Failed

Thank you so much. If you have any Questions regarding this case study: Why Nokia Failed, please ask in the comment section below. I will be more than happy to answer you

I hope you have understood the reason behind: Why Nokia failed

Case Study: Why Nokia failed

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