Nokia Corp, the $44 billion company at the time of writing those lines, is suffering from constant market share decline, caused mainly by the $230 billion Cupertino, California-based Apple, through its iPhone line of mobile phones. In 1999, Nokia peaked with 203 billion Euros market value, the highest of any European company. How did this Finnish conglomerate fall from grace? Time for some lessons.
Nokia; the empire that could have been
According to a study released by Millward Brown Optimor in 2010, Nokia came in 43rd in brand-ranking, tumbling 30 places in a year, and losing 58% of its brand value. In 2009, Nokia posted its first loss since the company began reporting quarterly in 1996. In my book, it’s time for the Finnish multinational communications and information tech company to learn few things from the name of their pain; Apple, which I summarize here in 6 points:
If we sue them, they will sue us back
On 22nd Oct. 2009, Nokia filed suit against Apple, accusing it of hitching a “free-ride” on its intellectual property. On 11th Dec. 2009, Apple filed a countersuit accusing it of the same. It kept on getting uglier afterwards, with both companies asking to ban the products import of each other.
Street smart CEOs tend to outdo lawyers with expensive suites
After joining Nokia in 1980 and holding many posts since, the law graduate Olli-Pekka Kallasvuo (OPK) became CEO in 2006. The very next year, 2007, marked the beginning of the Finnish giant downward trajectory after Apple launched its first iPhone in 2007. Steve Jobs, who became CEO of the decade in 2009, was called the Apple’s imperious, brilliant CEO who transformed American business by Fortune magazine.
Copying with pride will get us nowhere
When questioned in August 2007 about a Nokia concept interface similarity to the iPhone, Anssi Vanjoki – Nokia’s Executive VP & General Manager of Multimedia replied: “If there is something good in the world then we copy with pride.” That pride got Nokia nowhere, as they failed to deliver. When compared to what the iPhone’s interface can perform, the Finnish phones did not score high.
Launching a single new model every year is better than every week
Nokia is known for coming out with too many new models, like a new model each week. A newly released Nokia phone can become something of the past in 3 to 6 month time period. On top of that, those ‘new” models usually offer very similar features and functions. Users hate to carry an outdated or not-unique-enough phones. On the other hand, the iPhone smashing success proved that many users can and will buy a new model every year.
Users want hyped touch-based solutions
Hype, touch, coolness and desirability. Those are the things missing from Nokia phones. Prior to the iPhone era, Nokia was completely convinced that mobile phone users do not want touch-screens phones. This fatal assumption was based on the lousy performance of the Windows Mobile phones back then. I believe that had it not been for Apple, we’d be still pressing keys and suffering with Symbian nightmares till the current date.
Half-Arabs can kick ass
By birth, Steve Jobs is half Syrian. The Middle East was Nokia’s favorite playground, where it enjoyed selling its high-end phones with GREAT profit margins. All was good and green until the iPhone took that region by storm. It became the new trend for its users. To help keep its market share, Nokia lowered its prices and watched in pain while its profit margins dwindled, in that region – and everywhere for that matter.
Other Lessons We Can Learn from Nokia’s fall
1 – Don’t over-trust your customer polls and feedback
Nokia fell for what it considered its most strength point: staying close to customers and giving them what they requested, based on extensive studies and polls, and reliable feedback. My wife used to be loyal to keys-only phones, never to consider those touch-screen ones. Lately, she started to hear her colleagues and friends brag about how cool is the new iPhone.
This hype made her borrow my iPhone 3G to see for herself what this fuss is all about. When she used her two fingers to zoom in and out while going through our daughter’s photos saved on the iPhone, she changed her mind completely. She bought the iPhone 4 right aftwards.
2 – Always have backup plans for dramatic changes in customer’s behavior
Back in the old days, Nokia faced some lazy competition from the lousy Microsoft Mobile Windows phones, but those were (and still are) pathetic to say the least. You needed a stylus pen to navigate and launch applications. Synchronizing your phone with your PC had a 50-50 chance to fall through. Buying a Symbian application depended on how good you are at reading users’ walk-through and troubleshooting guides.
Nokia did not feel a real threat from crappy Windows Mobile phones, but that totally and dramatically changed overnight when Apple launched its iPhone. Nokia should have had “reliable” plans for a situation when its loyal customers would change their minds and start purchasing touch-based mobile phones.
3 – Less is more
How many times have your read this phrase before: Less is MORE? How many experts are shouting for consumers and companies to learn from this basic principle? Now count how many companies are following it! Take for example Samsung, which is following Nokia’s footsteps, launching endless mobile phone models left, right, and center. I challenge any veteran Samsung salesman to list ALL the models Samsung has launched in the last 2-3 years. For Apple’s iPhone, I can do that myself.