12th Sep 2013

The rise and fall of Nokia

Though the honour of inventing the mobile phone goes to Motorola, Nokia for many years had a reputation as the king of mobiles - at its highest point accounting for 40% of the market share in mobile phone sales. In 2003 the company launched the Nokia 110 – with a record 250 million sales this is the most popular mobile phone of all time. I think its fair to presume that we all had a Nokia at some stage.

Nokia is just shy of its 150th anniversary, and during this time the company has undergone many transformations. The company had rural beginnings in Southern Finland as a paper mill. The mill was on the banks of the Nokianvirta River, and the Nokia name was born. Nokia has also made products as diverse as galoshes and televisions before becoming a brand synonymous with mobile phones.

Nokia’s falling fortunes essentially coincided with the introduction of the iPhone and Androids. The market changed, Nokia started to lose its star power and the company’s share price fell dramatically. It has struggled ever since. Brand loyalty - which used to work in Nokia’s favour - now has customers unwillingly to venture away from their iPhones or Samsungs.

In an attempt at recovering some of this lost ground, in 2011 Nokia brokered a deal with Microsoft to use Windows Phone as its primary smartphone OS favouring it over the more popular Android system of Google. Interestingly Stephen Elop – a former Microsoft executive and the first non-Finnish CEO of Nokia – was behind the deal. Yet, today Nokia holds just 4% of the market share in smartphones.

In a further development last week Microsoft acquired Nokia’s devices and services division for over $7 billion. Microsoft are no doubt hopeful that by buying Nokia’s phone business, together they can earn a top spot in a market dominated by Apple and Google.

In a press release about the venture Risto Siilasmaa, Chairman of the Nokia Board of Directors said  "For Nokia, this is an important moment of reinvention”. Whether this deal can reverse the fortunes of two companies who are lagging dangerously behind in a competitive market remains to be seen. But for Nokia, a company so familiar with reinvention, we may hope so.

Hilda Goold

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