ON NOKIA’S DOWNFALL
of Engineering and Technology, Taxila
of Engineering and Technology, Taxila
of Computer Engineering
January 15, 2018
Dr. Awais Azam
As I was given the task
of compiling a report on the reasons for the downfall of NOKIA mobile phone
company, I am submitting the attached report entitled Research report on Nokia.
The report examines the
reasons behind the downfall of the company; the issues and weaknesses related
to it and includes some suggestions for the company to regain the lost status.
I hope you find this
Muhammad Saad Kayani
Student of Computer
Chapter 1. 4
1.1 Abstract. 4
Chapter 2. 5
2.1 Introduction. 5
2.2 Background to
2.3 Suggestions to regain
the lost status. 7
2.3.1 Dropping the prices. 7
2.3.2 Change the
advertisement strategy. 7
2.3.3 Modify the products. 7
2.3.4 Create more hype. 7
Chapter 3. 7
3.1 Conclusion. 7
Chapter 4. 8
4.1 Bibliography. 8
4.2 References. 8
report was commissioned to examine why the sales volume of Nokia Mobile Phone
Company has dropped over the past few years and to recommend ways of increasing
the volume. What happened to Nokia is no secret: Apple and Android crushed it.
But there are many other reasons for that failure. Since the rise of smart
phones Nokia also got into the act and produced its first smart phone in 1996
with a touch-screen and internet enabled at the end of nineteen nineties. But
Nokia was still not able to produce what the people actually wanted. It spent a
lot of money on research and development. Nokia not only failed to recognize
the importance of software but also underestimated how important the transition
would be. It is recommended that company take immediate measures to launch and
promote the smart phones with the technology demanded. And launch campaign contains endorsements by
renowned mobile phone experts.
Nokia was founded by Fredrik Idestam
in Finland as a paper manufacturing company. In 1920, Finnish Rubber Works
became a part of it and later on in 1922, Finnish Cable Works joined them. All
the three companies were named as Nokia Group in 1967.
In late 1970s, Nokia
started taking an active interest in the power and electronics business and by
1987, consumer electronics became Nokia’s major business. Nokia created the NMT
mobile phone standard in 1981 and launched the first NMT phone, Mobira Cityman,
in 1987. The company focused on two businesses- mobile phones and
telecommunications networks. 
The company is viewed
with national pride by Finns, as its successful mobile phone business made it
by far the largest worldwide company and brand from Finland. At
its peak in 2000, during the telecoms bubble, Nokia alone accounted for 4% of
country’s GDP, 21% of total exports and 70% of Helsinki Stock Exchange market capital.
2.2 Background to
Back in 2006, when OPK took over to
run Nokia, Nokia was the world’s bestselling mobile phone maker. They were
getting almost 35% of the market share with Motorola it’s only competent
getting nearly 20% of share from the market. The first think that happened to
the mobile phone market was the Entrance of Apple into the phone space, with
first iphone prototype demonstrated in January, 2007.
Up to 2007, Nokia was the
best marketing machine in the mobile telecoms. It was loved by the tech media
and had the best customer loyalty in the world. But Apple proved to be far
better than Nokia in marketing. And its customer loyalty also proved to be
legendary. According to the maker, the iPhone was the best smart phone ever and
because Steve Jobs said so, that became the storyline. The truth didn’t matter.
That the iPhone 2G was not even a proper smart phone, it didn’t even offered
the users the ability to install apps and didn’t support industry standards
like MMS. But a year later installing apps was made possible. The iPhone was
not a 3G device, didn’t have GPS and stereo Bluetooth. But that didn’t matter.
If your smart phone didn’t have the one cool thing the iPhone did –a touch
screen – it seemed your phone was old fashioned.
With time the iPhone was
introducing more and more features and as a result Nokia was facing more
competition and was rapidly falling from grace. Apple gained 14% market share
of smart phones in no time. While facing a rival like Apple what Nokia needed
from CEO, was a showman a brawler. OPK was not a showman and Nokia couldn’t
afford to go out and fight. What Nokia needed was over-hype and super
celebration of its huge legacy of achievements and every possible new tidbit it
was doing. But Apple was a champion in marketing.
In the meantime the profit margins of Nokia fell down
from 21% to 4% only. There was another mistake, Nokia overestimated the
strength of its brand, and believed that even if it was late to the smart phone
game it would be able to catch up quickly. Nokia continued to insist that its
superior hardware design would attract user. By 2010 Nokia had already
introduced a lot disappointing phones and its operating system had already
proven too buggy and unintuitive to attract customers.
Following chart shows how
rapidly the volume of Nokia sales has decreased.
Figure 1: Chart showing sales over the years
2.3 Suggestions to regain the lost status
2.3.1 Dropping the prices
The first remedy is to drop the prices of the
smartphones. This is usually adopted by the companies with a large economy for
sales. In need those companies sale at loss as well as on a marginal low cost
than their competitors.
2.3.2 Change the advertisement strategy
As seen Apple and Android have great promotion and
advertisement strategies so if Nokia revisits its promotion strategy and turns
to some mobile phone experts while launching new models would be a great step
towards regaining the lost grace.
2.3.3 Modify the products
Nokia should learn from
its previous mistakes and should not only focus on hardware technology but also
modify and introduce some new software technologies so as to meet the public
demands. And they should consider what their customers want from them rather
than what they can produce for their customers.
2.3.4 Create more hype
Most of the new phones that Nokia is producing are
quite up to the mark. But as its competitors it should create more hype before
the launch of a new product. It should make good use of social media, print
media and electronic media.
From all the facts we conclude that the
downfall of Nokia was obviously caused by the introduction of Apple and Android
but there were many other reasons due to which Nokia has lost all its grace. We
saw that if Nokia had adopted a better marketing policy it could’ve survived in
the mobile phone market. Somehow the CEO was also responsible because he didn’t
take the right decisions at right time which further worsen the situation. So
now if Nokia tries to focus on four main policies i.e. make competitive
products, satisfy the customers, modify the technology and revisit the
Vilpponen, Antti (4 September 2013). “Nokia: Finland mourns the demise of its
proud tech heritage”.
Kelly, Gordon. “Finland and Nokia: an affair to
3. Bloomerg (4 September 2013). “Finland mourns loss of national icon Nokia”.