Running head: THE RISE AND FALL OF NOKIA

Fundamental elements of the rise and fall Nokia

Jiangwei Cao
Kyongson Park
Purdue University

THE RISE AND FALL OF NOKIA

Fundamental elements of the rise and fall Nokia

As a giant telecommunication company, Nokia has been successful for its mobile
phone in the early 2000s, dominating the worlds mobile phone market. More consumers
had great compassion and pursued Nokia phones over all other brands as seen by the
global market shares graph (Figure 1). However, Nokias market started to fall when
facing the game-changing iPhone in 2007. Many critics had their own opinions on the
rise and fall of Nokia. Some claimed the functionality and design that led to its rise and
the excessive focus on hardware led to its fall. Nevertheless, I want to argue that it is the
price that dramatically increased Nokias market share while the complacency put Nokia
in serious trouble.
In the article The Rise and Fall of Symbian Ltd., Wood (2013) pointed out
some fascinating functionalities: Nokias Symbian platform had developed elements of
the dominant design years before the iPhone or Android. He spoke highly of the design of
the Nokia phone, such as flipped open, some with minuscule two-inch screens, and
some designed to look like fashion accessories (p.7). Consumers were amazed that
mobile phones could have variant designs and were created by Nokia. The era of flat,
rectangular screens later became mainstream. In the article The Rise and Fall of a
Mobile Empire Green (2011) argued that Nokia had always been a company
concentrated on hardware. Nokia excelled with hardware development while the lack of
focus on software advancement aided in their decline.

THE RISE AND FALL OF NOKIA

However, the design and functionality didnt necessarily mark the success of
Nokias mobile dominancy. Although the variety of design attracts consumers, this
feature may not be the only reason consumers purchase Nokia phones. In fact, consumers
only needed a phone they could text and call in the early 2000s; the supplemental
functionalities only slightly improved user experience since consumers didnt have great
expectations on phones yet. On the other hand, the concentration on hardware didnt
provide Nokia the ability to produce hardware for its own products, which can be
accounted as a failure to Nokias innovation.
In my perspective, the reason why Nokia made such a glorious accomplishment is
due to its affordable price. Take the Worlds best-selling phone Nokia 1100 as an
example: the total units sold until now is 250 million worldwide and its just a basic
feature phone. Green claimed the selling points of basic feature phones revolve around
low cost, simplicity and ease of use. The main focus is on calls, text messaging, alarm
clock, etc. instead of additional features reduced price and targeted consumers in
developing countries, such as China, to make the Nokia phone affordable. When it comes
to the fall of Nokia, complacency is the most crucial cause. In the article Nokia: The rise
and fall of a mobile giant, Lee (2013) analyzed the era of complacency of Nokia. He
believed that complacency kicked in and stopped Nokia from continuing to produce
innovative and leading technology. They felt they could do no wrong. (p.12) It is
obvious that Nokia was unaware of potential competitors on the market. Meanwhile,
Nokia continued using Symbian mobile system and solid buttons for several years on its
smartphones without substantial improvements or upgrades. While what the new
generation of pioneers at Apple understood was that you needed to focus just as heavily

THE RISE AND FALL OF NOKIA

on the software when your hardware is essentially a rectangle with a screen. (p.32)
Asserted by Edita (2002) from Nokia-The Inside Story Simply, this supports the idea
that being complacent and lack of innovation and focus on software led Nokia fall.
Theres no denying that design and functionality did play some role in Nokias
rising market as supported by Lee; he attributed Nokias success greatly on its design
ethos, The user interface of its early phone operating systems was fancy and intuitive,
and bound to a range of devices that grew increasingly diverse as the mobile market
grew. Nevertheless, when considering the consumers perspective, what do we take into
consideration first when buying a phone? Its very likely the price and not design matters
most. When purchasing a phone, consumers usually do not get the opportunity to
test it out before purchasing. This contributes to price being of higher importance
because consumers are not always aware of their personal preferences until they
use it on a regular basis. Also, as Green suggested, these phones were ideal for those
who wanted the convenience and utility of a mobile phone but werent interested in
paying for flashy design or huge feature sets. That is, consumers werent actually
looking for phones with fancy design but core functionalities provided by low price for
daily communication. Complacency is the most significant determining factor of the
fall of Nokia. It affects the decline far more than the lack of concentration on
hardware. In the article Nokia: The rise and fall of a mobile giant, Ben (2013)
claimed, Nokia missed the importance of software. (p.8) Clearly, Nokias excessive
focus on hardware and software led to its fall. Just like Green said, Nokia didnt realize
that it needed to focus just as heavily on the software when its hardware is just a
rectangle screen. As a Nokia 5230 user, I had a great experience with this smartphone,

THE RISE AND FALL OF NOKIA

due to it being so similar to the touch screen on the iPhone. However, the phone was only
popular for a short time then faded away from consumers sight. I strongly believe it was
Nokias self-satisfaction that delayed the invention of a big touch screen phone because
consumers had experienced the iPhone and other android devices before the one from
Nokia was introduced. This made Nokia phone not as appealing and fascinating as the
other currently popular phones.
The glorious era of Nokia has ended, but critics are still concerned on its most
influential reason for the rise and fall as this case can take a deadly toll to other
companies. As some critics suggested, Nokias rise is due to its phones various designs
and functionalities while the hardware concentration led to its fall. My argument is that
the rise mainly depends on the low price of Nokias phones as its the first thing
consumers take into consideration and Nokias fall is a result of its complacency on
current market share and less innovation on mobile operation software. The significance
of this argument is to let other tech and mobile companies learn the lesson from Nokia
and be aware of how to avoid potential failure.

THE RISE AND FALL OF NOKIA

References
Andersen, J. B. (2011). Nokias Rise and Relative Fall: What Lessons for European
Innovation Policy?. Innovation Management database.
Bilton, N. (2013, Sep 3). The end of an Era in Mobile. New York Times.
Retrieved from 2014, Nov 5.
http://bits.blogs.nytimes.com/2013/09/03/the-end-of-an-era-inmobile/?_php=true&_type=blogs&_r=1
Green, S. (2014, Jul). Nokia: The rise and fall of a mobile empire. Micro Mart, , 66-69.
Retrieved from 2014, Nov 18
http://search.proquest.com/docview/1546427406?accountid=13360
Lee, D. (2013, Sep 3). Nokia: The rise and fall of a mobile giant. BBC News.
Retrieved from 2014, Nov 5
http://www.bbc.com/news/technology-23947212
Wood, D. (2011, March 30). Tradeoffs OF open Innovation Platform Leaderships: The
Rise And Fall of Symbian Ltd. User and Open Innovation. 2, 3-48.

THE RISE AND FALL OF NOKIA

Appendix

Figure 1: Mobile handsets global market shares by volume