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If you live in the US, then it is hard to
believe how dominant Nokia was in
mobile. For a time, one in every three
mobile phones sold was a Nokia. But
they were never a major force in the
US for various reasons. But they built
a million phones a day back when the
market was around a billion phones per
year.
The story of how Nokia rose from a
forest product company to a leader in
mobile phones has been written about
many times and is a business school
case-study.
But, like many other manufacturers
such as Blackberry (then called RIM),
they underestimated the impact of the
iPhone. The mobile world changed in
one hour in 2007 when Steve Jobs got
on the stage and announced three new
products:
The first one is a widescreen iPod
with touch controls. The second is
a revolutionary mobile phone. And
the third is a breakthrough Internet
communications device.
Of course they turned out not to be three
devices, but just one. And a bewildered
Starbucks barista named Hannah Zhang
became the first recipient of a real call
from an iPhone when Steve placed, and
then canceled, an order for 4000 lattes
to-go live on stage at YBCA. If you have
never watched it, here is the video of
the entire keynote, a piece of history
captured in a little over an hour.
So what happened? Let’s start the
story in 2008. Under Nokia’s then CEO
Olli-Pekka Kallasvuo, Nokia had their
first decline in revenue and profits.
Handsets were still very profitable, it
was their networking division which was
struggling (ironically, that networking
division is now the largest in the world,
having swallowed Siemens’ networking
business,
Motorola’s
networking
business, and Alcatel-Lucent). Nokia’s
board brought in Stephen Elop from
Microsoft to be CEO.
In a period of three years, Elop cratered
Nokia’s handset business. At the start
of his tenure, Nokia’s handset business
was split 50:50 between smartphones
and feature phones (AKA dumb phones).
Dumb phones fell by a half during his
tenure, which might be expected if
everyone was switching from Nokia
feature phones to Nokia smartphones.
But they were not. Smartphones went
down even more, by two thirds. All
this during a period when the mobile
business was experiencing very strong
growth.
One of the really dumb things Elop did
was to announce in early 2011 that
future Nokia phones would no longer
use their internal operating system
Symbian (which was probably not
up to running a modern competitive
Nokia's Rise and Fall...
and Maybe Rise Again
Paul McLellan, Cadence
60 l New-Tech Magazine Europe