Professional Documents
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I. Introduction
This case study will examine the development and implementation of corporate
strategy of the Nokia Corporation. This case study will examine in particular recent
devices. In addition, Nokia offers communication services, software, as well as, phone
and internet based content. Nokia includes a network management segment called Nokia
Siemens Networks which offers network based products and services. This case study
Nokia has the largest piece of the mobile device market but has seen very strong
challenges by RIM’s Blackberry, Apple’s iPhone and a myriad of smartphones running Google’s
Android. Nokia’s Symbian operating system is showing its age compared to these newer
smartphone offerings. During 2010 Nokia went from 36.6% of the mobile phone market to
27.1%. In the fourth quarter of 2010 Nokia’s Symbian OS was replaced by Android as the most
widespread platform (Nagamine, 2011). The top three competitors to Symbian are beginning to
take a serious bite of Nokia’s smartphone market share. Table 1 below shows a comparison of
2009 vs. 2010 smartphone OS market sales. Nokia took a big hit to its market dominance to due
increased competition from Android and Apple (iOS) sales (Sandstrom, 2011).
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device is a growing choice of phone users across the world. Although the mobile device
market saw declines in 2009, there was significant growth in 2010. It is anticipated that
the largest market segment, Asia-Pacific, will see a volume growth of 98.7% by 2014
compared to 2009. This equates to a market value of almost $97 billion (Nagamine,
2011).
with a few smaller domestic competitors. There is a high cost to entry as the mobile
device industry is putting out new and increasingly more advanced products quarterly
(Datamonitor: Mobile Phones, 2010). These new devices require a significant amount of
investment capital to develop and support. In addition, mobile devices require access to
networks. A company either has its own network or must enter into partnerships with
The bargaining power of suppliers is low with respect to Nokia. As cellphone and
smartphones become more prevalent the number of hardware and component vendors is
increasing. The suppliers are primarily in China which means buyers can solicit multiple
component vendors without expending significant resources. There are few single-source
buyers (Doz & Kosonen, 2008). One discriminator when doing business with a company
the size of Nokia is the ability to provide the volume of product required. This can give
The bargaining power of the buyer is fairly high. There are many options with
regard to mobile device providers. In addition, service carriers, such as AT&T, Sprint and
Verizon are the entities that put the various products before the end-user. This requires
that Nokia provide incentives to carriers. This is particularly true in the United States
where Nokia does not have as strong a presence as in Europe and Asia (O’Brien, 2009).
Strengths Weaknesses
Strengths
As the industry leader in mobile devices, Nokia’s name carries a lot of weight.
Nokia has a reputation for quality and innovation. In 2009, Nokia’s brand was rated the
fifth most valued brand in the world (Datamonitor: Nokia, 2010). In the Asia Pacific
sector Nokia ranks in the top 20 of most trusted brands and in India specifically it ranked
number 1. Nokia’s name is practically gold in the largest emerging markets. Nokia’s
name recognition and reputation allows it to command a higher price and carry that into
the largest markets in the world. As noted in table 1, Nokia hold 37% of the world market
which is almost 20 points higher than its next closest competitor Samsung. Nokia also
has the edge with respect to its Symbian operating system (Sandstrom, 2011). Even with
Weaknesses
Although Nokia has the largest mobile device market share in the world it has a
rather small presence in the US market. The US market made up only 4.2% of Nokia’s
2009 revenues equaling $2.4 billion compared to its main US competitor Motorola which
garnered $11.8 billion and RIM bringing in $8.6 billion (Datamonitor: Nokia, 2010).
With the success of the iPhone and Android based phones Nokia will have a difficult
time grabbing market share in the US in the future. In addition, being a second-rate
competitor in the US could tarnish Nokia’s reputation as a key innovator when compared
Symbian is an open standard OS that Nokia has only so much control over. It is
managed by a meritocracy which makes it less than flexible and innovative. It looks
dated when put up against Android and iOS and is not as enterprise friendly as RIM’s
Nokia Case Study 6
offerings. Nokia’s CEO, Stephen Elop indicated that Symbian was not the platform that
Nokia needed to meet the challenges in the future (Sorrel, 2011). Although outdated,
Symbian has been a solid product. Nokia will need to be careful in how it replaces its
flagship OS.
Opportunities
Partnerships and acquisitions will be key to future growth for Nokia. With a
hyper-competitive environment and strong players like Samsung, Apple, Motorola, RIM
and HTC; Nokia will need strong business partners to stay on top of the market. Nokia
has made several moves of late forming alliances with Yahoo!, SAP, Intel and New
Alliance. These partnerships will strengthen Nokia’s services. The most watched
partnership will be Nokia’s deal with Microsoft to run Windows Phone 7 on the next
generation of smartphones. It is a big gamble for both companies as Nokia needs a new
significantly or the next several years. In the US it is expected that the3G/BB consumer
base will increase from 43% (2009) to 60% by 2013 (Datamonitor: Nokia, 2010). With a
basic cellphone market that is fairly well saturated the 3G/BB market has significant
opportunity for growth. It is also a way for Nokia to make inroads to the US market.
Along with 3G/BB growth Nokia can continue to bring new and innovative
chips into future device offerings. This short-range communication capability allows
electronic keys (Hernandez, 2010). The prospects are fairly broad and highly marketable
Nokia Case Study 7
to both consumers and retailers. This is just one area where Nokia is ahead of the pack
Opportunities
market. With few exceptions, Nokia’s competitors are large, are well capitalized and
have reputations as innovative companies. With a potential market of $97 billion dollars
in the Asia Pacific segment alone and a US market that can’t seem to get enough
smartphones, it may seem a bit like a feeding frenzy. With competitors coming out with
new products with improved capabilities every 6 months it will be difficult for Nokia to
roll out a new generation of phones while at the same time taking on a new OS via
Windows Phone 7 (Parker & Ward, 2011). If not executed cleanly it could spell the end
Nokia has been in a legal battle with Apple over patent infringement for several
years. It has been the clash of two titans over intellectual property. Should Nokia lose the
cases filed by Apple it could result in huge damages and a black eye. Patent litigation is a
(Bradley, 2011).
IV. Evaluation
Nokia is at a crossroads. It has been the market leader of mobile devices for quite
a few years. So much so that it is a significant portion of the Finnish GDP. Over the last
two years significant technological breakthroughs have allowed other companies to begin
challenging Nokia’s position. Nokia evaluated its mobile device offerings and identified
Nokia Case Study 8
that the Symbian OS was no longer the innovative product needed to move forward.
Nokia, in an effort to inject effective leadership into its mobile business during turbulent
times, hired ex-Microsoft head of the Business Division, Stephen Elop as CEO. Mr. Elop
Next Mr. Elop publically stated that Nokia would continue to support Symbian
primary OS. This was viewed as a defensive move by Nokia to protect its current install
base. However, shortly after Elop announced an agreement between Nokia and Microsoft
to drop Symbian as the ongoing platform and adopt Windows Phone 7 as the new Nokia
OS. This could be considered a strike where your competitor least expects it. Nokia had
been making overtures to Google regarding adoption of Android (Lawton, Lublin, &
Sandstrom, 2011). Then Mr. Elop publically announced Symbian as the way forward
only to announce later a Microsoft deal. This agreement between Nokia and Microsoft
could be a marriage made in cyberspace or the death-knell for Nokia. Nokia must make
gains in the US market and Microsoft needs a solid hardware platform for its Windows
Phone 7 OS. With Nokia’s hiring of Stephen Elop as CEO it gave the company the ability
to move more quickly to establish a partnership with Microsoft and keep Google and the
others off balance and less able to respond. In addition, Mr Elop speaks Microsoft. He is
part of the Microsoft culture and understands what is needed for the two entities to work
together.
With regard to Apple’s patent infringement cases against Nokia, with the adoption
of Windows Phone 7, Apple will be less likely to take on Nokia knowing that Microsoft
now has a vested interest in the outcome of the suits. This partnership gives Apple a
reason to drop the suits gracefully and it frees up Nokia’s resources for other battles.
Nokia Case Study 9
V. Conclusion
Nokia has been an industry leader for many years however the market has
changed quickly and Nokia must right itself. It is doing so with strategic partnerships,
technological innovation and leveraging its brand recognition. Its relationship with
Microsoft will be critical to its success. There is significant risk for Nokia as Microsoft
must deliver a world-class OS or customers will turn to Apple, RIM and Android which
are already world-class OSs. Microsoft, on the other hand already knows Nokia will
which has already been tarnished by previous mobile OS offerings. This is an aggressive
move for Nokia but one that could be hugely beneficial in the long run.
Nokia Case Study 10
References
Bradley, T. (2011, February 11). Nokia-microsoft alliance could end patent war with apple. PC
http://www.pcworld.com/businesscenter/article/219431/nokiamicrosoft_alliance_could_e
nd_patent_war_with_apple.html
Datamonitor: Mobile Phones. (2010). Mobile Phones in Asia-Pacific, 1-39. Retrieved from
EBSCOhost.
Datamonitor: Nokia Corporation. (2010). Nokia Corporation SWOT Analysis, 1-10. Retrieved
from EBSCOhost.
Doz, Y., & Kosonen, M. (2008). The Dynamics of Strategic Agility: Nokia's rollercoaster
Hernandez, W. (2010). Nokia to Add NFC Chips to Its Phones in 2011. American Banker,
Lawton, C., Lublin, J. S., & Sandtrom, G. (2011, February 10). Nokia, Microsoft talk cellphones.
Wall Street Journal - Eastern Edition. pp. B1-B5. Retrieved from EBSCOhost.
Nagamine , K. (2010). Mobile Phone Recovery Continues with Nearly 22% Growth in First
http://www.idc.com/about/viewpressrelease.jsp?
containerId=prUS22322210§ionId=null&elementId=null&pageType=SYNOPSIS
O’Brien, K. (2009, October 19). Nokia struggles to regain market share in the U.S. The New
Parker, A., & Ward, A. (2011, February 25). Downwardly mobile. Financial Times,9. Retrieved
Sandstrom, G. (2011, February 09). Nokia market share slides - gartner . The Wall Street
Sorrel, C. (2011, February 11). Nokia kills symbian, teams up with microsoft for windows phone
team-up-to-build-windows-phones/
Yoshida, J. (2010, February). Symbian lacks 'newborn' cachet in U.S. market. Electronic
Engineering Times,(1576), 4,6. Retrieved February 27, 2011, from ABI/INFORM Trade