Strategic Analysis of
Nokia’s Smartphone Market
Corporate Policy
and Strategic Management
Group A
Content
Content
1. Smartphone – Introduction
Content
1. Smartphone – Introduction
2. Nokia – Description of company
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
8. Strategic Diagnosis of Nokia
Smartphone Industry
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
8. Strategic Diagnosis of Nokia
Smartphone Industry
9. Strategy Formulation
Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
8. Strategic Diagnosis of Nokia
Smartphone Industry
9. Strategy Formulation
10. Q&A
Smartphone - Introduction
Smartphone - Introduction
No industry standard definition of a smartphone
Smartphone - Introduction
Mobile phone offering advanced capabilities…
Smartphone - Introduction
PC-like
functionality
Smartphone - Introduction
a phone that runs complete operating
system software providing a standardized
interface and platform for application
developers
Smartphone - Introduction
A phone with
advanced
features
Smartphone - Introduction
Nokia
Description of
Company
Nokia – Description of company
Nokia envisions a world where
connecting people to what
matters empowers them the most
of every moment
Olli-Pekka Kallasvuo, Nokia CEO
Nokia – Description of company
Nokia – Description of company
Manufacturer of mobile devices
Nokia – Description of company
Manufacturer of mobile devices
Leader in converging Internet and
communication industries
Nokia – Description of company
Manufacturer of mobile devices
Leader in converging Internet and
communication industries
Wide range of devices
Nokia – Description of company
Manufacturer of mobile devices
Leader in converging Internet and
communication industries
Wide range of devices
Major consumer segments
Nokia – Description of company
Manufacturer of mobile devices
Leader in converging Internet and
communication industries
Wide range of devices
Major consumer segments
Music, maps, media, messaging and
games
Nokia Organization
Nokia Organization
Devices: Develops and manages the mobile device portfolio,
includes the sources of components.
Nokia Organization
Services & Software: Develops consumer Internet services
in 5 areas (music, maps, media, messaging and games), and
works to deliver the services in an easily, accessible
manner to consumers.
Nokia Organization
Markets: Manages supply chains, sales channel, brand and
marketing activities.
Nokia Organization
Corporate Development Office. Gives operational support
to the units and explores corporate strategic and future
growth opportunities.
Nokia Organization
Nokia Siemens Network: Provides wireless and fixed network
infrastructure, communications and networks service platforms
and professional services to operators and service providers.
Nokia Organization
NAVTEQ: Provides digital map data for automotive navigation
systems, mobile navigation devices, Internet-based mapping
applications, and government and business solutions.
Nokia Organization
2008 Facts and Figures
2008 Facts and Figures
Head office in Finland
2008 Facts and Figures
World’s #1 manufacturer
of mobile devices
2008 Facts and Figures
39% share of global device
market in 2008
2008 Facts and Figures
Mobile device volumes
468 million units
2008 Facts and Figures
Net sales EUR
50.7 billion
2008 Facts and Figures
Operating profit EUR 5.0 billion
2008 Facts and Figures
128,445 employees
at year end
2008 Facts and Figures
R&D investment EUR 6.0 billion
2008 Facts and Figures
Sales in more than 150 countries
2008 Facts and Figures
Strategic Objectives
Strategic Objectives
Irresistible solutions and vibrant
ecosystems
Strategic Objectives
Irresistible solutions and vibrant
ecosystems
Direct and continuous consumer
relationships.
Strategic Objectives
Irresistible solutions and vibrant
ecosystems
Direct and continuous consumer
relationships.
Best devices
Broadening their geographic reach
Broadening their device base will grow
their service business
Strategic Objectives
Irresistible solutions and vibrant
ecosystems
Direct and continuous consumer
relationships.
Best devices
Broadening their geographic reach
Broadening their device base will grow
their service business
Smart services
Creating relevant and personalized
services
Target: 300 million people using their
smart services by 2012
Why Nokia, Why
Smartphones?
Why Nokia, why smartphones?
Why Nokia, why smartphones?
Smartphone segment is one of the rapidly growing segments
in the mobile handset industry
Why Nokia, why smartphones?
Why Nokia, why smartphones?
Manufacturers Market Share YoY Growth Rate
Nokia 44.3% 10.4%
Rim 20.9% 77%
Apple 13.7% 62.6%
Though Nokia is a market leader in the entire mobile industry,
its performance in smartphone market is abysmal in comparison
with its competitors
Why Nokia, why smartphones?
Nokia
Why Nokia, why smartphones?
Nokia
Why Nokia, why smartphones?
Strategy for
Nokia Nokia to jump to
Star Category in
BCG Matrix
Why Nokia, why smartphones?
Strategy for
Nokia Nokia to jump to
Star Category in
BCG Matrix
Focusing on
external
atributes
Industry Analysis
Porter’s 5 Forces
Porter’s 5 Forces
Competitive Rivalry
(Intense)
• Rivalry is intense among existing players
• No much differentiation in product features
• Exit barriers have to be evaluated in
correlation with value chain analysis
Porter’s 5 Forces
Bargaining Power of Suppliers
(Moderate)
• Software provider
• Hardware provider
Porter’s 5 Forces
Bargaining Power of Customers
(High)
• More choice of product and limited
differentiation
• Elastic demand
• Less asymmetric information
• Less switching costs
Porter’s 5 Forces
Threat of New Entrants
(Low)
• Huge capital requirements
• Economies of scale
• Product differentiation
• Distribution channel
• Absolute cost advantage
• Governmental and legal barriers
• Retaliation
• Brand
Porter’s 5 Forces
Threat of Substitute Products
(Moderate)
• Depends on the impact of substitute products
• Variety of functions
• Other substitute products: notebooks, PDAs,
tablet PCs
Porter’s 5 Forces
Complements (Moderate)
Complements (Moderate)
Email
Complements (Moderate)
Email
Maps & GPS
Complements (Moderate)
Email
Maps & GPS
Applications
Music & other media related
applications
Utility applications
Internet based
…
SWOT Analysis
Strengths Weakness
• Brand Awareness • Not good at software
• Technology leader in • Performance of Symbian OS
Manufacturing Mobiles is lackluster
• Market leader • Increasing dissatisfaction
• Presence across 150 levels with its smartphone
countries • Very weak market share in
US
Opportunities Threats
• Huge loyal customer base • Rapidly changing industry
• Huge presence in • Chances of missing
developing countries Inflection point is high
• Can use its infrastructure • Threat of entry from new
business (Nokia Siemens players, Microsoft might
Network) to reduce the enter smartphones market.
bargaining power of mobile Google has just entered the
operators market with Nexus One.
Strategic Diagnosis of
Nokia Smartphone
Industry
Product Analysis
Product Analysis
Product Analysis
Nokia’s N97 is
feature-richer
than iPhone
Product Analysis
Nokia’s N97 is
feature-richer
than iPhone
Product Analysis
Nokia’s N97 is
feature-richer
than iPhone
BUT:
Product Analysis
Nokia’s N97 is
feature-richer
than iPhone
BUT:
Nokia sold 1st qtr
of launch: 500,000
phones
Product Analysis
Nokia’s N97 is
feature-richer
than iPhone
BUT:
Nokia sold 1st qtr
of launch: 500,000
phones
iPhone sold 1st
week of launch:
1,000,000 phones
Smartphone Satisfaction
Platform Satisfaction Index
iPhone 92%
Android 77%
Palm Pre 77%
Blackberry 73%
Palm Treo 70%
Symbian (Nokia) 66%
Windows 66%
Smartphone Satisfaction
Platform Satisfaction Index
iPhone 92%
Android 77%
Palm Pre 77%
Blackberry 73%
Palm Treo 70%
Symbian (Nokia) 66%
Windows 66%
Segmentation Analysis
Segmentation Analysis
Entertainment
Users
N Series
Segmentation Analysis
Entertainment
Users
N Series
Communication
Users
E Series
Segmentation Analysis
Entertainment
Users
N Series
Communication
Users
E Series
Information
Users
Segmentation Analysis
Entertainment
Users
N Series
Communication
Users
E Series
Information
Users
Global Internet traffic
through smartphones
Global Traffic September 2009 October 2009
By Platform Share Share
Apple iPhone 43% 50%
Symbian 29% 25%
(Nokia)
Android 10% 11%
RIM BlackBerry 8% 7%
Windows Mobile 5% 3%
Others 5% 4%
Global Internet traffic
through smartphones
Global Traffic September 2009 October 2009
By Platform Share Share
Apple iPhone 43% 50%
Symbian 29% 25%
(Nokia)
Android 10% 11%
RIM BlackBerry 8% 7%
Windows Mobile 5% 3%
Others 5% 4%
Product-line analysis
Product-line analysis
Broad
range of
products
Product-line analysis
NSeries launched since
2007: N76, N77, N81,
N92, N93i, N95
2008: N78, N79, N85, N96
2009: N86, N97, N97 Mini
Product-line analysis
NSeries launched since
2007: N76, N77, N81,
N92, N93i, N95
2008: N78, N79, N85, N96
2009: N86, N97, N97 Mini
In that same period,
Apple released only
one Smartphone:
iPhone
Product-line analysis
ESeries launched since
2007: E51, E61i, E65, E90
2008: E63, E66, E71
2009: E52, E55, E72, E75
Product-line analysis
ESeries launched since
2007: E51, E61i, E65, E90
2008: E63, E66, E71
2009: E52, E55, E72, E75
In that same period,
Blackberry
has launched far
fewer phones than
Nokia.
Product-line analysis
Product-line analysis
Product-line analysis
Product-line analysis
Product embraced by
the right consumer
Product-line analysis
Product embraced by
the right consumer
Product-line analysis
Product embraced by
the right consumer
Sufficient consumers in
each segment
Product-line analysis
Product embraced by
the right consumer
Sufficient consumers in
each segment
Product-line analysis
Product embraced by
the right consumer
Nokia
is doing
Sufficient consumers in
each segment
neither
Product-line analysis
Product embraced by
the right consumer
Nokia
is doing
Sufficient consumers in
each segment
neither
Value Chain
Value Chain
Telecom operators
exert control
Value Chain
Telecom operators
exert control
Telecom operators
influence the total
sales of
smartphones
Value Chain
Voice ARPU is going
down
Value Chain
Voice ARPU is going
down
The future is DATA!
Value Chain
Value Chain
Strategy
Formulation
Product differentiation
Product differentiation
Applicactions are the product
differentiatior
Product differentiation
Applicactions are the product
differentiatior
Nokia’s OVI Store
Product differentiation
Applicactions are the product
differentiatior
Nokia’s OVI Store
Projection: in 2014 6.67 billion
applications would be downloaded
Product differentiation
Applicactions are the product
differentiatior
Nokia’s OVI Store
Projection: in 2014 6.67 billion
applications would be downloaded
Increase User Satisfaction Index
Product differentiation
Applicactions are the product
differentiatior
Nokia’s OVI Store
Projection: in 2014 6.67 billion
applications would be downloaded
Increase User Satisfaction Index
Alliance with software developers
Product differentiation
Applicactions are the product
differentiatior
Nokia’s OVI Store
Projection: in 2014 6.67 billion
applications would be downloaded
Increase User Satisfaction Index
Alliance with software developers
Increase community strengh of Maemo
Product differentiation
Applicactions are the product
differentiatior
Nokia’s OVI Store
Projection: in 2014 6.67 billion
applications would be downloaded
Increase User Satisfaction Index
Alliance with software developers
Increase community strengh of Maemo
Cost differentiation
Mobile Operating
Manufacturer Profits
Nokia 30.7
Apple 36.4
Samsung 13.3
RIM 15.4
LG 4.2
HTC 5.1
Motorola -0.1
Sony Ericsson -0.1
Cost differentiation
Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4
Samsung 13.3
RIM 15.4
LG 4.2
HTC 5.1
Motorola -0.1
Sony Ericsson -0.1
Cost differentiation
Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4 Pressure on
Samsung 13.3 competitors
RIM 15.4
LG 4.2
HTC 5.1
Motorola -0.1
Sony Ericsson -0.1
Cost differentiation
Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4 Pressure on
Samsung 13.3 competitors
RIM 15.4 Cost leadership
LG 4.2 an invincible
HTC 5.1 position against
Motorola -0.1 competitors
Sony Ericsson -0.1
Cost differentiation
Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4 Pressure on
Samsung 13.3 competitors
RIM 15.4 Cost leadership
LG 4.2 an invincible
HTC 5.1 position against
Motorola -0.1 competitors
Sony Ericsson -0.1 Fight head-on
with Apple
Cost differentiation
Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4 Pressure on
Samsung 13.3 competitors
RIM 15.4 Cost leadership
LG 4.2 an invincible
HTC 5.1 position against
Motorola -0.1 competitors
Sony Ericsson -0.1 Fight head-on
with Apple
Competitive Strategy
NOKIA
Mass
Market Broad
Low cost mass differentiation
market strategy strategy
Niche
Market Focus
Low cost niche differentiation
market strategy strategy
Cost Product
Advantage Differentiation
Competitive Strategy
NOKIA
Mass
Market Broad
Low cost mass differentiation
market strategy strategy
Niche
Market Focus
Low cost niche differentiation
market strategy strategy
Cost Product
Advantage Differentiation
Competitive Strategy
NOKIA
Mass
Market Broad
Low cost mass differentiation
market strategy strategy
Niche
Market Focus
Low cost niche differentiation
market strategy strategy
Cost Product
Advantage Differentiation
Functional Strategy
Functional Strategy
Reduce product portfolio
Functional Strategy
Reduce product portfolio
Opportunity for targeting
information users
Functional Strategy
Reduce product portfolio
Opportunity for targeting
information users
Target specific customers and
specific lifestyles
Functional Strategy
Reduce product portfolio
Opportunity for targeting
information users
Target specific customers and
specific lifestyles
Connect emotionally with the target
Functional Strategy
Reduce product portfolio
Opportunity for targeting
information users
Target specific customers and
specific lifestyles
Connect emotionally with the target
Define roadmap of Operating Systems
(Symbian or Maemo)
Functional Strategy
Reduce product portfolio
Opportunity for targeting
information users
Target specific customers and
specific lifestyles
Connect emotionally with the target
Define roadmap of Operating Systems
(Symbian or Maemo)
Tight vigil on inflection points
Functional Strategy
Reduce product portfolio
Opportunity for targeting
information users
Target specific customers and
specific lifestyles
Connect emotionally with the target
Define roadmap of Operating Systems
(Symbian or Maemo)
Tight vigil on inflection points
Corporate Strategy
Continue divestments
Concentrate resources and energy in
smartphone business
Corporate Strategy
Continue divestments
Concentrate resources and energy in
smartphone business
Q&A
