Nokia Case Study

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Nokia Case Study February 27, 2011

2010 smartphone OS market sales. . During 2010 Nokia went from 36. Introduction This case study will examine the development and implementation of corporate strategy of the Nokia Corporation. 2011). 2011). software. This case study will focus primarily on the mobile device market. Porter Five Force Analysis Rivalry Among Existing Competitors Nokia has the largest piece of the mobile device market but has seen very strong challenges by RIM’s Blackberry. Nokia is a Finnish company that is the world’s largest manufacturer of mobile devices. as well as.6% of the mobile phone market to 27. Nokia offers communication services.1%.Nokia Case Study 2 I. In the fourth quarter of 2010 Nokia’s Symbian OS was replaced by Android as the most widespread platform (Nagamine. II. Nokia includes a network management segment called Nokia Siemens Networks which offers network based products and services. Nokia took a big hit to its market dominance to due increased competition from Android and Apple (iOS) sales (Sandstrom. Apple’s iPhone and a myriad of smartphones running Google’s Android. In addition. The top three competitors to Symbian are beginning to take a serious bite of Nokia’s smartphone market share. Nokia’s Symbian operating system is showing its age compared to these newer smartphone offerings. This case study will examine in particular recent events involving Nokia’s cellular phone business. phone and internet based content. Table 1 below shows a comparison of 2009 vs.

9% 1.3% 18.9% 3.1% Chg -9.878 6. 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.452 46.4% 8. Asia-Pacific.432 2009 Mkt Shr 46.3% Threat of Substitute Services Threat to the mobile device industry is low as an untethered communication device is a growing choice of phone users across the world.3% -4. In addition. These new devices require a significant amount of investment capital to develop and support.890 15.Nokia Case Study 3 Table 1: 2010 smartphone sales by Operating System. This equates to a market value of almost $97 billion (Nagamine. mobile devices require access to networks.2% 3. Threat of New Entrants The mobile device market is made up primarily of large multinational companies with a few smaller domestic competitors.9% 14.0% 15.347 24.798 34.598 12.225 47.6% 22. will see a volume growth of 98.7% 6. A company either has its own network or must enter into partnerships with network providers.7% 16. 2010).8% 2009 80.031 10. there was significant growth in 2010.8% -3. It is anticipated that the largest market segment. Although the mobile device market saw declines in 2009. units in thousands OS Symbian Android RIM iOS Microsoft Others 2010 111.5% -2. Both avenues are costly as well.7% 4.417 2010 Mkt Shr 37.577 67.9% 19. Bargaining Power of Suppliers .378 11. 2011).7% by 2014 compared to 2009.

such as AT&T. This can give an edge to on particular supplier. 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). In addition. Strengths. Conversely. One discriminator when doing business with a company the size of Nokia is the ability to provide the volume of product required. Sprint and Verizon are the entities that put the various products before the end-user. III. There are many options with regard to mobile device providers. This requires that Nokia provide incentives to carriers. there is opportunity to use multiple vendors to product one type of component which reduces supplier power. Bargaining Power of Buyers The bargaining power of the buyer is fairly high. As cellphone and smartphones become more prevalent the number of hardware and component vendors is increasing. Opportunities and Threats (SWOT) Analysis Table 2: Nokia SWOT Strengths • Strong brand reputation Weaknesses • Weak penetration in US market • Sizeable market Opportunities • Partnerships and acquisitions • • Growth of 3G and broadband demand New technologies and services • Aging product operating system Threats • hyper-competition • legal challenges from competitor . Weaknesses.Nokia Case Study 4 The bargaining power of suppliers is low with respect to Nokia. 2008). The suppliers are primarily in China which means buyers can solicit multiple component vendors without expending significant resources. There are few single-source commodities so it is difficult for individual vendors to apply significant pressure to buyers (Doz & Kosonen. service carriers.

Nokia Case Study Strengths 5 As the industry leader in mobile devices. Weaknesses Although Nokia has the largest mobile device market share in the world it has a rather small presence in the US market. Nokia’s name is practically gold in the largest emerging markets. being a second-rate competitor in the US could tarnish Nokia’s reputation as a key innovator when compared to RIM. The US market made up only 4. 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 carries a lot of weight. 2011).4 billion compared to its main US competitor Motorola which garnered $11. 2010). Motorola and Apple (Yoshida. It looks dated when put up against Android and iOS and is not as enterprise friendly as RIM’s . Even with aggressive competitors in the market Nokia has a fairly large buffer. Nokia also has the edge with respect to its Symbian operating system (Sandstrom. Nokia’s name recognition and reputation allows it to command a higher price and carry that into the largest markets in the world.2% of Nokia’s 2009 revenues equaling $2. 2010). Nokia has a reputation for quality and innovation. As noted in table 1. In 2009. It is managed by a meritocracy which makes it less than flexible and innovative. Symbian is an open standard OS that Nokia has only so much control over. 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. Nokia’s brand was rated the fifth most valued brand in the world (Datamonitor: Nokia.8 billion and RIM bringing in $8. Nokia hold 37% of the world market which is almost 20 points higher than its next closest competitor Samsung. In addition. 2010).6 billion (Datamonitor: Nokia.

It is also a way for Nokia to make inroads to the US market. The prospects are fairly broad and highly marketable . Nokia will need to be careful in how it replaces its flagship OS.Nokia Case Study 6 offerings. 2011). This short-range communication capability allows devices to support mobile ticketing. Apple. 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. Nokia has made several moves of late forming alliances with Yahoo!. Although outdated. Intel and New Alliance. electronic identification and electronic keys (Hernandez. Nokia’s CEO. With a basic cellphone market that is fairly well saturated the 3G/BB market has significant opportunity for growth. SAP. Nokia will need strong business partners to stay on top of the market. 2011). Stephen Elop indicated that Symbian was not the platform that Nokia needed to meet the challenges in the future (Sorrel. 2010). The demand for 3G and broadband (3G/BB) connectivity is projected to grow significantly or the next several years. Opportunities Partnerships and acquisitions will be key to future growth for Nokia. Along with 3G/BB growth Nokia can continue to bring new and innovative technologies to market. In the US it is expected that the3G/BB consumer base will increase from 43% (2009) to 60% by 2013 (Datamonitor: Nokia. Nokia announced it was adding near-field communication (NFC) chips into future device offerings. RIM and HTC. Symbian has been a solid product. With a hyper-competitive environment and strong players like Samsung. 2010). Motorola. mobile payment. It is a big gamble for both companies as Nokia needs a new OS and Microsoft needs a respectable and dedicated platform (Sorrel.

So much so that it is a significant portion of the Finnish GDP. It has been the clash of two titans over intellectual property. Nokia evaluated its mobile device offerings and identified . IV. Nokia has been in a legal battle with Apple over patent infringement for several years. Evaluation Nokia is at a crossroads. 2011). are well capitalized and have reputations as innovative companies. 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. Patent litigation is a strategic business practice today but it is a significant drain on company resources (Bradley. 2011). 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. Should Nokia lose the cases filed by Apple it could result in huge damages and a black eye.Nokia Case Study 7 to both consumers and retailers. there is a lot of money to be made in the mobile device market. Nokia’s competitors are large. It has been the market leader of mobile devices for quite a few years. With few exceptions. it may seem a bit like a feeding frenzy. Over the last two years significant technological breakthroughs have allowed other companies to begin challenging Nokia’s position. particularly in the US. Opportunities As mentioned previously. If not executed cleanly it could spell the end of Nokia as a player in the smartphone market. This is just one area where Nokia is ahead of the pack and can leverage its innovation to differentiate itself.

This partnership gives Apple a reason to drop the suits gracefully and it frees up Nokia’s resources for other battles. Elop publically stated that Nokia would continue to support Symbian primary OS. With regard to Apple’s patent infringement cases against Nokia. Elop quickly shook up Nokia’s management which upended its corporate culture. 2011). in an effort to inject effective leadership into its mobile business during turbulent times. with the adoption of Windows Phone 7. Nokia must make gains in the US market and Microsoft needs a solid hardware platform for its Windows Phone 7 OS.Nokia Case Study 8 that the Symbian OS was no longer the innovative product needed to move forward. Elop publically announced Symbian as the way forward only to announce later a Microsoft deal. This could be considered a strike where your competitor least expects it. Mr Elop speaks Microsoft. Nokia. In addition. This was viewed as a defensive move by Nokia to protect its current install base. This agreement between Nokia and Microsoft could be a marriage made in cyberspace or the death-knell for Nokia. Nokia had been making overtures to Google regarding adoption of Android (Lawton. Then Mr. Apple will be less likely to take on Nokia knowing that Microsoft now has a vested interest in the outcome of the suits. He is part of the Microsoft culture and understands what is needed for the two entities to work together. Mr. Lublin. . Stephen Elop as CEO. However. Next Mr. 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. & Sandstrom. hired ex-Microsoft head of the Business Division. 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.

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. Conclusion 9 Nokia has been an industry leader for many years however the market has changed quickly and Nokia must right itself. Conversely.Nokia Case Study V. It is doing so with strategic partnerships. Its relationship with Microsoft will be critical to its success. Microsoft has a huge reputation at stake which has already been tarnished by previous mobile OS offerings. on the other hand already knows Nokia will provide world-class hardware. This is an aggressive move for Nokia but one that could be hugely beneficial in the long run. technological innovation and leveraging its brand recognition. Microsoft.

2011. (2011. American Banker. Retrieved February 25. (2008). Y. October 19). California Management Review. pp. The Dynamics of Strategic Agility: Nokia's rollercoaster experience. G. Pp. (2010). Datamonitor: Nokia Corporation. PC World. (2010).com/about/viewpressrelease. Retrieved from EBSCOhost.S. Mobile Phones in Asia-Pacific. Wall Street Journal .Eastern Edition. Lawton. K. Retrieved from http://www. Retrieved from EBSCOhost. . IDC Corporate USA. Nokia to Add NFC Chips to Its Phones in 2011. Nagamine . 11.com/businesscenter/article/219431/nokiamicrosoft_alliance_could_e nd_patent_war_with_apple. Hernandez.. 95-118. B1-B5. S. & Sandtrom. February 11). J. 1-10. Retrieved from EBSCOhost. Retrieved from EBSCOhost.idc.Nokia Case Study 10 References Bradley. K. M. Lublin. & Kosonen. (2011. 175(95). T.html Datamonitor: Mobile Phones. from http://www. C. Retrieved from EBSCOhost. Nokia-microsoft alliance could end patent war with apple..pcworld. Microsoft talk cellphones. Doz. Nokia Corporation SWOT Analysis. Nokia struggles to regain market share in the U.jsp? containerId=prUS22322210§ionId=null&elementId=null&pageType=SYNOPSIS O’Brien. Retrieved from LexisNexis. B4. Nokia. The New York Times. W. (2010).. February 10). 50(3). (2010). 1-39. (2009. Mobile Phone Recovery Continues with Nearly 22% Growth in First Quarter.

It barely maintained its position as the largest producer of mobile phones in the world. February 09). A. (2011..S.gartner . February 11). C.(1576).com/gadgetlab/2011/02/microsoft-and-nokiateam-up-to-build-windows-phones/ Yoshida.9. teams up with microsoft for windows phone 7. Nokia kills symbian. installed its first non-Finnish CEO. & Ward. Retrieved February 27. (Document ID: 2276441441). (2011. Electronic Engineering Times. Nokia market share slides . from ABI/INFORM Trade & Industry. February 25). (2011.html Sorrel.6.com/article/BT-CO-20110209-705792. February). (Document ID: 1994260201). lost out to Android as the largest smartphone OS. Microsoft and Apple. RIM. market. had a mixed reaction to its flagship N8. saw its Q4 pre-tax profits fell by 22 percent and today we have learned that the Finnish company has spent almost $4 billion in research and development in 2010.9 billion on R&D which is around three times the average spent by its rivals such as HTC. When you look at the chart (below) visualising the spending on R&D it becomes clear how much more the Finnish company is spending on new and emerging technology. Retrieved from http://www. . 2011. 2011. 4. Research results by Bernstein Research has revealed that in 2010 Nokia’s Devices & Services department spent $3. Retrieved February 27.Nokia Case Study 11 Parker.wired. The Wall Street Journal.wsj. from ABI/INFORM Global. Wired. Downwardly mobile. Financial Times. G. Symbian lacks 'newborn' cachet in U. Retrieved from http://online. 2010 was a hell of a year for Nokia. A. (2010. J. Sandstrom.

design and test and integration. It shows that a sizeable chunk was spent on Symbian and a lot more spent on hardware. Despite this break down it is hard to know in what direction Nokia is headed and how this massive spend on R&D will help it in the future. .Nokia Case Study 12 The first question you must ask is: “Where is all the money going?” Well that’s a pretty hard question to answer. MeeGo is also mentioned as are Nokia Research Centres. though another chart provided by Bernstein Research gives us some indication.

Nokia currently holds a number of valuable patents in relation to GSM. this spend on R&D could point to Nokia attempting to re-establish itself at the top of the mobile phone market. 08 exchange4media Mumbai Bureau .Nokia Case Study 13 It is safe to say that Nokia has been left standing as others around them dominated the smartphone market in the past two years. However with MeeGo a possible saviour in 2011. CDMA and LTE and with this type of spending we could be seeing as revolutionary technology coming our way in the coming years. Sony leads list across APAC October 22. We may also learn more at Nokia's Strategy Briefing for 2011 next Friday. 11 February TNS Brand Survey 2008: Nokia tops ad spend in India.

Nokia Case Study 14 MOST POPULAR MOST EMAILED 1. Three Indian brands – ICICI. TNS India said.000 brands study. moving up one place to take this year’s No. 1 spot as Asia Pacific’s top brand is Japanese electronic brand Sony. “Reaching and retaining the ‘Best Brand’ popularity as revealed in the Top 1. Cadbury. STAR-Zee gear to change the face of television distribution 5. Shobha Subramanian. For Yebhi. This goes beyond mere market or sales share into the realm of consumer share of mind.000. Sony. Nokia has emerged as the top global ad spender in India. Meanwhile. Executive Director. Social media is unavoidable today: James Ward. Nokia. including India. customer service is the best marketing 4. Brands such as Sony. IMPACT Exclusive: All aboard the social media bandwagon 2.com. Kingfisher and Taj – have been named as the most admired consumer brands across the Asia-Pacific alongside global majors like LG.” India’s Top Brands across 10 categories . ICICI and HP are in the forefront not just in India but across various markets in this region.473. Commenting on the findings. demonstrate their success in building awareness and differentiation in a challenging and competitive category. HP and Nokia in their respective categories. according to the ‘Top 1000 Brands’ survey conducted by TNS in 10 key APAC markets. Guest Article: Short-cuts don’t pay off in the long run in SEO 3. Incanus Complete Most Popular List » With a yearly ad spend of $147.

Japan. Australia. Personal Business Equipment and Service. 9. Health. where as Canon. Automotive. Beverage. Korea and Australia. Alcohol and Cigarettes. Financial Services. Taiwan. Among the top loser was Nokia. and Thailand across 12 major categories namely. Media and Telecommunication. Top 10 Ad-spenders in India out of the 1000 surveyed Brands across APAC The survey further showcased that Hewlett-Packard took the biggest leap from its’ 2007 rank of 44.600 people were interviewed for the survey across 10 countries including. Food. Apart from that TNS also covered 82 sub categories. 300 people who aged 15-64 were interviewed in each country. Nike and Google took a leap of 12. Travel and Leisure. APAC’s Top 11 Brands with their Ad-spends in India . Retail. TNS however. Johnson & Johnson. In all. Baby Product. Hong Kong. Singapore. and Hewlett-Packard emerged as the Top-5 global brand ad-spenders in India. China. The outcome: As a result of the survey Nokia. which lost 10 positions from last year to become only the 11th best brand in the APAC region. Korea. as it rose to rank-5 in 2008. consumers from Japan. even if respondents associated a brand with a number of sub-categories. when compared to China and Japan across the same categories. Household Product and Toiletry/ Cosmetic. Cadbury. and 14 places respectively. for the first time.Nokia Case Study 15 Methodology: The survey was done in India. only counted one mention of any brand by any respondent. Lipton. 3. Camera and Electronic Goods. Malaysia.

Nokia Case Study 16 http://mobithinking.9% 1Nokia453.5% Total1360 .0 million32.4% Total1388.2% Others413.2 million20.0% 3LG116.3% 2Samsung280.7 million31.0 million33.0%18.5%41.2%23.4%-1.0% 4RIM48. by 2010 global sales according to Strategy AnalyticsRankVendorUnit shipmentsMarket shareAnnual sales growth RankVendorUnit shipmentsMarket share1Nokia453.8 million3.6%3LG116.5%31.2 million20.5 million3.6%5RIM48.8 million3.5% Others437.3%2Samsung280.8 million3.4% 5Apple47.6%4ZTE51.2 million100.7%94.6%4.8 million30.com/stats-corner/global-mobile-statistics-2011-all-qualitymobile-marketing-research-mobile-web-stats-su Top five mobile phone manufacturers.7 million8. by 2010 global sales according to IDC Top five mobile phone manufacturers.7 million8.

Nokia Case Study million100%Source: 17 IDC (February 2011) Source: Strategy Analytics (February 2011)via:mobiThinking .

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