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HARV ARD BUSI NESS I SCHO OL
~ 9-714-42 8
~
R E V : FEBRUARY 21, 2014
~ JUAN ALCACER
~
TARUN KHANNA
CHRISTINE SNIVELY
~
t?Y The Rise and Fall of Nokia
~
. In 2012, Nokia, an over 100 year-old communications and technology corporation headquart~ red
~ m Espoo, F!1'1and, was the world's leading mobile handset manufacturer, a pos_ition it ~ad held since
1~~- Y:t, m Septe_m ber 2013, Microsoft purchased Nokia's Device and Services bus~ess for €5.4
~ billi~n. A sad ending to Nokia's once great handset business," an analyst commente_d. For decades
~ No~a, ha~ led the telecommunications (telecom) industry in-handsets and networking . What were
Nokia s missteps over the years? What should Nokia have done differently?
~
Nokia evolved from a pulp and paper manufacturer in the 19th century to a consumer electronics
~ manufactu rer in the 1980s before turning its attention to mobile phones in the 1990s. The company
✓ had successfully reinvented itself several times over, relying on flexibility in response to shifting
markets and a focus on design and engineering innovation. By the late 2000s, however, Nokia's
~ position as market leader in mobile devices was threatened by competition from new lower-cost
Asian manufactur ers, and Apple's 2007 release of its iPhone established an entire new category- the
~ smartphon e. These moves put pressure on Nokia at both the high and low end of the market, and by
~ 2011, the company's revenues had dropped significantly. (See Exhibit 1 for financial data.)
..;; ,./"
In 2012, Nokia posted an operating loss· of €2.3 billion and was bumped from the top
2
manufactu rer position by Samsung, despite maintaining a 24% market share, largely due to sales of
~ low-cost handsets in emerging markets. That year, CEO Stephen Elop dropped Nokia's in-house
operating system, Symbian, for Microsoft's Windows Mobile OS.
_:;
By 2013, Nokia's Devices and Services bus~ess was for sale, at a deeply discounted price. Some
....::; saw the sale as a boon for Microsoft; one analyst said, "Microsoft had to do this. The future is in
mobile devices, not PCs, and they need to increase their focus and investment on mobile. I am not
3
~ sure this will work, _but I also do~'t see that they had a choice." Others were even more skeptical.
"Microsoft and Nokia may have srmply thrown a rope to one another, cried 'Save me!' and jumped
~ off a cliff in unison." 4
:..;i Nokia's Early History: 1865-1970s
~ Nokia Ab, founded in 1865 as a timber company near the town of Nokia, Finlandi grew into a
significant pulp and paper ~on~em over time. By the mid-20th century, Nokia had taken several steps
~ to move beyond its roots m timber and rubber. By the late 1960s the company had merged with
~ Research & Writing Group) prepared this
Professors Juan Alcacer and Tarun Khanna, and Associate Case Researcher Christine Sn!vely (Case
Business School, and
c.ase. This c.ase was developed from published sources. Fundm~ for the de~elopn_ient of this case was provided by Harvard
~ not by the company. HBS cases are developed solely as the bas1S for class d1scuss1on. Cases are not intended
primary data, or illustrations of effective or ineffective management.
to serve as endorsements, sources of
~ a, . t C 2014 President and Fellows of Harvard C.C,Uege. To order copies or request permission to reproduce
materials, call l-800--545-7685,
pyn~ rd Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvof ard.edu/educators. This publication may not be digitized,
~ __ .. ,, . reproduced, posted, or transmitted, without the permission Harvard Business School ·
photoropl.ed,• or 0 .._
wnte uoaw-
Prof. P.O. Jose. Indian Institute of Management • Vlsakhapatnam (IIMV) from October 2016 to January
-~ ~ s document ls authorized for use on ly In PGP • CompeUtlon and Slrategy 2016 by_ 2017.
~
-?
426
-_;;,
 .,. \
~
.I
The Rue and Fall ol Nol d•
714-428
inc lud ing a tire and rub
ber foo twe ar ma nuf act ure
r and a cab le an~
ity had fiv e co:d
~
sev era l Fin nis h con cer ns,
:,~
ion. Th e new ly- me rge d ent
r to for m No kia Co rpo rat rlu nd wa s na m
ele ctr oni cs ma nuf act ure er gen era tion . Bjorn We ste
for est ry, ele ctro nic s and pow
bus ine sse s: rub ber , cab le,
CE O.
~
es suc h as fire
na~ ia for gov ern me nt ser vic
t wir ele ss pho nes in Sca ndi ces to p~od.::ce
No kia pro du ced the firs ts fro m the Fin nis h def ens
e for
fy
bri gad es, pol ice , an d rai
mi lita ry rad io- pho nes . In
lwa ys, bui ldi ng on req ues
1971, No kia began sel ling ana
n com put ers and rele ase d
log car rad io- tele pho nes . Th
the Mi kro Mi kko office com
at yea r No kia
put er. By the ear :,
beg an dev elo pin g its ow
~
,,
s in Fin lan d.5
rke t sha re of com put er sale
197 0s No kia ha d a 80% ma ind ust ry. -Th e
Th e 197 0s saw No kia tak
e its firs t ste ps tow ard d~m
rki ng inf ras tru ctu re inc lud
ina nce in a nas cen t tele com
ing bas e sta tion s and lin ks
to Sal ora, Fin lan d' s
por t str uct ure s. It
~
com pan y sup pli ed net wo tele pho nes and net wo rk sup
pro duc er, to pro duc e car rki ng com pan y, to
top rad io an d tele vis ion a sta te-o wn ed tele com net wo
, a 50/ 50 joi nt ven tur e wit h the se yea rs, No kia
est abl ish ed Tel efe nno Oy ss net wo rks . Th rou gho ut
wo rk equ ipm ent for wirele lan d wa s run by the
dev elo p an d ma rke t net nent.6 Du rin g the 1970s, Fin
ns wit h the Fin nis h goverrh nic s an d tel eco m
ma nag ed d~ ca te rel atio
lef t-w ing Social De mo cra
tic Par ty~ wh ich had con
tro lled mu ch of the ele ctro
~
~
,
net wo rki ng ind ust rie s.
(1977-1988): Er a of Gr ow th ~
,,
No ki a Un de r Ka ira mo s na me d
g and the pap er ind ust ry, wa
exp erti se in wo od pro ces sin the rad io tel eph on e
Kari Ka ira mo , an eng ine er wit h
kia ent ere d int o a joi nt ven
tur e wit h Sal ora to cre ate
No rdi c Mo bil e
CE O in 1971. In 197 9 No pho nes on Sca ndi nav ia's
bir a pro duc ed the firs t car rk7 thr ee yea rs
com pan y Mo bir a 0y . Mo t inte rna tion al cel lul ar net wo
lau nch ed in 1981 as the firs in the u.s.s
Te lep hon e (NMI') net wo rk, ne Sys tem (AMPS) net wo rk
the Ad van ced Mo bile Pho
,,
aft er Mo tor ola lau nch ed up its tel eco m
com pet itio n, N~ kia sho red
cer ned abo ut st~ t~o wn ~d
~
In the early 1980s, stil l con e Ta ble A for top
thr oug hou t the dec ade . (Se
em bar ked on a ?uy mg spr ee ctr oni cs com .
inf ras tru ctu re hol din gs and e the larg est con sum er ele p~~on, m
As a res ult, No kia bec am its firs t int ern atio nal
acq uis itio ns and det ails .) ed bey ond Fin lan d to ma ke acq tus 1ti
a. In 1983, No kia ven tur rts f .
Sca ndin avi · L sub seq uen tly gro win g its exp ~
rucs com pan y uxo r Ab, _ ; wi rel ess
Sw edi sh con sum er electro ntr ies in 1982 to ove r 20 co
ls fro m fou r No rdi c cou
1987, No kia pos ted €4 6 ~ on m rev enu es,
es_ ou gh ou t
tele com net wo rki ng term ina 9
eric a, and Asi a in 1987. In
Eu rop e, the U.K , No rth Am e ros e 58%, to €180 million.to
up 54% fro m 1986; net inc om
kia 's rise and tr t
·
.
:,
the dri vin g force beh ind No
Ka ira mo wa s oft en cite d as
and rub ber con cer n to a ma
jor glo b~ electronics ~ tele
com (ne two rki n ans on nat
ion fro m a pa per
~ and han dse ts) con cer n. He 71
bel iev ed No kia nee ded to
res tru ctu rin g of the com pan
exp and mto the wo rld ma
y's org ani zat ion and ma int
rke t for it t
ain ed r~ := iv e. He un der
the d d 11 and dev elo
too k a ma jor
pm ent (R&:D)
:,
of net sale s thr oug h mo st
of
eca e. De scr ibe d as a cha ma tic
ris .
inv est me nts of close to 4% pite his erra tic beh avi or -K air a
lea der wit h a bol d vision, des
hom e to end a loc ko ut- he
mo ~ne e cha llen ged a Un io
~l ea de r to a
:J
nak ed foo trac e aro und his
mu ltin atio nal tec hno log y
pow erh ous e.12 He em pha s·
~u t No kia on a pat h to beeO
8
_Peed and irn tne dia cy
g a global ~
sfo rmi ng the mo re sta id :
for ma liti es and processes, tran ent Simo Vuorilehto
His num ber tw o-N old a
Pre sid
p ream wh ere Ka iram o ,;~r
wa
and ma via n asp ect s of the
s oft en cal led I<aira.m , FlJ
_ov~r tra dit ion al
lnish com pan y.
~ s alte r-e go; the tw
:I
- A .
for me d a stro ng lea der shi
them."13.
ove Visions,,, and V rile
.
Uo
.
hto "~ - l
uu p em en ted
o
~
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·
f~
~
,-;
~
~ The Rise and Fall of Noki a
714-428
~
s Table A s
Nok ia's Top Acquisitions of the 1980
~
Date Co m~ Descrip_tion
~ 1981 Televa Telecom manufacturer owned by the Finn
ish government.
s in Scandinavia - Nokia
Second-largest manufacturer of television
~ 1983 Salora acquired an 18% stake.
computer firm.
1983 Luxor Ab Sweden's state-owned electronics and
~ 1986 Sahkoliikkeiden Largest electrical products wholesaler
in Finland.
-owned Televa Oy,
Joint venture between Nokia and state
~ Televa's share in 1987.
1987 Telefenno established in 1978. Nokia bought out
1987 Maillefer Swiss cable machinery manufacturer.
umer electronics company
~ 1987 Oceanic French television manufacturer and cons
from Swedish Electrolux
1987 Sonolar Consumer electronics company acquired
r-w 1987
1988
Televisso
_§_ricsson Information St.stems
Consumer electronics company acquired
Ericsson's computing division
from Swedish Electrolux
~
--
wide M~bil;
on: Strategy and Competition in the World
Steinbock, Wireless Horiz
Source: Case write r research, compiled from Dan Corp - Focus On Electrorucs,
gement Association, 2003); "Nokia
Marketpla~, (New York: American Mana RONICS.html; "Nok ia Histo ry/ Augu
st
/796/Nokia-Corp-FOCUS-ON-ELECT
http: //eco mme rce.hostip .info / pages lS, Nokia : The Inside Story, (Lon don,
UK:
005/08/30/262@15519.htm; Martii Hltiki
30, 2005, http: //eng lish.c ri.cn/855/2
~ Prent ice Hall, 2002), accessed November
2013. ·
:-. ile phone designed for the Scan dina
vian NM T anal og
In 1987, Nok ia introduced the first mob 2013 equi vale nt of €4,500.
-----
rket ing it to business users for the
netw ork -the Mobira City man -ma call from Hels inki to
achev was photographed mak ing a
Sov iet Uni on pres iden t Mikhail Gorb esta blish ing the seco nd
Exhibit 2). Nokia was influential in
Mos cow with a Oty man in 1989 (see Mobile (GSM),a whi ch
pean digital network Global System for
gene ratio n netw ork (or "2G"), the Euro allo wed pho nes to wor k
~ mpatible analog network systems and
cam e to repl ace the dozens of inco ile han dset mar ket with
was a major player in the analogb mob
thro ugh out Europe. By 1988, Nokia (12.8%), and Japa n's NEC
~ wed by U.S. manufacturer Motorola
13.4% of the wor ld mar ket share, follo 14
ufacturers.
(11.2% ), and several othe r Japanese man
~ ish econ omy was also
d, and by the late 1980s the Finn
Nok ia's fiery performance continue man y com pani es used the
_; ; d, banks could more easily lend, and
boo min g. As mar kets were liberalize as low as 3% .15 Betw een
in 1989 alone~ and unem ploy men t was
opp ortu nity to grow. Wages rose 10% on (€453 million) to FIM
~ e more than tripled from FIM 2.27 billi
1982 and 1987, Nok ia's mar ket valu 16 and acqu isiti ons activities
est in Finland. Nokia's mergers
8.029 billion (€1.5 billion), the larg uits and connectors,
_.:;; consistently boosted revenues while
also addi ng valuab~e pate nts in prin
ted circ
. Inve stme nts in R&D
among others, to its grow ing portfolio
fiber optics, and digital computers,
~
~
a unifo rm
ards conference in 1982, callin g for
and .Telegra~hs hosted ,a_ wireles_s stand
a The Euro pean Committee of Posts prom oted the use of the emer gent 2G GS. M digital
Nordic countJ?es, along with Nokia, Euro pe. Roll-
digital wireless netw ork in Europe. ew ~tandard to be used throu ghou t
~
the comnu_ttee sel~cted GSM as the_n prov ided
wireless stand ard in Europe, and in 1987 pione er in GSM infra struc ture. GSM
ork eqmp ment mstalled by Nokia, a
t first bega n in Finland in 1991 with netw also allow ed Noki a to more easily
expa nd into
~
mies of scale, and stand ardiz ation
~::ro pean manufacturers with econo
dereg ulate d European markets. h America, and
g~d in the 1980s in Euro pe and Nort
~ b The analog network, or "first-gene
provi ded voice service and SMS (shor
ration " (lG) wir~less stand~rds, emer
t ~ssa ge service, or texting) to mobt
le users . Fragm ented netw ork systems, inclu ding
(Nordic
j '1
AMPS (advanced Mobile Phone Syst~
m) 1~ the U.S., '.ACS (fota l Access Com
munications Systems) in the U.K., NMT
Telegraph) in Japan, and others throu
ghou t the
mavia, NIT (Nippon Telephone and
Mobile Telephone) System in Scand work ed withi n one geog raphi c locat
ion.
~ er. Handsets on analog ,networks only
~ world , were incompatible with one anoth
"'' by Pro<.~~;.-•'""~.,_ a M~ogoo,oo,. V.-"'= ("MV
) <m m~ 20'6 W.,,, ..,,,
~
G
-- o ,....,,...,00,00,y '" PGP ·Co-•_,,"""°'
. 428
j
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.-~ .
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t ~
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~
~
The Rise and Fall of Nok ia
714-428
17
:,
-:,
tronics sector, spe nt in 1987,
ion, or 7% of net sales from the elec
con tinu ed as well, wit h €210 mill at that time.
18 ·
of 5.4 % of net sales invested in R&D
higher tha n the U.S. industry average
r. "The per cep tion is the y've
uisitions hur t profitability, howeve
Som e began to feel Nokia's acq
bitt en off more tha n they can che
w," one ind:ustry observer said.
an Union formation in 1992, as Nok
19 Vuorilehto def end ed Nok ia's
ia did not wan t to be shu t out of .-..
acquisitions ahe ad of the Europe
Europe: "We had to move quickly.20
rapidly. We nee ded the resources."
mon th earnings to FIM 402 mill

We had no choice because the outs

Yet in November 1988, Nokia repo
ion (€Tl million). Nokia's consum

ide wor ld is cha ngi ng so

rted a 39% dro p in its eig ht-
er electronics bus ines s, wh ich
o wor ried abo ut a gro win g
-
~
•..."
s, was struggling. Internally, Kairam
accounted for 70% of company ~ale "scheming to ove rthr ow the
pow er struggle between himself
and Vuorilehto, who some felt was
h himself as [Nokia's] new leader."
21 ,22 Suddenly, Nok ia's financial ~
current management and establis
outlook looked bleak, with its "bu
ying binge," as one analyst desc
ribed Nok ia's M& A acti vity ,
23 Nokia's man age men t rem ain ed :1
-:J
income fell 23% to €199 million.
leaving it cash poor. In 1988, net rilehto said ," and [...] wil l be ·
have made the right decision," Vuo
confident nonetheless: "I believe we
successful" 24 ·,
:1
gm'g1times (1988-1992)
N Ida un de r Vuo
.
rilehto: C
hall
en . .
·
depression, comnutted SUJa
· ·de . !i
o
in Dec emb e,
b
Vuorilehto was aptart

. o who had suffered from mar

m:,;,.~.,;:,;,,,,,
" g out as an eng
inpo mee r, ~
"".d CEO. Vu °';J ":,
and
b" • ns £or an mte
1:,~;,.:
rna o
"
ti

uc
·

own u in Nok ia's pulp and

in e1i tron ics. ~r di ng lo
nal Nokia 25 He focused sele ctiv
ely and
u£ cturer
ile pho ne man a ted
...9
:1
· ess s
, hare Kai ram o's . 1tio ost nota y
am bl th UK e · · mob ~
pap er h usm . . me n '.
som e,. e
did not s
on fewer acq ws, tio~ , m
eved Vuo t~ took
rilehrileh
er at the right time. Onewor
ovth
to was e one who made
things
ana
and
lyst com
k, thfortask nex t
the th _J
Tec
le
phoyne.26 Some beli
hnocall
strategi
gu~;;:'
d Vuo
tfur • . . .
guy
bi - off so much, VUorilehto is the into six busmess diVlSions:
righ ey
:1
"Karramo was the vmona,y ent and restructured the finn · d
face of years, with Nokia ha g
coup"27 Vuorilehto s~eamlin,d
. Electr0kin ) Mobile
. man
ones
J nnance continued,
and by
·
Ph age,mNokia Data, Cables & Mac analyst d OSCri"bed N0..
hine
1989, an
hil

· In
ry, Basic dustnes, L:an,
0s
h ting,"'
:1
.,
Telecom (netwo, g ' u
_.J
nics Yet poo r peu o
"la kl ter."" The Finnish econ
omy , meanw e, was over ea
Cordin m=
neu-renn -p, ,cl
households to
as....:.:,.
s
rrow a
•
.
"Deregulation," the .
me ~ abroad and not save."30 Inte
min ister said, "encouraged COOlpanles and
rest rates climbed lo 15% In 1989, up !1
acco 9% ginto
from 1988 .31financet ho
itsbo
~
31 % from the previous year." The
cotlawner elec!ron ia, A
In 1991 Nolcia', total sales dropp,d
<livis;on . ; ; _ a particula,jy
large drop as color televiaiona sold
eral /actors contributed to Nolda',
poorly. The cables and
poor !'erfurmance. The
machine,y <fivls;on struggled as weJJ. Sev ing POltner, pushed Fin1Mld Into an OCOnonuc crisis,•"
...
~
~

·f1
laI1 ol the Sov;,t Union in 1991, a key
trad
Finnlah CUtrency Was &really
~J
•ingle digita lo over 20%.3' The ~
wfth unemployment jumping from
ness es mun icipalities wit h Joana In foreign CUrrencies.35
devalued, an add,d hardship fur busi •ti
and
r, given the faltering
F--
Throughout the 1980s, Nokia had buil
-y, /Fi nn isb banks were hesitant to
flow.; pOoJ.
e<>nsumivrun-

t !ta linanctng on bond,, Now, howeve

help , leaving
low." improved In 1993 a, a result
Nok Ja ent!re]y deJ)enclent on its own cash
of the depreciated CUrrency,, dD!
nestk: !I
~
~
;;I
'"""°""""""'"""'"--In ... ,....,hutJ,..,. In ... ..,,,,....
4 ~
,.11
" " - • -.........,.,..............,,,,,,,....._,.n..._,_....,,,~
.
1
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I .I S I I I - I I / I I I I 1
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~
~
~ The Rise and Fall of Nokia
714-42 8
~
'
~ Desp i~ . ~ese challe nges, Noki a's telecom netwo
rking divisi on, a comp lemen tor of the mobi le
tructu re for wirel ess netwo rks as GSM netw ork
r,c.· phon es divISion, was thrivi ng.38 It provi ded the infras
tructu re grew. Net sales reach ed €323 millio n
in
roll-o ut began in Europ e and dema nd for infras infras tructu re secto r had
r-• 1991.39 Noki a had a head start on comp etitor s becau se the Finni sh teleco m
~e~ dereg ulate d soone r than those in most Europ
ean countries.40 In North Amer ica, the 2G ~M
A
ets, was slowl y devel oping. GSM was consi dered
ri • digita l stand ard, incom patib le with GSM hands
ed users to send low cost SMS mess ages at
th were
super ior as it transf erred more data and allow
r-- unava ilable to CDM A hands ets. GSM phon es conta
ined a SIM card whic h users could simp ly remo
des. Oper ators could also trace the locat ion of SIM
ve
and inser t into a new phon e for easy phon e upgra
r- cards . (See Exhibit 3 for GSM and CDM A releas
e dates. ) In the U.S. and in Europ e, users purch
hands ets throu gh their carrie r, but by the late 1990s
t
many Europ ean carrie rs allow ed CUS omer s to
ased
r- purch ase a hand set and airtim e minu tes (and later
data) with a carrie r separ ately.
r• ile Com mun icat ions
Nok ia und er Olli la (1992-2006): Beco min g a Mob
~ Com pan y
~ CEO in Janua ry 1992 when Vuor ilehto s!e~ ~d
Jorm a Ollila was name d Noki a presid ent and
ate, began his caree r at Citib ank befor e Jouu ng
down . Ollila , a Lond on Schoo l of Economics gradu
r-- Noki a irI 1985. As an accou nt mana ger overs eeing
Nokia 's accou nt, Ollila had expre ssed conce rn over
the new comp etitiv e envir onme nt and [...] it
i? the firm' s organ izatio n, argui ng, "[It] did not match
comp etitio n requi red dyna mic organ izatio nal
need ed a thoro ugh transf orma tion. Dyna mic
1
him Ollila as vice presi dent of irlter natio nal
~ capab ilities ."41 Soon after, irI 1985, Kaira mo hired a
finan ce in 1990 and serve d as presi dent of Noki
opera tions. He becam e senio r vice presid ent of
.....
I
Mobi le Phon es irI 1992 befor e becom ing presi dent
and CEO. 42 Ollila imple ment ed "The Noki a Way,
"
--
~

_,.
.-,ii;
_;,

highl ightin g Noki a's core value s of custo mer satisf

and conti nuou s learni ng.
43
After a perio d of dwind lirig profit s, Ollila reviv
appro ach"44 for Noki a and made a series of
chem icals busirl esses. He said, "In a slow- grow th
make mista kes. It's impo rtant

action, respe ct for the irldiv idual , achie veme nt,

ed Vuor ilehto ' s call to "ado pt a back- to-ba sics
major ·a sset sales,· dives ting its data, fores try,
situat ion like we're facirl g now, you can't affor
to do the -smal l thing s corre ctly- the big river

and
d to
of profi t come s from
a
45 days as CEO: "It was Olli-P ekka [Kall asvuo , Noki
~ dozen s of small stream s." He recall ed his first sh
figure out what to do. We had unha ppy Finni
CFO] and me sittin g~ the he~d office trying to a
The only thirlg you could do is to start build irlg
share holde rs, unha ppy mtem ation al share holde46rs.d
-=> base for a very mean irlgfu l stock perfo rmanc e."
~ and chem icals busin esses , and cente red the
Unde r Ollila, Nokia dives ted its data, forest ry,
consu mer electr onics , netw orks, and
on four key busirless areas: mobi le teleph ones,
~ comp any47 g equip ment ) and mobi le phon es the focal point
s of
cable s, maki ng teleco mmun icatio ns (netw orkin
we have prim e possi biliti es to grow and stren gthen
~ Noki a's strate gy. "Tho se are the two areas wher e
cted.48 Ollila belie ved the comp any could be saved
our mark et positi on the next few years ," he predi for
49 nuing to deve lop GSM netw orkin g equip ment
~ only by50focus ing on mobil e phon es and by conti
netw ork equip ment order s for Europ e.e,51 Indus
try
- -? Europ e. In 1992, Nokia receiv ed 25% of the GSM and
.- orks woul d cost over $75 billio n betw een 1992
exper ts predi cted that the instal lation of new netw
-
-~
~
ship exceeded 3S%
ship of stocks, and by Augus t 1993, foreign owner
d In 1993, Finland ended its restrictions on foreign owner
compa ny.
of Nokia's share capital, higher than any other Finnish
~
infrast ructure .
e Ericsson and Siemens also won contracts with Europe an countr ies to supply GSM
I~

5
,:-"!"nis document Is authorized for use only In PGP • Competition and
Strateg y 2016 by Prof. P.O. Jose. Indian Institute of Manag
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ement -Vlsakh apatna m (IIMV) from
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'~fit' j$
52
The Rise and Fall of Nokia
-
1999, an °Pporlunity for Nokia's networking business lo thrive. Nokia also contmlled one
the essential patents for GSM standards,"' which guaranteed continuous cash flow in technology
thi,
licensing. Recognizing opportunity in Japan's 70% market growth over the previous year, Nokd,a
1992 signed an agyeement With Japanese mobile network ope,a1o, mo to es,gn

d of
~~ •~
•
their network, the first European manufacturer lo make a deal in Japan. f d . phones use
Nokia Mobile Phones
~
JFI:
In 1992, Nokia launched the fi t
hands~~s were priced at €1,33S ~ass-pr~duc~d _d_igital phone, Nokia 1011, for GSM.54 GSM
7 13
•
the military, which cost over 2 507 ' ), While significantly cheaper than handsets developed for
manufacturer's price f al ' (FIM 66,009), GSM handsets far outstripped the average €314
handsets sales were gr or. an og consumer mobile phones in competitive markets.55 While GSM
"
... I
1992
owmg, analog handsets remained more popular worldwide.
, No~a was Europe's biggest producer of mobile phones and the world's second
~
1 By late
•
argest producer behind Motorola (see Exhibit 4 for competitor descriptions). Nokia exported
hand_s ets (most :of which were still analog} to 70 countries,56 expanding its reach to Latin ~e~ca,
Russia, Australia, and Eastern Europe.57 Ollila predicted handset penetration in industrialized
countries would exceed 20% of the population by ,2000, meaning 250 million subscribers and global
sales of over 40 million units per year.58 Meanwhile, Nokia aggressively sought patents for its new ~
technology developments. Its early patent strategy focused on acquiring new IP rights to defend the
~
growing businesses.59 (Refer to Exhibit 1 for Nokia's number of new patents over time.)
Nokia anticipated rapid growth in the mobile phone market in the coming years, as countries
across Asia as well as Australia and New Zealand rolled out GSM networks. Nokia identified Asia as
the region with the highest growth potential. Nokia's networking unit negotiated deals to install
;s
GSM infrastructure for 17 operators.60 Handsets became a consumer item as prices dropped. The
y invested heavily in advertising in local mc3Fkets,61_and tailored features and prices to suit ~
~;'J:emand. Nokia's product ~~vation, flexibility and rapid responsiveness to market differences
~
~
allowed Nokia to expand globally.
din to an observer, "Nokia invested in each vertjcal of the handset ecosystem-
Acc.or . g distribution, and design R&D." 63 Nokia produced its semiconductors in-house and
~ u f a ~ g ,wn radio chips. 64 Unlike its larger competitors focused on multiple business units, ~
·~
desi~e ~tsdi:ested many of its non-core units. "Nokia was completely focused on mobile phones;
Nokia had nswner electronics, home appliances, etc.," 65 explained Nokia India's vice president.
ou:ers ha ~o Motorola were also vertically integrated at this time, providing infrastructure and
Encsson ::' hile other highly-diversified competitors viewed handsets as secondary products.
handsets, w
:~a;
::iiJ
By
1994
, Nokia accoun~ed for 25%_ of t~~ market capitalization of Finland's Helsinki Stock
67 That year, Nokia changed its official language to English and became the first Finnish
Exchange.to list on the New York Stock Exchang~. 68 (See Exhibit 5 for market capitalization over
c~rnp~rne analysts were co~med that Nokia would not be able to manage its growth. One analyst
:aJ
;-jjj
~
tune.) d "This, for Mr. Ollila, appears to be the greater threat "69
conunente , .
~
~
,..,..._ f In 1992 Japan had three mobile system operators; !DO, NIT, and DD!. !DO was the fastest growing with 25% market share, ~
~ 1
l"' - / ,, lhis doc
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V af<hapatnam (IIMV) from 0ctobe
r 2016
;iifn
;-ji,-
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2017. ,
 - 7
The Rise and Fall of Nokia
714-428
Nokia and an Evolving Consumer Market
In 1994, mobile penetrati th h' h .
mob1'l h f on was e ig est m Sweden, where 13% of the population owned a
d e d
one, ollowed by Finland with 10%, and the U.S. with 6%.70 As unit and airtime prices
roppe and network coverage expanded, handset sales for personal use grew.
The Nokia 21?0 was ~e first series c;,f the cqmpany's digital handsets offered in the U.S. The 2120,
part of the 2100 line, weighed less than 7 oz., and was less than an inch thick and 5 inches long. It was
the world's smallest and lightest phone in.1994,71 in contrast to ·earlier Cityman models that weighed
28 oz. and we.re as long as 7 inches. The user-friendly phone included a five-line LCD screen display,
99 speed-dial memory slots, a soft-touch keypad, selectable ringtones that could be personalized, and
a retrac~ble antenna.72 The suggested retail price in 1994 was just under €703, but the phon~ sol_d at a
lower p~ce when p~hased with a service contract through an authorized dealer. 73 Camers m ~he
U.S. typically subsidized the cost of mobile phones and generated revenue through service
contracts,74 and for a long time made it difficult to switch providers and transfer numbers.g Nokia
had to negotiate with carriers such as AT&T or Vepzon to sell their models.
,, -
As the mobile phone industry took hold beyo~d the enterprise consumer, phones became pocket-
sized and distribution spread worldwide; cellular penetration took off (see Exhibit 6 for mobile
penetration over time in developed and developing countries). Nokia, Ericsson, and Motorola
collectively controlled 75% of the global handset market by the end of 1995.75 To manage growth,
Nokia had manufacturing facilities in Salo, Finland, as well as factories in Ft. Worth, Texas, Bochum,
Germany, Hong Kong, Otlna, and Masan, South Korea, where the CDMA wireless standard had
been mandated. While Nokia dominated GSM networking production, it had yet to crack the CDMA
network market of the U.S. and South Korea, though the company in 1995 announced that it was
developing handsets (but not the network technology).76
Nokia began to explicitly market its mobile phones as fashion accessories. Nokia's handsets were
sleek and elegant, imbued with minimalism and simplicity associated with Scandinavian design. The
Nokia 8110, released in 1996 and featured in the movie The Matrix, was gently cwved to rest against
the user's face and contained a sliding cover to protect the keypad. Users began to ask for special
features and functions,7' and a market for colored and patterned replacement covers emerged. These
covers, sometimes referred to as plates, were available for the Nokia 5110, released in 1998. Nokia
phones offered a selection of ring tones as well. 78 Nokia hired young art school designers to keep up
with trends. By 1998, Nokia sold products in 140 countries, tailoring its offerings to fit local demand.
Increasingly Nokia behaved like a consumer-products company, introducing new models annually
and encouraging users to customize their devices. 79 "All the major players have access to the same
technology so it's about something else-its looks and feel and style," explained Arto Kiema, vice
president of Nokia's Research and Development ~enter in Salo. 80 (See Exhibit 7 for the evolution of
mobile phone design.) ·
Nokia at its Peak
In 1998, Nokia became the world's leading mobile phone manufacturer with 23 % market share
and 163 million units sold, surpassing Motorola's 20% market share. (See Exhibit 8 for net sales by
business unit and ~e_gion.) Analysts faulted Motorola for failing to respond fast enough to the switch
> from analog to digital networks, and for concentrating more on CDMA technology, used by 12
' g 1n 2003 the EU stipulated that all wireless carriers must allow number portability, followed by the U.S. · Federal
'
)
Communications Commission in 2004.
7
) his document Is authorized for use only in PGP - Competition and Strategy 2016 by Prof. P.D. Jose, Indian Institute of Management - Vlsakhapatnam (IIMV) from October 2016 to JanuarY
1
_a 2017.
;) 432
)
 ..,.
ti:=
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.....
The Rise and Fall of Nok ia
714-428
ich was used by 100 mil
lion people in 1998.81
•
e, rat her tha n GSM, wh dsets. Motorola's
mil lio n peo ple wo rld wid for more fashionable han
slo wly -to the dem and s also struggling. 82
Mo tor ola als o rea cte d poration's global sales, wa
sible for ove r 20% of the cor "unrivaled pro we ss" in
sem i_c ond uct or u~ t, resp~n erver noted from Nokia's ~
tive to Motorola, one obs ing pho nes tha t wo rk
No kia als83o ben efit ed rela com pan ; in the world sell
boasted: "W e are the only to bui ld a bra nd
!ogistics. C! O Kallasvuo ment our pro duc t line, firs
t i;si
nda rd. We we re first to seg t to ma ke sur e we
~ ev~ry ~aJ or cel lul ar sta in this business, and the firs
d tha t des ign wa s essential where R&D costs are ~
ide nti ty, firs t to und ers tan nufacturing in a business
the efficiency of global ma 1 for No kia R&D
cou ld tak e adv ant age of umes."84 (Refer to Exhibit
hig h and can onl y be rec
oup ed wit h worldwide vol wa
spe ndi ng ove r time.)
ila recalled. "In ~
ld ever have imagined," Oll
faster than anything we cou aro und 40 mil lio n
"Th e gro wth wa s mu ch market, in units, wo uld be
in 1999, the mobile pho ne In 1999, the ma rke t ~
1992 we pro jec ted that, ive. We were both wrong.
tho ugh t we were too aggress s beg an to out sou rce
wo rld wid e. The ana lys ts capacity, Nokia's competitor
ts." 85 Lacking production Nokia pro tec ted its ~
exc eed ed 250 million uni
ma nuf act uri ng, while No
technological dev elo pm ent
pat ent tot al jum ped fro m

kia continued to produc

s and han dse t features by86
796 in 1998 to 1469 in 1999.

e its handsets internally.

continuing to aggressively
file pat ent s. No kia 's
tech com pan ies
-
~
land, wh o sou ght out oth er ~
acted foreign investors to Fin h companies. Th e
Th e success of No kia attr r €285 million in new Finnis
tur e capitalists invested ove ma int ain ed R& D ~
wit h pot ent ial. In 1999, ven de for Finns. 87 By 2000 Nokia
e a national symbol of pri r hal f of its R&D
mo bil e pho ne had becom North America, but well ove
oug hou t Europe, Asia, and ntr ies inc lud ing ~
facilities in 14 countries thr duction facilities in nine cou
d. Nokia also maintained pro
activities occ urr ed in Finlan
other emerging markets.
Hungary, Ori na, Brazil, and r pho ne of the ~
kia 6160, the mo st pop ula
continued to drop. The No 4. At 5 oun ces ~d
Retail prices of GSM phones 1999 Nokia 7110 sold for €46 ~
price of €834 in 1998. The ws ing. By 2002 the
1990s, sol d for an ~verage bile pho ne to offer web bro
, the 7110 was the first mo (released two yea rs
wit h a slim, elegant design first-Nokia camera pho ne §.
en €185 and €411, was the
Nokia 7650, priced betwe ringtone options.
89
phone)88 and came with 30
after Sam sun g's first camera 0, exc eed ing &,
a 23% profit ma rgi n in 200
duction costs an,d reported rep ort edl y sou gh t
No kia ma inta ine d lower pro working gear business and
90
Motorola's 6%. Motorola
was losing money on its net cto r bus ine ss 92 ti-
ate d it wo uld sell its sem ico ndu
unit. Analysts also specul
91
a me rge r or a buyer for the anw hil e its mark. t
to $7.48, a 10-year low. Me ~
's stock price dro ppe d 26% e
In October 2002 Motorola y vuJnerable.93
to 17%, leaving the compan
share in handsets declined
but some wo rrie d style
beg an t tru ~
---
nes continued to evolve, i : d ~p
The style of Nokia's pho ts.) No kia con tin ued to inn ova te
for images of Nokia handse ich w~ knd o ~cm ag
usability.94 (See Exhibit 9 6108 and 3108 ph on es- wh r e wi th
ices in 200 3-t he Nokia a key pad .95 In 2004
the first touch-screen dev · 2004, contain· •
ed a scroll bar mstead of
h 1eased m 1994 (7 oz.. ) 96 ' most &
stylus. The 7280 p one, re t of its lightest han dse t in
r fou r ounces, half the weigh
Nokia phones weighed nea
ti-
gy
Nokia's Emerging Market Strate
By the early 2000s, Nokia
turned its attention to em
erging markets. It sold h
kia Telecomrnunicaf
d .
an ~et s 10 ove r 130
--
countries while Nokia
infrastructure business, con
. .
pro vid ing network manag
estimated there were at lea

Networks (formerly No
tinued to be a leading sup
ement and customer ser
st 600 million potential sub

pli
vic
er of GSM net w k JOnJ s)'.
e to Internet
or so
.
uti
t e net wobe
ons and
.
I
97

rki ng
a so gan
pro vid ers . No kia
scribers in Rus . ~hir~ice and India.98 In 2002
s1a, na, I

--
et-
~
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~ The Rise and Fall of Nokia
714-428
,...
~
Nokia s~~it its hands et divisi on unit into nine separa te
busine ss center s based on geogr aphy to work
;-.. 0
1:' specif_ic marke ts. Believing that smalle r divisions allow ed faster
respon ses in marke ts that grea~Iy
reorga nized itself into four divisi ons: Mobi~e
,...,.
differ ed m te~ ~f featur e dema nd and usage, Nokia
pa. Netwo rks. By 2002, Nokia contro lled over oYo
4
Phones , Multi media Phone s, Enterp rise Solutions, and
hands et marke t. 99 At that time, 60% of
marke t share of GSM hands ets and 5-7% of the CDMA
while 21 % of hands ets emplo yed CDM A
hands ets world wide opera ted on the · GSM netwo rk
's PDC netwo rk, analo g netwo rks, or other
techn ology . The remai ning 19% opera ted on Japan
netwo rks.100
r- In 2003, Nokia introd uced two hands ets, the Nokia 1100
with voice and SMS capab ilities and longe r batter y life,
and 2300, tailore d to emerg ing mark ets
usefu l in region s with unreli able powe r. The
,..
ffiS two mode ls were desig ned with prepa id users in
emerg ing marke ts, had a durab le case, AM/F M radio,
books for famili es sharin g a phone . The 1616 was priced
the U.S. the avera ge retail price for a hands et was over

mind.101 The 1616 mode l, also devel oped for

exten ded batter y life, and multi ple addre ss
102
at $32 in emerg ing marke ts; in contra st, in
$200 with a carrie r subsc riptio n.
i-- Sales slowe d in 2004, howev er, and Nokia 's world wide
marke t share fell from 35% to 28.9%.
103
r-w Many believ ed this was largel y due to Nokia 's failure
to respo nd to new "clam shells ," or, flip-
Amer ica. In 2004, Moto rola and Sams ung
phone s, which were partic ularly popul ar in Asia and North
respectively, while Nokia only offere d two
~ had 43 and 63 clams hell mode ls in their portfolio,
uced in 2004, becam e the best-s elling phon e in
--r•
clams hell mode ls.104 Motor ola's clamshell Razr, introd
strugg ling brand.105 Nokia respo nded to this
the world withi n a few short years and revive d the
ating some mode ls.106
comp etitio n by cuttin g prices on select hands ets and elimin
. Of the 650 millio n mobil e phone s sold
By 2005, Nokia annua l reven ues exceeded €29 billion
-----
107 Sales were strong in Weste rn Europ e and Asia, which
world wide, Nokia sold 200 millio n.
held 45% marke t share in Easte rn Europ e, the
comp ensat ed for weak sales in the Americas. Nokia
marke t. The low-e nd Nokia 2112 and Nokia
Midd le East, and Africa. In India, Nokia held 63% of the
)'
ssivel y pursu ed the growi ng Russi an marke t.
1100 were espec ially popul ar in Asia. Nokia also aggre
with key opera tors fared poorly.108
-.i In North Amer ica, howev er, Nokia 's CDM A hands ets
-.I - Increased Competition
:.-,,
.:..-
- By the mid-2000s, the indus try was increa singly comp
includ ing South Korea n manu factur er Sams ung, entere
etitive . New comp etitor s from Asia,
d marke ts in Europ e that Nokia had
lifecycles to betwe en six and nine month s,
::;:....., domin ated. Increa sed comp etition shorte ned produ ct
ing and distri butio n to keep pace by offeri ng
drama tically increa sing pressu re on design , manu factur
~ in Europ e and the U.S. agree d to terms with
:;..-' new mode ls more quick ly than ever. Many opera tors
to provi de lower -cost hands ets. As more
_,; Asian contra ct manu factur ers or hands et-ven dors
factur ers (ODMs), many of which were based
.,,,- manu factur ing was outso urced , origin al desig n manu
under their brand s. ODM s threat ened to
in Taiwa n, produ ced phone s for other firms to sell
~ comm oditiz e hands et produ ction and disrup t the vertic
al indus try mode l of comp anies like Nokia .109
~ Several Chinese manu factur ers in the larges t hands et
mark et in the world also emerg ed. Tho~ gh
brand s such as TCL, Huaw ei, and ZTE rapid ly
,..
i- ~ Nokia and Motorola still led in marke t share in China ,
factur er in China by 2002 (and the 12th largeS t
gaine d traction. TCL becam e the larges t hands et manu
ed to expan d overs eas as the dome stic ~arke t
1,.- ~
in the world ), and some Chine se manu factur ers plann
a signif icant advan tage in econo mies of
G
C_p
became satura ted. Comp anies such as Nokia maint ained
scale, howev er, becau se Chine
from other manu factur ers.
110
se vendo rs sourc ed chips , hands et desig ns, and other
A netwo rk of knock -off, "grey marke t" produ cers
key com~ o~ent ;
sellin g tmitat o
Q
-,,,.,,·~""'"""
-
- - - -
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document is authorized for use only In PGP • Competition
and Strategy 2016 by Prof. i~i/ose , Indian Institute
of Manage ment· V1sakha
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[ _:J
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The Rise and Fall of Nokia
~
7144 28
handsets was also growing. Illicit phones containing components from brand-name producers sold at
high discounts. In 2005, up to 50 million grey market units were shipped in China.
111
.,.
By the mid-2000s Nokia was seeking new areas of growth. The developing world was attractive,
as subscriber growth in India, China, Russia, and Latin America remained strong. It was becoming
•.,'11
\
harder to compete in the saturated, developed world, as handset makers encouraged subscribers to
upgrade existing handsets by providing new handsets with attractive new features on short release
'
cycles. Phones for business use were seen as another potential market. One of the early players in the
smartphone market, Research in Motion (RIM), had introduced an e-mail function in its 2003
BlackBerry,112 which led to the development of other functions and RIM's early dominance of the
enterprise market. In 2005, less than 10% of office· workers had mobile e-mail. "We think it's probably
the single largest untapped market for Nokia," said Mary McDowell, head of Nokia's enterprise
solutions group.113

"
~
~
~
Analysts recognized that Nokia, while leading in market share worldwide, was being pushed
down-market as competitors gained market share. Samsung, for instance, ranked third in 2002
~
market share and was still growing. Kallasvuo, who had shifted from the role of CFO to executive
vice president and general manager of Mobile Phones in 2004, said, "Being strong at the low end does
~
'
not preclude strength at the high end."114 An analyst agreed, "[Nokia's] efficiency made it difficult for
rivals to challenge it at the low end." 115 But Nokia:s substantial patent portfolio, with over 1600 new
filings in 2005, also helped to ensure Nokia's dominance. Nokia's vice president for intellectual ~
property rights explained, "We are now in a lucky position as no mobile phone manufacture r can
make mobile phones without using several of our patents."
116
~
3G Standards and Convergence ~
The roll-out of third-genera tion ("3G") wireless technology- talked about for years, but slow to ~'\
arrive- began to accelerate in 2005. 3G networks gradually replaced GSM and CDMA. Increased
bandwidth provided by 3G networks allowed the mobile Internet to grow. U.S. chipmaker
Qualcomm, which no longer manufactured handsets but held patents on the chips, software, and .,.
~,I
other technologies that made 3G possible, pushed for· the adoption of the new 3G network,
CDMA2000, in the U.S. Qualcomm also controlled key patents in the emerging WCDMA network, .,..
GSM's migration to 3G, in Europe. WCDMA and CDMA2000 were compatible, allowing phones to
be used worldwide.117 Samsung was an early player in 3G development as it supplied networks in t--
China in 2002, and was awarded a contract that year to introduce 3G in Japan. Nokia held 25% of
patents essential for WCDMA.118 By 2005, Nokia released two 3G handsets in Europe, but South .;:...
Korean competitor LG became the early leader in 3G handsets. LG purchased chips from Ericsson ~
and Qualcomm, tutlike Nokia which produced its own. "Being first is not necessarily a gateway to
119
.......
Heaven,'' Ollila remarked.120 4
Nokia under Kallasvuo (2006-2010) :i
Kallasvu,0 was named CEO in June 2006 when Ollila decided to step down after 14 years as CEO.
~
~
Kallasvuo, like Ollila before him, had been with the company for many years. He was appointed
assistant vice-president of Nokia's legal department in 1987 and moved to the finance division the
following year. In the late 1990s, he served as head of Nokia's business operations in the U.S. before
running the mobile phones division, where he worked alongside Ollila for years.
In 2006, less than a month into Kallasvuo's tenure, Nokia and Siemens agreed to combine their
Ji
~
network infrastructure operations lll- response to low price competition from Asia. Nokia Siemens ,. •
10 , :a
be 201stoJanLJal"= - -
.
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~
---
5 ~
•'
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~
~
The Rise and Fall of Nokia 714-428
~
d €15.8 billion
~etwork , the joint venture replacing Nokia Network s, expected to generate an estimate
~ 121 "The commun ications industry is converging, and a strong and independ ent Nokia
~ revenue.
revenue while
Sieme~ Network s will be ideally positione d to help customer s lower costs and grow
• managm g the challenges of convergi ng technology," said Kallasvuo.
122
In June 2006, Nokia exited talks with Sanyo over a joint venture to manufac ture
CDMA phones,
it would offer
announc ing that it would leave the CDMA market altogether, except in the U.S. where
to lo~er ~arket
Nokia-b randed CDMA phones.123 The high cost of making CDMA handsets , due
Kai ~ stamo,
volumes , convince d Nokia that the devices were too expensiv e for emergin g markets.
with low-
then-hea d of Nokia Mobile Phones, explained, "In this fragment ed market, making money
end CDMA handsets is very difficult:" ·Nokia instead shifted producti on to the GSM and 3G
124 away from the
WCDMA handsets used by over 70% of the world's mobile subscribe rs and turned
U.S. market.
Rise of Smartphones and Apple iPhone Launch
smartph ones.
By 2006, manufac turers were working to meet the growing demand for
operated on 3G
Smartph ones were powered by operating systems similar to that of a compute r,
music player,
network s, and typically provided web-brow sing and e-mail; they also offered a camera,
features. Usage
a contacts list, and increasingly, applications (apps) such as maps, games and other
. Worldw ide,
spread as retail prices on some devices dropped below $200 with U.S. carrier subsidies
sold that year.125
over 80 million smartpho nes were sold in 2006, 8% of the 990 million total handsets
a joint venture
Nokia's smartpho nes, which ran on the Symbian operating system (OS), develope d as
' between Nokia, Ericsson, Motorola, Siemens, and others, led with 38 million devices
126
controlli ng 48% market share despite weak North American sales. Motorola 's Window
shipped,
s Mobile OS
127 RIM's popular
devices helped that company grow over 104% with 4.9 million devices sold in 2006.
line of BlackBerry smartpho nes sold over 6 million units
..
in 2006, second in market share with 7.5%.128
~ ,.., .
in the
In 2007, Apple introduc ed the iPhone, which ran on Apple's proprieta ry iOS, first release~
~ m 2008
US d available worldwi de in 2008. Over 3 million units sold in 2007, and sales grew 245%
cost $150
· : f over 11 million units. An Apple senior executive estimate d that the iPhone
129
-;
~o~ t~ develop.130 It was initially priced at $600 and available exclusive ly to AT&T subscrib
ers in
ones, but also
'I
th U.S. The iPhone included more computin g features than competi ng smartph
success in
de~vered "cool form factor," as one industry observer noted, reminisc ent of Nokia's
131
132
) turning the handset into a fashion accessory in the 1990s.
.
(
Nokia and the U.S. Market
... Southeas t
By 2007, Nokia remained the leader in the fastest growing markets includin g China,
,/
Asia, and India, but its handsets were largely absent from the U.S. market after
eliminat ing CDMA
..,
(
J handset production. In North America, 160 million phones were sold per year, approxim
ately the
market had become crowded and fragmen ted; by 2007 Nokia. sold only ~>ne in
same as in China. The 133
retail stores, but
'
~
10 handsets in the U.S. A few Nokia models were on display at Verizon and AT&T
none at Sprint. T-Mobile, the distant fourth in subscribe rs, carried several, however . 134
2
In 007, Nokia opened a research center in Silicon Valley, the technolo gy hub and home
to Apple,
,,
;, Goo~le, and other competitors. The research center, one of seven worldwi de, had up
to 70 researche rs
and interns ~om S~o.r~ Universit y working on wireless grids, user interface s for wireless devices,
135 was
and ~etworki ng capabilities. Bob Iannucci, head of the research centers and based in Palo Alto,
th st stated in a press
appointe d e fir non-Finnish Chief Technolo gy Officer for Nokia in 2007. Nokia
;>
11
. . and Strategy 2016 by Prof. P.O. Jose, Indian Institute of Managemen t - Vlsakhapatna
m ("MV) M ""°"" 2016 to January
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for use only in
~
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..
r
~-
....
The Rise and Fall of Nokia
714-428
W'
..
y a lot more
le and the internet, it's made Silicon Valle
relea se, "Wit h the conv ergen ce of mobi
impo rtant for us."136
ined~ "In
Noki a's U.S. mark et share drop ped from
33% in 2002 t~ 10% in 2007. An analy st expla
then pt~k a
feature-packed mobile they can afford and st0
Euro pe and Asia peop le buy the coolest, most re give s
buy whic heve r phon es the guy at the netw ork
netw ork to use it on. In the U.S. cons umer s sand abo~ t
away for a two- year contract." A Nokia
137
the fact that the U.S. woul d evolve more
need ed a new strat egy in the U.S.

executive admi tted, "We had our head in the

towa rd the global mark et."
138 Kalla svuo reali zed Nok ia
sed the Nokia 6555. Noki a also signe d a deal
wi th
.,
Wj
In 2007, Noki a partn ered with AT&T and relea
an Asia n contr actor to deve lop a phon e for
outso urce d entir ely, a chan ge for Noki
manu factu ring and assembly. 9 Motorola,
13

Verizon to be released in 2008. The phon e

a which had historically relied on in-ho
in contrast, assembled only half of the phon

was to be
use hand set
140
es it sold. ~y
nolo gies
~
•
2007 Noki a bega n to source hand set chips from
and STMicroelectronics. As part of this deal,
suppliers.141

Texas Instruments, Broadcom, Infin eon Tech

Nokia agreed to license its mod em techn ology
to its new
•.
Indu stry Shif t to Software
rtant as the hard ware itself, as custo mer dem
and Iii
Smar tpho ne operating systems became as impo
for new fearures and apps grew and operating
in a manu fattu rer's strategy. An indus try obse
user interface has prom pted a lot of design activ

syst_e,m choice became an increasingly impo

rver noted, "App le's inno vatio n in its mob
ity amon g competitors." In 2007, Noki a's
142
used opera ting syste m in the worl d with 67%

rtant facto r
ile phon e
Sym bian
mark et
•;;
opera ting system remained the most widely
.,.,
share, followed by Microsoft with 13% and RIM
w,ith 10%.143
~
portf olio
ently. By 2009 Noki a had adjus ted its pate nt
Hand set producers reacted to this shift differ softw are in
up from 2% in 1999. Appl e's portfolio, 35%
to contain over 70% software-relate~ patents, and oth · er
circuits, connectors, switc hes and relay s,
1999, grew to 54% with an increased focus on .
.,_ infr on mem ories and hybr id circu its (42% in I
networA astr u~e patents. Sam s~g sustaine~ its focus in 2009).
are (virtually 0% of its 1999 portf olio to 6.5%
1999 and 2009), and mcreased research m softw ~
hand set-fo cused to softw are-f ocu d ·th
th
The indus try solidified its transition from being d sel Wl e ~
release of Apple's iPhone. Taiwan's I-ITC, Motorola and several other manu fac t urers eve oped their
,
.
own smartphones, many of which used Goog
le's open -sour ced Andr oid O tin
....
--"
pera g syste m, whil e
Open Hand set All"iance was a cons f 84 f
Nokia continued to use Symbian. Google's ortiu
~ o ums
£ le devices. Andr oid was the fla shi
oi:moo to de~elop open stand ards for mobi
---
rers. HTC and T-M bil g p so twar e of the
~ , operung the software up to manufactu G . ~ ~ were early adop ters of the
Vodaf
Android OS for their handsets. Sony Ericsson, one, arnu n, pnnt , Moto rola, and Sam
sun
also all joined the Alliance over the ne
Android OS. RIM, I-ITC and Samsun xt two
years to manu factu re smar tpho ne mod els
usin th!
whil e Nok ia's ~ale s ---
-..--
remained flat.144 ' gall saw smar tpho ne sales incre ase in 2008,
umer devices. The il'hone, for exam ple, cow
d ~.
Smartphones became pa,t of an eco.ystem of cons the devi ce. .,_
library, allow ing musi c strea ming throu gh
be synchronized with a user's iTunes music -
►
ming ,
mobile features such as video and audi o strea
The rise of social me<tia, new apps, additional
and othe, romptementora allowed snmt
e calls or
phon e, to deliver mo,e than just maki ng phon es ever y
145il and text messages. Users in deve loped mark ets
gene rally repla ced their phon
-i~/
sending e-ma
and manufacturers spent an estimated $30 milli
on on engin eerin g a new smar tpho ne ~
18
mod el"'hs,
mont
~I
12
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...
'~
437
 ·1;
714428
The Rise and Fall of Nokia
Nokia's Response ~
songs, games and maps compatible
In August 2007, Nokia launched its online store Ovi to sell 147
service-oriented business. Nokia was
with Nokia's Symbian OS phones as part of a shift to a more 7
October 2007, Nokia paid $8.1 billion (€5.
also developing MeeGo, another mobile computing OS. In
d digital maps used by Yahoo, Google,
billion) for Navteq, the digital-map database that create
e from mobile maps and music could total
Garmin, and others. An analyst estimated Nokia's revenu
is in the middle of a transformation. It's
$2 billion.148 Kallasvuo said, "The industry as a whole
and we're making a conscious long-t erm
movin g from a device indust ry to an experience industry
effort to capitalize on that."149
market share in the smart phone
Pressu re was moun ting as iOS and Android devices gained
OS, Nokia announced in 2008 ~at it would
market. To compete with Google's open-sourced Android
into a not-for-profit ventu re, the Symb ian
acquire all Symbian shares from its partners and spin it off
platform. "It offers us an oppor tunity to
Foundation, to establish Symbian as a royalty-free, open
innov ate faster on a bigger, united, more widely accepted
°
platform," 15 Kai Oistamo, head of Nokia 's
r new products, we believe, faster to the
devices business, told Reuters. "It also enables us to· delive
151 continued to focus on selling low-e nd
marke t. I'm convinced we will sell more products." Nokia
et but did not contai n full smart phone
featur e phone s (phones that could access the intern
high production volum es and low costs.
capabilities) to emerging markets, where it profited from
bly in the low end of the market. Nokia
Competitors witho ut Nokia's scale struggled to sell profita
while its strongest growt h in sales came
contin ued to experience sales growth in China and India, ·
ents.152 ·
from the Middle East and Africa with a 52% increase in shipm
et services and software, separa te
In 2008, Nokia created a new business group based on Intern
sized two prima ry units: hands ets and
from the main phone business. The new setup empha
, services.153 In 2008, as Apple's App Store, the iPhone 3G,
released, Nokia released several "candy bar"-style smartp
and Google's first Andro id device were
hone handsets. The following year, the
d. While some analysts felt Nokia was on
Andro id 2.0, Motorola Droid, and iPhone 3Gs were release
I
the right track with its new devices, one said, "Unle ss it fields a competitive device, it will contin ue to
54 it 10 for Nokia 's marke t share by region,
see its share of ~e smartphone market er~de."~ ( ~ Exhib
~
~
highe st marke t share in 2009 with 34%,
2007-2010.) Despite these concerns, Nokia maintained the
9% respectively, and China 's ZTE with
,I followed by South Korean Samsung and LG, with 18% and
5%. Motorola fell to out of the top five in 2009_1ss
(
Stephen Elop's Burning Platform (2010-2013)
?
to replac e Kallasvuo, who remai· nedon
In September 2010, Stephen Elop was name d the new CEO
s were unhap py with Nokia 's failure to release ~
"'
(
the board of Nokia Siemens Networks. Share holder
ian and the first non-Finnish CE~-~
'
....
i!
?

product that could compete with the iPhone. Elop, a Canad

Nokia, had previously served as presid ent of Microsoft's
157 strategy is solid
explained, "The core
transformation." The board believed Nokia would benefi
Nokia transitioned from a hardw are company to a softw are

Business Division.156 Nokia 's we / ;

and Nokia will contin ue to powe r throu gh what is a ~ubsta
t from Elop's experi ence at Microso as
comp any.

i;t 1
✓ Whil
e Nokia
k e t share
. controlled 40.3% of world marke t share in June 2010158 (and 8.1 %hmar market w
in the
hile
· had declined. Apple domin ated the high-e nd smart p one tr ted on
'? Us)· ,159 profi t margin
· s
manufacturers using Android flooded the low-e nd and middl
e marke t. While Nokia co~cen from ~
-
Jumpeto staff,
low-end phone s in Asia Andro id's smart phone share
'
,,,,~

selling marginally profitable 160

single-digits to 23%in 2010, Elop recognized the challe
nges Nokia faced, and in a memo
13
"'""
;) .
This document 1s authorized for use only in PGP - Competition
~~ .
and Strategy 2016 by Prof. P.O. Jose, Indian lnst1tule of Man , -••.""'"'"""'m
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~
.;) 438
~
 ~
..''
The Rise and Fall of Nokia
'{'
714-428
fir
compared the company to the story of a man standing on a burning oil platf~rm in the ~ddle of_ the
North Sea, urging the company to jump before it was too late. After the man m the story Jumped mto
~
the icy water and was rescued, he noted that he would not have jumped into the water under normal ~
circumstances, but the burning platform caused a "radical change in his behavior." 161 Elop's memo 't
stated: ~
I have learned that we are standing on a burning platform. And, we have multiple points of
scorching heat that are fuelling a blazing fire around us[ ... ]. Why did we fall behind when the
~ '
\
~
world around us evolved? [.. .] Some of it has been due to our attitude inside Nokia. We
.•..
poured gasoline on our own burning platform. I believe we have lacked accountability and
leadership to align and direct the company through these disruptive times. [.. .] We haven't
been delivering innovation fast enough. [... ] The burning platform [...] caused the man to shift
his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his
story. Now, we have a great opportunity to do the same.162 •
~
A New Operating System
The company needed a change in direction, and Elop singled out the Symbian OS, explaining
...'
~
Symbian was "an increasingly difficult environmen t in which to develop." 163 Industry experts
estimated that R&D costs associated with developing a new operating
~
'X_
system ranged from $100-$200
million, in addition to costs necessary to maintain the ecosystem. 164
was partially to blame for Nokia's struggling smartphone offerings.
Many
It was
critics
described
believed Symbian
as clunky, and
~
developers <;hose not to write applications for it. 165 Many industry observers ~
.....
preferred the Apple App
store or Google's Android Marketplace to Nokia's .Ovi store.166 The Apple App store contained over
300,000 apps in 2010, while the Android Marketplace grew six times in 2010 to include 130,000 ~
apps.167 Ovi contained 30,000 apps, while RIM and Microsoft's
apps, respectively.168
Windows Phone had 16,000 and 6,500 '
· ....
..--
Elop decided to abandon Symbian and replace it with Microsoft's Windows Phone 7 software.
Symbian support was outsourced to managemen t consultancy Accenture, which would maintain the
operating system on 400 million phones through 2016. 169 Reportedly Elop also approached Google to
discuss using Android,170 but as he explained in a speech to employees, "It just didn't feel right. We'd
be just another company distributing Android. That's not Nokia! We need to fight!" 171 Nokia shares
fell 14% the day of the Windows announcement. 172 The transition to Windows was expected to take
--
one year, leaving Nokia vulnerable to competitors.
:7
~
In May 2011, Elop announced that sales and profits for the second quarter would be
"substantially" below expectations due to continued pricing pressure in Asia and "mismanage ment"
with a high inventory of unsold smartphones on the shelves in China. 173 In addition to competition
from Android, CDMA handsets that Nokia no longer produced were experiencing an increase in :--i
market share in China. Elop explained, "There's definitely a situation here [in China] whete it's not
only the Symbian range of devices but also feature phone devices that are under competitive :-:i
~
174
pressure." Already selling at a 13-year low, Noki'a share price dropped 19% to $6.70. By June 2011,
Nokia's smartphone market share, which had been 49% in 2007, prior to the launch of the iPhone,
had dropped to 25%.175 From 2007 to 2011, its total market value had dropped 75% .
~
~
In the summer of 2011, prior to the Windows ·Phone launch, Nokia made its largest marketing
push to date to reestablish a presence in the U.S., a key market for Microsoft. Elop decided to focus on
selling through traditional wireless carriers which would subsidize the retail price of its phones.
Nokia replaced all Symbian-based smartphones in North America with Windows Phone products. 176
14
This document Is authorized for use only In PGP · Competition and Strategy 2016 by Prof. P.O. Jose, Indian Institute
of Management • Vlsakhapatnam (IIMV) from October

~
:-ii
2016 to J a n u a r ~
~ ' ':/
~
ri-~•-.,
2017.
.~
,...j=::
~
..
!Iii
,..
The Rise and Fall of Nokia
In 2012, Noki a mov ed its U.S. opera tions from
Whit e Plain s, New York, to Sunn yvale , Calif th
ornia .
lured to e

714-42 8
on Valle y could attra ct softw are deve lope rs
,.
Iii, Noki a hope d that the new locat ion in Si_lic
regio n by Appl e, Goog le, and socia l netw orkin
Elop anno unce d that Noki a woul d officially

g site Face book .177

e~it the Japa nese mark et in July 2011. The
phon es in 2008, but conti nued to ope_ra_te
st0
comp ru:'y
res for its
.-
~ had stop ped supp lying Japa nese carri ers with (€ l71,420).
betw een ¥600,000 (€ 5,142) and ¥20 milb o~
high -end Vert u line of hand sets, whic h cost 178 a ov_ertook
tpho nes in that mark et. Mean whil e, Chin
The Vert u line strug gled to comp ete with smar Huaw ei, ZTE,
the U.S. as the worl d's bigg est mark et for
smar tpho nes in 2012. Chin ese manu factu rers
smar tph~ ne
syste m and were amon g the worl d's top five
and Leno vo utiliz ed the Andr oid oper ating et. Mate nals
parti cular ly succe ssful in the low- end mark
manu factu rers (beh ind Sam sung and Appl e), 2,000 yuan
,..;;; cost for low- end smar tpho nes dipp ed below
(€250) or less. Chin ese comp any Xiaomi,
enthu siast ic fan base and posit ioned itself as

400 'yuan (€50); comp lete hand sets sold for

foun ded in Apri l 2010, imm ediat ely attra
a mobi le Inter net comp any rathe r than a man
m, Milia o socia l netw ork, and Xiao mi phon

cted a large,
ufac turer
e. Xiao mi
with its MIU I Andr oid-b ased oper ating syste rtisin g, and
~ inste ad of tradi tiona l telev ision or onlin e adve
relie d on onlin e word -of-m outh mark eting 179
-
i-
only sold its prod ucts onlin e. By 2012, Xiao mi
hand set sales reach ed 719 milli on units .
,-., Micr osof t Deal
As the com pany strug gled, Noki a had anno unce d a serie s of
layof fs in 2012 that carri ed into 2013.
ufac turin g
Salo, Finla nd, one of the last cell phon e man
~ Over 1,000 jobs were cut from its plan t in
2,300 jobs were elim inate d in Hun gary, and
700 in
cente rs in Wes tern Euro pe. In Febr uary 2012, onse to the €1
and India . This roun d of layof fs was in resp
~ Mex ico, as manu factu ring shift ed to Chin a
,- billio n loss repo rted in the fourt h quar ter
quar ter of 2012, Noki a anno unce d in June 181
of 2011 .180 Afte r anot her €1.7 billio n in losse
2012 that it wou ld elim inate 10,00 0 more posit
In 2012, Ollil a resig ned as chai rman of the

s the first
ions by the
board .1s2
end of 2013 as part of a restr uctur ing effort.
~ ided
a' s devic es and servi ces busi ness and prov
In Sept embe r 2013, Micr osoft purc hase d Noki upon the
.-;; acces s to. Noki a's pa_tents for ten years . for
€5.44 billio n ($7.2 billio n). The deal built
its
ag_reed use the Micr osoft oper ating syste m in
t?
partn ershi p form ed m 2011 ~hen Noki a hard ware
~ smar tpho nes and h~lp ed Micr osoft to verti
cally · integ rate by team ing up with a
the basis for
stren gthe n its finan cial posi tion and prov ide
manu factu rer. Noki a expe cted the deal to
183
~ . Upo n the anno unce men t of the deal Nok
ia's shar e
futur e inves bnen t in its conti nuin g busin esses '
ped 5% to belo w $32 a share.185
price incre ased 40% . Micr osoft 's stock drop
184
~
~
,:-;;
p
p
~
,~
?
P
J
- 15
- - - - - -- --
;
10 JanualY
ober 20 16
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~
"' 714-428
§ -16-

~ d N ki p·nanc1·a1 Data and Growth Indicators, 1989-2012.

~ Exhibit I Selecte o a 1

1~9is~9=====;€5,177
[J._~=========:=~===================;;
o Total Revenue(€ m)
€4,720 ;~19~9ij4=====~;€18,777
;~19~9ij9.~====;€29,267
; 2~oi04~=====;;€50,710
617
~2~oo~s~====;;€40,984
3,908
2~009~i===~;~€42,466
4,304
~2~01~0~===~;€38,659
6,204
;~201~i2
~~201~~1;==~;€30,176
2,408
178 2,308 980 (644)
~Operatinglncom e(€m)
~ As a % of net sales 3 ·6% 11 _101,, 19.7% 14.7% 12.2% 5.8% 5.4% 6.6%
~ Net Income(€ m)
"
(56.5) 675.7 2,577.00 3,192.00 3,988.00 891 1,850.00 (1,164.00) (3,106.00)
.,,
:,

G)
"? Cash from Ops. (€ m) 436 3,102 4,343.00 3,197.00 3,247.00 4,774.00 1,137.00 (354)
17 Cash from Investing (€ m) -266 (1,359) (329) (2,905.00) (2,148.00) (2,421.00) 1,499.00 562
-8 cash from Financing (€ m) 218 (574) -4,318 -1,545 (696) (911) (1,099) (465)
i Net Change in Cash (€ m) 388 1,268 (327) (1,302) 378 1,666 1,644 (284)
.,
:,

~Total Assets(€ m) 4,535 4,777 14,279 22,669 39,582 35,738 39,123 36,205 29,949
i[ Total Liabilities(€ m) 3,797 2,552 6,779 8,270 23,072 20,989 22,892 22,289 20,502
~ Total Equity(€ m) 738 2,225 7,500 14,399 16,510 14,749 16,231 13,916 9,447
~ Total Liabilities And Equity (€ m) 4,535 4,777 14,279 22,669 39,582 35,738 39,123
a, 36,205 29,949
~
l R&D Spending (€ m); 246 355 1,755 3,733 5,968 s ;909 5,863 5,584 4,782
"' :;; As a % of net sales 5.1% 6.4% 8.8% 12.9% 11.8% 14.4% 13.3% 14.4% 15.8%
~ ~ Selling and Marketing Spending (€ m) 1,220 2,552 4,380 3,933 3,877 3,769 3,205
. m As a % of net sales 6.2% 8.7% 8.6% 9.6% 9.1% 9.7% 10.6%
~ Avg. Number of Employees 41,300 . 28,000 55,260 55,505 121,723 123,553 132,427 130,050 97,798
~ Operating Income/Employee (€) 4,305 . 22,030
:, 70,720 77,542 50,968 19,489 17,428 7,535 (6,585)
!1.
sEPS (€)
0.92 2.24 0.70 1.05 0.24 0.50 (0.31)
~P/E Ratio (0.84)
;::
., 15.9 80.4 16.6 10.37 37.17 15.48 nm nm
I interbrand Ranking NIA N/A N/A #8 ~5 #5
~ Number of New Patents #8 #14 #19
;! 51 188 1,469 1,995 1,385 1,061 746 585 605
~ Finnish Composition of Board of Directors 100% 100%
~ Finland GDP per capita (€) 77% 63% 60% 54% 44% 45% 29%
21,400 16,700 23,700 29,100 34,900
~%of Finnish GDP 32,299 33,300 35,000 35,600
., 0.5% 0.75% 4.0%
3 3.0% 2.6% 1.6% 1.0% 0.5%
1Average Selling Price- all phones
.:S all manufacturers (€
a 2,792 306 187 110 80 ss s2 62 60
3 Source· Case .
~ . wnter research; Compiled from Ca . .
o in a Sea of Cbange," The R P:ta! IQ and N~ki~ Annual Reports, 1994-2012; Finland GDP Per Capita, http://countryecon omy.com/gdp/finl and; Jyrki Ali-Yrkkl.l, " Nokia
and Finland
i 15
Helsin~ Sanomat, http://=-~ /' titu:e of U:,e Fmrush Economy, 2010, http:/ /www.etla.fi/wp-c ontent/uploads/20 12/09/B244.pdf; "Experts

' ~¼go
Analyse Deep Impact of Nokia Decline,"
s~
1996, Vla Thomson
ONE; "Nokia,, enrs~/ article/Experts+analyse+deep+impact+of+Nokia+decline/1329104318689; Luke T. Szymczak, "Nokia Corp.," Prudential Securities, September 16,
qwty Research, April 20, 2012, via Thomson ONE, accessed November 2013.
1.r

liiw'WJ.l.t.JLf-1!
 7
Th e Ri se an d Fa
ll of Nokia
714-428
~
Cityman, 1989
us in g a M ob ir a
E xh ib it 2 t M ik ha il G or ba ch ev
USSR Pr es id en
ch 27, 2012,
," Wall Stree
t Journal, M ar 2013.
llphones Back Oc to be r
an t Th eir Ce 318488, accessed
an d Th ey W 04577297763321
'80 s Ca lle d, 40527023038129
So ur ce: "T he icles/SB1000142
sj .c om /n ew s/art
ht tp:// on lin e. w
-1998
nc h D at es , 1991
A N et w or k L au
E xh ib it 3 G SM an d C D M
imeline
G S M L au n ch T
UK
Genn11ny Belgium
Sweden Ireland
France Austria
Norway
De nm ar k Russia
Greece 'Spain United States
Po rtu sa l Italy
Sw itz er la nd Netherlands China•
Finland Thailand
Au str al ia
Luxembourg 1997 1998
1995 1996
1993 1994
1991 1992 Canada
Kong Peru
ited States Hong
South Korea Un
Timel ine
C D M A Launch
histo
/ ica ry;
/ bo ut usun fio11s:
w .gs m a.com aC0111111
A, " ht tp:/ /w w
GSM & th e GSM ar ry A. Ga rra rd, Cellular
"Brief H ist or y of .as p; G
co m pi le d fro m s/ cd m a_ hi sto ry
Source: Ca se
writer research, dg .o rg /re so ur ce
," ht tp:// w w w .c us e, In c., 1998).
"C DM A Hi sto ry , M A: Ar te ch Ho
velopment, (Boston
De
Worldwide M ar kt
,.nuarY
"" ''
2016 10
octobe'
t VisaJ<hapatnam
n .
(I
tMV) from
442
, te OtM anageme
Indian Institu
Prof. P.O. Jose,
n an d Strategy 2016 by
ly In PGP - Competitio 2017.
I thorized tor use on
,s document Is au
 -
t, 1.,.
714428 The Rise and Fall of Nokia
".,
··1.
•t.
Exhib it4 Nokia 's Global Comp etitor s
Count ry
of Origin
2012 Net
Income
Busin ess Units Over the
Years
Competed with
Nokia (time
DD
ocano~g
"'--'
~
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Germ any
(15%), China
(8%)
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-
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and Produc
.motor
ts
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ions,
:--i
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EN/Bu siness+ Produc t+and+ service s; Siemen s Aktien .com/U S-
gesellschaft Historical Financ ials and Produc ts and
Hoover's, Inc .; Siemens, "Produ cts & Solutio Operat ions,
ns," http:// www .siemen s.com /entry /cc/en /; Alcate l-Luce nt Compa ny
Overview and Products and Operat ions, Hoove r's,
Inc.; Telefo naktieb olaget LM Ericsso n Compa ny
Products and Operations, Hoove r's, Inc.; Ericsso Overv iew and
/ investo rs/ financ ia!Jepo rts/201 2/ annua ll2/ our-bu
Samsu ng Electronics Co., Ltd. Compa

n, "Our Busine ss," http:/ /www .ericsso n.com/

siness/ our-ke y-prod ucts-an d-serv ices/ mobile-broad
thecom pany
band; :-i
~
ny Overvi ew and Produc ts and Operat ions, Hoove r's, Inc.; HTC Corpo ration
Company Overview and Products and Operat ions,
Products and Operations, Hoover's, Inc.;accessed Decem Hoove r's, Inc.; LG Electronics Inc. Compa ny Overv
ber 2013. iew and
:I i
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I
•. __·,4 43

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2017.
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(1/MV) from October 2016 to
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2006 2007 2008 2009 2010 2011
ji Net Sales bl:'. Business {EUR million) 1999 2000 2001 2002 2003 2004 2005
35,099 27,853 29,134 23,943 15,686
~ Devices and Services
~ Enterprise Solutions 830 861 1,031 2,070
~NAVTEQ 361 670 1,002
~ Nokia Networks 5,673 7,714 7,534 6,539 5,620
g Nokia Siemens Networks 6,367 6,557 7,453 13,393 15,309 12,574 12,661 14,041 13,779
j Nokia Ventures Organization 854 585 459 366
g Mobile Phones 13,182 21 ,887 23,158 23,211 20,811 24,769 25,083
23,618 18,507
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3,659 5,981 7,877 10,538
a. Location and Commerce 1,091 1,103
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if lnterbusiness Group Eliminations (78) (79) (86) (193) (149) (96) (19) (9) (26) (59) (113) (331) (416) (392)
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co Net Sales, Total 18,777 30,376 31,191 30,016 51,058 50,710 40,984 42,466 38,659 30,176
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~ Net Sales by Major Markets
~Americas 25% 25% 25% 22% 21% 21%
; North America 5% 4% 5% 5% 4%
12% 8% 7%
~ Latin America 9% 8% 9% 8% 10% 7% 9% 11%
~ ~Europe 53% 52% 49% 54% 41% 42% 38% 39% 37% 36% 34% 31% 33%
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ichina 10% 11% 13% 12% 13% 16% 18% 17%
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714-428 The Rise and Fall of Nokia •~
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preso-pdf.pdf, 6514 2/dat a/5/-/ Ql-2008-eamings-
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accessed December 2013.
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22
This docum ent Is authorized 1
-;.:
or use only .in PGP - Competition and
Strategy 2016 by Prol. P.O. Jose, Indian
Institute of Management -Vlsakhapatn (ll"V) IrOm October 2016 to Janua0 4
~ !J.t~
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2017. ......_
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714-4 28
The Rise and Fall of Noki a
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Exhi bit 10 Nok ia Mar ket Shar e by Regi on (2007-2010
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e Track er, IDC, Marc h 2012, acces sed Octob er 2013.
Sourc e: Comp iled from EMEA Mobile Phon
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