The Decline of Nokia...What Happened?

Summary

This video explores the rise and fall of Nokia, once the dominant cell phone manufacturer. It highlights Nokia's dominance in the mobile market, with iconic phones like the 'Nokia brick,' and how they eventually lost their leadership to smartphone competitors like Apple and Samsung. The speaker delves into Nokia's early success, their struggle with the Symbian operating system, and their failure to adapt to the growing smartphone trend. The video discusses Nokia's decision to switch to Windows Phone and their subsequent decline, ending with a reflection on their current market share and relevance.

Takeaways

• 📱 Nokia was once the dominant mobile phone manufacturer, especially known for their bar phones with a screen on top and a number pad on the bottom.
• 📉 Despite their past success, Nokia no longer holds the top position in the mobile phone market; they shifted to working with mobile networks and infrastructure.
• 🏭 Nokia started as a paper company in 1865 in a small town in Finland, later diversifying into various industries including rubber and cables before focusing on mobile phones.
• 📈 By 1998, Nokia became the best-selling mobile phone brand in the world, dominating the market for a decade with popular models that made them highly profitable.
• 📉 Nokia’s decline began around 2008 due to the rise of smartphones, where they were slow to adapt and invest in the new technology compared to competitors like Apple.
• 📊 At its peak in 2008, Nokia's market share was 38.6%, but this rapidly declined as they failed to compete effectively in the smartphone market.
• 📱 Nokia's smartphone operating system, Symbian, was outdated and difficult to develop, which made their smartphones less appealing compared to competitors using iOS and Android.
• 💡 Nokia’s strategic missteps included underestimating the demand for smartphones and not prioritizing the development of a user-friendly and versatile operating system.
• 💼 In 2011, Nokia switched from Symbian to Windows Phone 7 as their main operating system, partnering with Microsoft. However, this move did not reverse their decline.
• 🤝 Microsoft acquired Nokia's phone division in 2014 for $7.2 billion, but the deal is considered a failure as Microsoft later wrote off the investment and exited the market.

Q & A

What type of phone was Nokia most famous for in the past?

Nokia was most famous for its bar phones, which had a screen on top and a number pad on the bottom.

Why does the speaker compare Nokia to celebrities like Kurt Cobain and John F. Kennedy?

The speaker compares Nokia to these figures because their image, like Nokia's, is frozen in time. Nokia's brand is often associated with older phones and hasn't evolved much in the public's perception.

What major industry does Nokia focus on today, if not cell phones?

Nokia today focuses on mobile networks and the infrastructure behind them, not on manufacturing cell phones.

When did Nokia first enter the mobile phone market?

Nokia first entered the mobile phone market in 1981 after acquiring a Finnish mobile phone company.

How did Nokia handle its diverse business portfolio in the late 80s and early 90s?

In the late 80s and early 90s, Nokia divested from many of its businesses, including consumer electronics and rubber, to focus more on cell phones.

What was Nokia's global market share during its peak year in 2008?

In 2008, Nokia held a 38.6% global market share, meaning over one-third of all cell phones were made by Nokia.

What caused the decline of Nokia's market share and profitability after 2008?

The rise of smartphones, particularly the iPhone, and Nokia's failure to invest heavily in smartphone development and improve their operating system caused their market share and profits to decline after 2008.

Why was the Symbian operating system problematic for Nokia?

Symbian became problematic because it was slow to develop and didn't meet the growing demands of the smartphone market, leading to rushed products and buggy software.

What major shift did Nokia make in 2011 to address their declining smartphone presence?

In 2011, Nokia switched from their Symbian operating system to Microsoft's Windows Phone 7, launching the Lumia phone series to compete in the smartphone market.

What was the outcome of Microsoft's acquisition of Nokia's phone division in 2014?

Microsoft's acquisition of Nokia's phone division in 2014 was widely considered a failure, leading to a massive financial write-off and significant job cuts.

Outlines

00:00

📱 Rise and Fall of Nokia's Mobile Dominance

The paragraph introduces the topic of Nokia's significant influence in the mobile phone industry and its subsequent decline. It sets the scene by asking the audience to recall the classic bar phones made by Nokia, which dominated the market, especially among those over 30 who likely owned a Nokia phone. Despite Nokia's historical success as the leading cell phone manufacturer, it no longer holds that position, and the brand's current association is with outdated technology. Nokia still exists today, primarily involved in mobile networks and infrastructure, but no longer produces cell phones. Instead, Nokia-branded phones are made by HMD Global, run by former Nokia executives. The narrative draws a parallel between Nokia's decline and the way public perception freezes certain iconic figures at their peak, highlighting the disconnect between Nokia's current state and its once-dominant image in the mobile phone industry.

05:01

📈 Nokia's Expansion and Dominance

This paragraph traces Nokia's journey from its humble beginnings in 1865 as a paper manufacturer in a small Finnish town, to its eventual diversification into various industries including rubber, cables, and consumer electronics. By the late 1980s, Nokia was involved in many sectors, but struggled with profitability due to its lack of focus. To address this, Nokia streamlined its operations, divesting non-core businesses and shifting its focus to mobile phones, predicting the market's growth potential. This strategic pivot led to significant investments in research and development, resulting in innovative phone designs that captured public attention. Between 1991 and 1995, Nokia's sales more than doubled, and the company became the world's best-selling mobile phone brand by 1998. For the next decade, Nokia maintained its dominance, with multiple models ranking among the top-selling phones of all time. However, by 2008, despite its dominance, the company's market share began to decline, indicating the beginning of challenges ahead.

10:02

📉 The Decline in Market Share and the Rise of Smartphones

This paragraph examines Nokia's declining market share starting in 2008, with key financial metrics reflecting a sharp downturn from peak performance in previous years. A primary factor identified is Nokia's late and insufficient investment in smartphone technology, which was rapidly gaining popularity due to the rise of the iPhone and Android devices. While Nokia initially downplayed the significance of smartphones, seeing them as niche products for business users, the rapid improvement and consumer adoption of these devices proved otherwise. A critical weakness was Nokia's reliance on its outdated Symbian operating system, which struggled to meet evolving consumer demands compared to Apple's iOS and Android's user-friendly interfaces. Internal communications at Nokia recognized these missteps, citing failures in innovation and adaptation to the smartphone market. In response, Nokia pivoted to using Microsoft's Windows Phone operating system, but this move failed to regain its former market position. The segment concludes with the eventual sale of Nokia's phone division to Microsoft in 2014, a deal widely regarded as a failure, leading to massive write-offs and layoffs.

Keywords

💡Nokia

Nokia is the central focus of the video, once the world’s leading cell phone manufacturer. The company is a Finnish brand, known primarily for its dominance in the mobile phone market in the late 1990s and early 2000s. The video discusses Nokia's rise to fame, peak success, and eventual decline due to missing key trends in the smartphone industry.

💡Symbian

Symbian was Nokia’s primary mobile operating system for many of its phones before the smartphone era. The video highlights how Symbian became outdated and was one of the reasons for Nokia’s decline, as the company failed to adapt to newer, more versatile operating systems like iOS and Android.

💡Smartphones

Smartphones refer to mobile phones with advanced capabilities, beyond simple calling and texting, that operate more like mini-computers. The video traces how Nokia's inability to focus on the smartphone market led to its downfall, especially when compared to companies like Apple with their iPhone.

💡Operating System

The operating system (OS) is the software that controls the overall functionality and user experience of a device. In the video, Nokia's reliance on the outdated Symbian OS and its slow response to adopt a competitive OS for smartphones is identified as a major contributor to its decline.

💡HMD Global

HMD Global is a company formed by former Nokia executives that currently manufactures Nokia-branded phones. The video mentions HMD Global as the current producer of Nokia phones, indicating how Nokia no longer directly manufactures phones itself, reflecting its diminished role in the mobile phone market.

💡Windows Phone 7

Windows Phone 7 was an operating system developed by Microsoft, which Nokia adopted for its smartphones after moving away from Symbian. This decision, made in 2011, is discussed in the video as part of Nokia’s attempt to remain relevant in the smartphone market, though it ultimately failed to revive the company’s fortunes.

💡Apple iPhone

The Apple iPhone is used as a pivotal point in the video to illustrate how Nokia misjudged the importance of smartphones. Launched in 2007, the iPhone revolutionized the mobile phone industry with its user-friendly design and operating system, leaving Nokia lagging behind in the smartphone race.

💡Market Share

Market share refers to the portion of total sales in an industry controlled by a particular company. Nokia’s once-dominant market share is discussed in the video, with statistics showing how its share of the mobile phone market plummeted after 2008 due to the rise of smartphones from competitors like Apple and Samsung.

💡Mobile Networks

Mobile networks are the infrastructure that supports mobile communication. While Nokia is no longer a major player in the consumer mobile phone market, the video notes that the company still operates in the background, focusing on mobile network infrastructure—a shift from its previous identity as a cell phone manufacturer.

💡Research and Development (R&D)

Research and development (R&D) refers to the efforts a company invests in innovating and improving its products. The video emphasizes Nokia’s initial success in the mobile phone market due to heavy R&D investments, but later criticizes the company for not investing enough in the development of smartphone technology, contributing to its downfall.

Highlights

Nokia was once the best-selling cell phone of all time.

Nokia's dominance in the cell phone market was absolute for over a decade.

In 2008, Nokia sold 472 million cell phones, holding a 38.6% market share.

Nokia's financial peak was in 2007 with sales of 51 billion euros and 8 billion in operating profits.

Nokia's decline began with the rise of smartphones and the iPhone in 2007.

Nokia's operating system, Symbian, was seen as non-competitive compared to iOS and Android.

Nokia's CEO acknowledged in a 2011 memo that they had missed major trends and were falling behind.

Nokia switched to Windows Phone 7 as their main operating system in 2011.

Microsoft's acquisition of Nokia's phone division in 2014 is viewed as a disaster.

Nokia's focus on their profitable past prevented them from investing in the future of smartphones.

Nokia underestimated the importance of a versatile operating system for smartphones.

Nokia's market share and sales declined significantly from 2008 to 2012.

Nokia's transition from a diverse conglomerate to a focused mobile phone company led to initial success.

Nokia's history dates back to 1865, starting with paper production before moving into technology.

Nokia's market dominance was characterized by innovative phone designs and widespread popularity.

The public's perception of Nokia is often 'frozen' in time, associated with their older, non-smartphone models.

Nokia's current business focuses on mobile networks and infrastructure rather than consumer phones.

Nokia smartphones today are made by HMD Global, a company run by former Nokia executives.

Nokia's attempt to regain market share in the smartphone industry faces an uphill battle.

Transcripts

[Music]

i have had an overwhelming amount of

comments saying that i should make a

video that talks about what happened to

nokia and you're all right nokia is a

great subject here let me try this just

sit down empty your head and try to

picture a cell phone from 10 or 20 years

ago not a smartphone or a flip phone i'm

talking about a bar phone you got the

screen on top and the number pad on the

bottom now whatever you're picturing is

probably something that's made by nokia

let me know in the comments if i'm right

about that but i would bet that if

you're over 30 years old you have owned

a nokia cell phone at some point in your

life it was probably your first phone

the number one best-selling cell phone

of all time to this day was made by

nokia yet today where are they i'll take

that bet one step further and guess that

today no matter what your age is you do

not own a nokia cell phone i mean maybe

have one in a drawer somewhere from 12

years ago but that's not the one you use

nokia is a strange company to me i think

of it like this you know how when

someone dies and they're fairly young

and at the height of their popularity

maybe someone like kurt cobain or john f

kennedy they never get the chance to

grow older or decline in any way our

image of them is sort of frozen in that

moment in time well with nokia it's not

like they were young or killed suddenly

but for me anyway my image of them is

frozen in time now i don't want to

misrepresent anything there's more to

this company than the nokia brick they

did make it to the smartphone age they

were even the number one smartphone

provider for a while well ahead of apple

plus nokia still exists today they're

not as big as they were but still pretty

big they just don't make cell phones

anymore they deal with mobile networks

and the infrastructure behind them

things that i don't really understand

and the public normally doesn't see and

nokia phones still exist today they're

made by this company called hmd global

which is actually ran by former nokia

executives but i hope we can all agree

there's been a decline here it's not a

good sign when we all associate them

with an 18 year old phone so what

happened how did they go from the number

one cell phone provider in the world to

well let's just say not the number one

cell phone provider in the world nokia

is a finnish company quite possibly the

most well-known company from finland

where at one time anyway the name nokia

is actually the name of a small town in

finland where it all started and the

date it all started is much further back

than you would expect

1865. what we all know today is a cell

phone company started over 150 years ago

now of course they weren't making cell

phones back then they were actually

making paper that was the core of their

business for the next 100 years in the

1960s they diversified their business

when they merged with a rubber company

and a cable company and they continued

this course of expanding into new

industries mostly by acquisitions they

first entered the mobile phone market in

1981 when they acquired a finnish mobile

phone company by the late 80s nokia was

all over the place they were making

these cell phones but then they were

making paper and rubber and consumer

electronics they had a power division

they were very unfocused as a result of

running all these different businesses

they'd become a large company with high

sales but they weren't very profitable

they were like a student in college

attempting to take 22 credit hours but

failing to keep their grades up so the

obvious answer here was to drop a few

classes so you can give the proper focus

to each one that's what nokia did they

spent the later part of the 80s in the

early 90s divesting all of this other

stuff cutting down their consumer

electronics business dropping their

rubber business completely and gradually

increasing their focus on cell phones

they predicted the popularity of the

market and spent a bunch of money on

research and development it led to a

bunch of innovative new phones with cool

designs that were able to attract the

public's attention from 1991 to 1995

everything exploded their sales more

than doubled they were turning profits

now and their market value grew 10 times

larger by 1998 they were the

best-selling mobile phone brand in the

world the way i would describe nokia in

the cell phone market for the next

decade is absolutely dominant let me try

to express this dominance in any way i

know how i said that the best-selling

cell phone of all time was made by nokia

but what i didn't mention was the number

two best-selling cell phone was also

made by nokia and in fact looking at the

top 10 list apple samsung and motorola

each occupy one space while the other

seven all go to nokia in terms of unit

sales and market share 2008 was their

best year that year nokia sold 472

million cell phones for comparison

purposes in 2018 samsung sold 295

million and apple sold 209 million back

to 2008 nokia's market share was 38.6

meaning over a third of all cell phones

were made by nokia to compare it in 2018

samsung held a 19 market share while

apple's was 13.4 throughout that time

nokia's goal was to reach 40 which they

never actually hit and i feel pretty

safe in saying that they never will but

think about that they were just barely

missing their goal of 40

while today the two biggest brands are

combining for 32 percent financially

their best year was the year before 2007

bringing in sales of 51 billion euros

and 8 billion in operating profits so by

these measures and probably most other

measures you want to look at this was

the peak for nokia now let me extend

these graphs a little bit back to market

share it was falling since 2008 and in

2012 they dropped down to the number two

spot their sales graph follows a very

similar trend and their operating profit

fell into the negative in 2011. in a

five-year span they went from making 8

billion euros in a year to losing 1

billion now this is a complex industry

with a million factors to consider when

trying to identify reasons for this

decline but let's try to simplify it

smartphones these cell phones that we

associate with nokia were not

smartphones but they were making them a

lot of money for one obviously in 2007

that's what the public wanted and nokia

was the brand that everyone wanted and

for two they had been making these

similar phones for more than a decade to

a point where they were doing it very

efficiently and what i would assume to

be a very low cost so to recap these

phones were producing the highest

revenue at the lowest cost so it makes

sense that they were turning high

profits smartphones on the other end

those were new more money was needed for

research and development and just

production costs overall since they were

far from perfected plus people didn't

even seem to want them smartphones

weren't seen as something intended for

everyone they were typically bought for

business use apple launched the first

iphone in 2007 which today we look back

on as a monumental event but i don't

think nokia really cared at the end of

that year 5 of all smartphones were sold

by apple and 50

were sold by nokia they were obviously

putting some resources into making

smartphones but many would argue it

wasn't nearly enough they were just too

comfortable in their position in the

market and failed to invest in the way

of the future that first iphone didn't

really sell too well but the next one

sold much better and the next one sold

even better than that a big reason

people were repelling away from the

nokia smartphones was their operating

system just so we're all on the same

page the operating system is what makes

the stuff on the screen look the way it

does with smartphones the operating

system is more important than ever

before with all these older phones

you're making calls and maybe listening

to a few songs so the operating system

wasn't nearly as important but with all

the stuff you're doing on smartphones

well you better have a good operating

system nokia's strengths were making the

hardware the actual phone rather than

the software that went into it the

operating system they typically used was

called symbian but with the sudden push

to produce software for these new

smartphones it was proving to be

difficult nokia said that it just took

too long to produce phones that used it

i suppose this led to rush products and

operating systems that had some bugs and

just weren't very pleasant to use nokia

had good phones but bad operating

systems and since that's what people

cared about now they were gravitating

toward the better ones in february of

2011 it was pretty clear the way things

were headed and the ceo of nokia put out

what was meant to be an internal memo

that outlined some of their major issues

i'll show a few parts of it the first

iphone shipped in 2007 and we still

don't have a product that is close to

their experience android came on the

scene just over two years ago and this

week they overtook our leadership

position in smartphone volumes

unbelievable apple demonstrated that if

designed well consumers would buy a high

priced phone with a great experience and

developers would build applications they

changed the game and today apple owns

the high-end range we fell behind we

missed big trends and we lost time at

the time we thought we were making right

decisions but with the benefit of

hindsight we now find ourselves years

behind and then this one's talking about

their operating system it has proven to

be non-competitive in leading markets

like north america additionally symbian

is proving to be an increasingly

difficult environment in which to

develop to meet the continuously

expanding consumer requirements leading

to slowness and product development and

also creating a disadvantage when we

seek to take advantage of new hardware

platforms as a result if we continue

like before we will get further and

further behind while our competitors

advance further and further ahead i

think that identifies some clear issues

and shows what was going through their

minds at the time days after this memo

nokia announced that they were going to

shy away from symbian to switch to

windows phone 7 made by microsoft as

their main operating system later that

year they introduced lumia a nokia phone

that used windows phone 7. in 2014

microsoft decided to purchase the phone

division of nokia which was most of

nokia for 7.2 billion dollars most

people view this as a complete disaster

only one year later microsoft wrote off

7.6 billion dollars from the deal and

announced 7 800 job cuts as i said

earlier today microsoft is no longer

involved they sold it for 350 million

dollars in 2016 and today they're trying

to make a comeback they have a one

percent share one percent in the

smartphone market let me know in the

comments do you agree with the reasons i

provided for the decline of nokia i know

there's more to it but these seem to be

the main issues settling with what was

profitable right now instead of looking

forward to the future and

underestimating the popularity of

smartphones and the importance of a good

versatile operating system i want to

mention this a few months ago i made a

video about the decline of kodak and if

you want to check that out there's a lot

of similarities also odds are you owned

a nokia phone at some point but did you

ever own a nokia smartphone not the

lumia but one that ran on symbian and if

so what was it like compared to ios or

one of the others i'd like to hear what

you have to say

thank you for watching

[Music]

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