The Decline of Nokia...What Happened?
Summary
TLDRThis 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
📱 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.
📈 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.
📉 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.
Mindmap
Keywords
💡Nokia
💡Symbian
💡Smartphones
💡Operating System
💡HMD Global
💡Windows Phone 7
💡Apple iPhone
💡Market Share
💡Mobile Networks
💡Research and Development (R&D)
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]
you
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