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Emerging Nokia

By iceling1991 Apr 17, 2015 10111 Words
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REV: MAY 2, 2011

JUAN ALCÁCER
TARUN KHANNA
MARY FUREY
RAKEEN MABUD

Emerging Nokia?
It was December of 2009 and D. Shivakumar, the Managing Director of Nokia India was catching up over coffee with Colin Giles, his counterpart in the China office, and Chris Braam, who was in charge of operations in the Middle East and Africa. The gathering was somewhat celebratory in nature: Giles had recently been promoted to global head of sales. Before Giles left his Greater China market role, his colleagues wanted to get his thoughts on Nokia’s future in the region. The three men had no doubt that Nokia’s strategy in emerging markets had been successful: Nokia was the market leader in India and China, with market shares of 60% and 40%, respectively.1 The company also had made inroads into Africa and South America. However, Nokia had lost ground in the developed world: the company only sold one in 10 handsets in the U.S. (compared to one in three in 2002),2 and it had recently pulled out of Japan after 20 years of operations. Nokia’s revenues in Europe declined by 15% in the fourth quarter of 2009.3 However, Nokia was famous for its ability to reinvent itself. From its beginnings as a paper mill turned rubber manufacturer turned electronics company, and finally, as the world’s largest producer of mobile phones, Nokia possessed an unmatched ability to face obstacles head on and come out on top. Said former CEO Jorma Ollila, “Finns live in a cold climate. We have to be adaptable to survive."4 But what now? Should Nokia stay the course, operating in both the developed and developing markets, or should they forego one for the other? And what would this imply for the types of handsets and services they would need to offer?

The History of Nokia
In 1865, Fredrik Idestam, a German mining engineer, began producing paper after he purchased two wood pulp mills in southern Finland. One of the mills, located near the Nokianvirta River, inspired the company’s name when it was formally established in 1871. Throughout the 20th century, Nokia had expanded beyond paper production into electricity generation, rubber boots, and computers.

________________________________________________________________________________________________________________ Professors Juan Alcácer and Tarun Khanna and Research Associates Mary Furey and Rakeen Mabud prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

Copyright © 2010, 2011 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-5457685, write Harvard Business School Publishing, Boston, MA 02163, or go to www.hbsp.harvard.edu/educators. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School.

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The Kari Kairamo and Jorma Ollila Eras, 1977-2006
CEO Kari Kairamo further expanded Nokia’s scope. In 1981, Nokia acquired a 51% stake in the Finnish government-run telecom company and renamed it Telenokia. In 1982, Nokia installed Europe’s first digital telephone system in Sweden.5 Nokia continued its acquisition spree throughout the 1980s, buying television maker Salora and the electronics firm Luxor. The company landed in financial distress after the collapse of the Soviet Union in 1991 and a deep recession in Finland.6 Between 1990 and 1993, Finland’s real GDP declined by 14% and unemployment, which was three percent in 1990, shot up to 20% by 1994.

With a background in economics and engineering, Jorma Ollila, who became CEO in 1992, was a cost-conscious leader who steered the company towards profitable growth.7 His focus was on telecommunications and, in particular, bringing small, sleek, easy-to-use phones to market. Research and development (R&D) into telecommunications and mobile phones was given priority: One third of Nokia’s employees and 10% of revenues were allocated to R&D. Nokia was, and remained, effectively an engineering company.

Under Ollila’s stewardship, Nokia became a globally-recognized brand, largely because it was the first handset designer to understand that mobile phones could serve as an extension of one’s identity; they could be fashion accessories.8 It was during this time that Nokia adopted the slogan “Connecting People” to communicate its brand proposition. And it struck a chord. According to Interbrand, Nokia was the fifth most valued brand globally by 2000. 9 Under Ollila, Nokia extended and strengthened its international presence. In 1992, revenue outside Europe accounted for 20% of total revenue; by 2006, non-European revenues accounted for 60% of total revenue (See Exhibit 1). Ollila also started to emphasize services and aimed to strengthen Nokia’s network equipment operations.

The Olli-Pekka Kallasvuo Era, 2006-Present
Olli-Pekka Kallasvuo joined Nokia in 1980 and spent over 25 years with the company in different positions in Finland and abroad until he became CEO in June 2006. A few months later, in the spring of 2007, Apple rocked the mobile industry with the introduction of the iPhone, a device that was a first step towards the convergence of data, audio, music, and Internet in one device. Simultaneously, Chinese producers such as ZTE aggressively entered Asian and African markets with cheap low-end handsets and Korean producer Samsung solidified its position as the number two player in the market. The intense competition in both the high-end and low-end markets weakened Nokia’s position, and the company’s market share stagnated. New efforts by competitors, such as the introduction of the Motorola Droid in the smartphone segment and new products by Samsung and LG in the basic phone segment, coupled with the financial crisis in the fall of 2008, further eroded Nokia’s net profit margin from 19.3% in 2007 to 11.5% in 2008 (see Exhibit 2 and Exhibit 3). Recognizing that the company faced a challenging new environment in rapid flux, Kallasvuo knew that Nokia had to transform itself to succeed. Kallasvuo emphasized that “it is very clear that devices alone are not enough anymore. Devices are needed and they need to be part of the solution. Devices plus services make solutions.”10

Following this vision, Kallasvuo embarked on a comprehensive restructuring of Nokia. In January 2008, Nokia moved from being organized in business groups by product line to a functional organization (see Exhibit 4). According to Mary McDowell, Nokia’s Chief Development Officer, “We went from a very loosely coupled model to a need to talk to each other a lot.”11 They emphasized two 2

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pillars: handsets and services. An additional unit, called markets, ran Nokia’s supply chains, branding and marketing activities, and delivered the products and services to the customer.12 As a part of the focus on services, Nokia and Siemens joined their network operations in a joint venture named Nokia Siemens Networks, becoming one of the largest telecommunications hardware, software, and services companies in the world. They offered a portfolio of mobile, fixed, and converged network technologies as well as professional services, ensuring that the operator was focused on marketing and overall strategy while the network equipment manufacturer managed the complete backend.

Kallasvuo said, “We believe Nokia has a tremendous opportunity to capture value as the Internet services market evolves and grows. Being a catalyst for change has been our heritage and it will be our future.”13

The Origins of the Mobile Phone Industry
Motorola launched the first commercial mobile phone handset, the iconic DynaTAC 8000X, in March 1983. The “brick,” as the DynaTAC was popularly known, was bulky (330 x 44 x 95 cm), heavy (almost 1 kg), allowed calls of up to 30 minutes, took 10 hours to recharge, and cost almost US$ 4,000.14 Sales were brisk. By the end of the year, there were 400,000 subscribers worldwide, mostly in the U.S., Europe, and the Middle East. By 2008, four billion people subscribed to wireless communications. Few technologies had evolved so fast and changed so many lives worldwide.

1st Generation
In the early 1980s, governments handed out the first mobile licenses to incumbent fixed-line operators, effectively creating monopolies which allowed the operators to charge hefty monthly and per-minute fees. Most cellular phone plans were post-paid: subscribers committed to contracts, usually lasting one or two years, and were billed a monthly fixed fee plus extra charges based on usage beyond the terms of the contract. Operators used the revenue gained from these fixed contracts to subsidize and distribute handsets, a practice known as “bundling.” The early mobile communication systems used analog technologies built upon country-specific standards. Across the world, by the late 1980s, there were seven technologically incompatible standards. This limited the size of any given market and the ability of operators and manufacturers to broaden their markets abroad. Ericsson, Motorola, Nokia, and Siemens were among the first firms that provided mobile operators with both mobile network equipment and handsets. Mobile operators became the interface with consumers and dictated prices, technological specifications, and marketing campaigns (See Exhibit 5).

Motorola capitalized on its first-mover position to become the market leader in the U.S., a position it solidified with blockbuster products such as the MicroTac, the first “flip phone,” introduced in 1989. The adoption of AMPS, a standard associated with Motorola, by countries in Latin America, the U.K., and Asia, enabled Motorola to expand its lead worldwide.

2nd Generation
New mobile communication standards developed in the early 1990s, based on digital rather than analog technology. The two main standards were the Global System for Mobile Communications (GSM) and Code Division Multiple Access (CDMA). GSM was most prevalent in Europe and Asia,

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Emerging Nokia?

while CDMA was prevalent in North America. In addition to better call quality, the most popular standard, GSM, provided new services, such as text messaging, call forwarding, 911 calls, and geographic coordinate positioning. Operators signed roaming agreements with their counterparts in other countries, so travelers could use one phone in every country following a similar standard. Concurrently, there was a wave of liberalization in the telecommunication industry. Many governments encouraged competition among operators by giving digital licenses to new entrants. Competition led to increased coverage, better call quality, and lower fees. With the larger global market created by common standards, handset manufacturers became less dependent on specific operators. Handsets increasingly became more sophisticated, with extra features such as cameras. Between 1990 and 2000, the global subscriber base grew an average of 52% annually.15 Handset manufacturers opened plants around the world, but struggled to keep up with demand, and new companies entered the market, including the Korean behemoths Samsung Electronics and LG, which some believed to be partly backed by the Korean government’s industrial policy. The global prominence of the GSM standard benefitted European producers, such as Nokia. Motorola, the industry leader from the 1980s, found itself struggling as a result of operating on the less popular CDMA standard. By 1998, Nokia had leveraged its ability to introduce fashionable and cheap handsets and its strength in GSM to become the global industry leader.

3rd Generation
The launch of the 3G networks meant that data could then be transmitted in addition to voice calls. Suddenly, mobile phones could send and receive documents, videos and pictures, and access the Internet. In many countries, the government held auctions for 3G licenses, with operators paying what would prove to be extravagant prices. The frenzy culminated with the bursting of the “telecom bubble” in 2000, followed by a recession in 2001.

Handset manufacturers, who had been planning to expand, responded by cutting costs and outsourcing production. This hurt smaller manufacturers, but benefitted the larger ones. They also began to launch high-end models such as the Razr, introduced by Motorola in 2005. The following year, Motorola extended the model into the mass market, “which lessened its must-have coolness and social impact. It seemed every snot-nosed kid at the mall had a Razr stuffed in a back pocket.”16 With 3G networks, operators diversified their income stream beyond monthly fees to servicespecific fees, with subscribers spending most of their money on services (See Exhibit 6). Because providing services required software development that was beyond the capabilities of operators and handset manufacturers, they relied heavily on “ecosystems” -- a loose network of companies outside the handset industry that developed innovative services (See Exhibit 5). In ShenZhen, China, hundreds of companies had cropped up, creating an ecosystem which enabled phones to be produced in two days. MediaTek, a chip set supplier, was one such firm. These companies were experimenting with quick integration of services and applications. According to Dieter May, vice president of Nokia’s Emerging Business Unit, the quality of the phones produced and their social acceptability had increased dramatically in recent years. The old model, in which innovation occurred in the high end of the market and cascaded down into the low end after costs had come down, had been challenged.

By this time, some mobile phone operators in both developed and emerging markets had acquired considerable traction. These included Verizon and AT&T in the U.S., Telefonica in Spain, Vodafone in the U.K., Orange in France, and America Movil in Mexico. The market rewarded these companies 4

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with generous market capitalizations as high as US $227 billion for Vodafone in 2001 -- making it at that time the eighth largest company in the world, and the largest non-U.S. company. In 2002, Research In Motion (RIM) popularized the smartphone with the release of the BlackBerry, creating a new, highly profitable market segment. Apple revolutionized the segment with the launch of the iPhone in 2007, increasing its market share from 2.7% in 2007 to 8.3% 2008.17 Although the iPhone was an American, not a worldwide, success story, it was highly profitable. In 2008, smartphones accounted for 3% of cell phones sold around the world, but 35% of the operating profits. Apple and RIM held 32% of the smartphone market between them.18 Although the introduction of smartphones provided short-term relief for the downward trend in prices in the handset market, even this segment came under pressure when more competitors entered the space. (See Exhibit 7). Apple also changed the relationship between mobile operators and handset manufacturers by placing certain specific conditions on operators. When Steve Jobs was looking for a partner to distribute the iPhone, he insisted that Apple would retain control of every aspect of handset design and marketing, that the iPhone would be sold through an exclusive retail network and that the operator would give a substantial share of its revenues to Apple. Apple signed an exclusive deal with AT&T in 2006, whereby AT&T gave up the right to put its logo on the iPhone, said the phone would only be available in Apple and AT&T stores, and agreed to give 20% of its revenues to Apple. As mobile handsets became an important device to access the Internet, they attracted the attention of Google and Microsoft. Microsoft launched Windows Mobile as an operating system for mobile phones in 2003 and later began to link phone services to its search engine, Bing, and other Windows products. Google introduced Android, a mobile device platform, which was used by Motorola’s Droid and its own Nexus One, a handset made by HTC, a Taiwan-based smartphone manufacturer. Computer manufacturers such as Acer and Dell also entered the industry. As a result, by mid-2009, the mobile industry was in flux. Exhibit 8 provides information about the main players in the industry and Exhibit 9 shows their market shares across time. Exhibit 10 shows the market capitalization for Nokia, Samsung, Motorola, and Apple.

The Mobile Industry in Emerging Markets
“The rapid spread of this technology in the developing world has occurred in a fundamentally different way compared to the West,” said Kallasvuo.19 Years of poor investment and monopolistic markets held by local government-owned entities rendered fixed lines inefficient. Across the developing world, countries bypassed fixed-line telephony services leapfrogging directly to wireless services.

Emerging markets posed challenges for both operators and handset manufacturers. Because of customers’ relatively low incomes, there was pressure to keep prices low. In 2009, the average disposable income in the U.S. was eight times that of Brazil, 17 times that of China, and 45 times that of India. Because access to computers and the Internet was low, wireless phones became the main way to access the Internet for 3 billion people.20 In emerging markets, growth in cell phone penetration was driven by first-time purchasers, as opposed to the developed world where growth was driven through phone upgrades or purchases of secondary devices. See Exhibit 11. Contrary to the monopolistic origins of the industry in the developed world, competition among operators in the emerging markets was intense. Governments followed the bidding models of 2G and 3G licenses in Europe and the U.S. and gave licenses to numerous players. In Indonesia and Thailand,

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as many as eight operators competed aggressively. In Brazil, India, and Russia, licenses were given for specific regions and national carriers emerged only after a grueling consolidation processes. Rick Simonson, a former banker turned Nokia CFO, and most recently executive vice president and head of mobile phones, explained that the relationships between device manufacturers and operators ran the gamut from Latin America on the one end, where Telefonica and America Movil had duopoly control and accounted for 90% of the handsets sold, to some of the more newly emerging markets like China, India, Southeast Asia, and Africa, where primarily device manufacturers sold directly to the end consumer. The European markets were in-between, where half of the handsets were distributed through operators and the other half through the open market. Services were a key selling point for consumers in emerging markets. Text messaging based on SMS technology was cheaper than phone calls and became wildly popular in Southeast Asia. Beyond ensuring that services were affordable in emerging markets, operators and handset manufacturers had to ensure that they would be able to provide services at all, especially in rural markets that lacked reliable electricity and basic infrastructure such as paved roads. These barriers resulted in higher costs associated with serving rural customers, triggering innovative business models. One of them, developed by Bharti Airtel, India’s biggest mobile operator, came to be known as the “Indian Model.” It was distinctive in that the company itself focused on marketing and strategy, outsourcing information-technology (IT) operations to IBM; the running of its mobile network to Ericsson and Nokia Siemens Networks (NSN); and customer care to IBM and a group of Indian firms. Unusually, Bharti outsourced the construction of its network, as well as the operation. Commenting on the Bharti model, McDowell said, “Bharti’s success points to the importance of consumer access. An analogy is useful. We think a lot about how Walmart, with its reach to consumers, might have influenced manufacturers directly; what if the likes of Bharti influence us, the manufacturers in this space?”21

Even the way operators collected fees had to change. The post-paid model fell apart when operators attempted to apply it to emerging markets because post-payments relied on credit information, automatic charges, payment centers, and a reliable mail system to collect monthly fees -conditions that were absent in emerging markets. A pre-paid system, whereby customers used cash to buy minutes, was adopted without much difficulty when introduced by the pan-African operator Zain, primarily because most African countries were cash-based societies. Lacking a post-paid system and incurring low revenues per customer, operators in emerging markets ended the practice of subsidizing and distributing handsets.

Innovation also fueled new ways to increase revenues. Johannesburg-based MTN introduced MTN Zone in 2008, a price plan that offered variable discounts of “at least 10% and up to 99%”22 on MTN-to-MTN calls depending on the location and time of day for users in Ghana, Guinea Bissau, Uganda, South Africa, and Swaziland. The approach, known as dynamic tariffing, used proprietary software to calculate local rates in real time and communicated them to customers. “The more capacity available, the greater the discount offered at the time of making the call.”23 Another practice that originated in emerging markets, and that was pioneered by Nokia and Bharti in India, was known as “reverse bundling.” Reverse bundling offered consumers a fixed number of minutes when they bought a specific handset. In this case, the operator piggybacked on the handset manufacturer and not the other way around, as was the case in the developed markets.

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Nokia: Continuing to Change
Nokia’s strategy in handsets was to offer models at all price points, including low-cost models. Indeed, in 2009, more than half of Nokia’s revenues (55%) came from low-end phones, the popular S40 product line, and subscriptions to associated services.24 Samsung, on the other hand, focused on the middle to high end, while Apple played strictly in the high end of the market. Nokia achieved its low cost of production by offering only a few standard models and customizing them through software. Nokia’s main competitors in the emerging markets, Samsung and LG, produced three times as many models. In 2008, for example, Samsung added 120 new models to its product range, while Nokia added 50.25 Nokia had three distinct software platforms: S40 for lower price point mass market feature phones, Symbian for smart phones, and was developing Maemo/Meego for true mobile computing experiences. On top of these platforms, Nokia was able to provide application and service offerings, as well as rapid customization for its operator customers. Samsung, on the other hand, had no clear platform strategy, but provided individual products across different price points. Although Nokia introduced the world’s first smartphone (the 7650 in 2001), had success with the N95, and held 41% of the worldwide smartphone market in 2009, they had difficulty competing with Apple and RIM, who were increasing their share of the U.S. market. Between the first quarter of 2008 and the third quarter of 2009, Apple more than tripled its market share and RIM’s share nearly doubled.26 “We have a good portfolio but we are currently lagging in the high-end mind-share product,” Kallasvuo said. “Apple continues to be a great competitor, no doubt about that. But we have our assets as well. Our strategy is in democratizing the smartphone in a massive way.”27 McDowell commented,

For the rest of the world, there is general acceptance of GSM and 3G technology as is. So while you may have to customize some colors, or include some mobile applications that the operator is pushing you don’t have to get into the guts of the software and make fundamental changes. That’s not true in North America, where there are very specific requirements. If you think in terms of optimizing for global scale, the business case never works to say, ‘Let’s do this special thing for the U.S. and delay time to market in the rest of the world.’ And that’s really the jam that we’ve been in. We’re a victim of our scale and success (in the smartphone area).28 According to Simonson, Nokia ran the “longest, most complex supply chain in the world. We have the most efficient sourcing, logistics, manufacturing, and distribution of any company in the world.”29 Nokia sold about 450 million phones a year, each of which was composed of 400 components. Nokia had nine factories around the world and shipped their products, which not only included the device but also the incorporation of the software, to almost every country in the world. In terms of services, Nokia had three offerings – music, location tools, and messaging – available through its Internet services brand, “OVI,” which meant “door” in Finnish. Nokia launched the Ovi store a year after Apple launched its App Store. Though seen as a defensive strategy, Nokia’s Ovi store was the second largest application store after Apple’s, and in 2009, application downloads from the Ovi store were growing 70% per month, according to Tero Ojanperä, Nokia’s Executive Vice President of Services.30 Although these services were created with the developed world in mind, Nokia’s Ovi store dominated in emerging markets, where Apple was weak. Exhibit 12 compares Ovi to other services provided by competitors.

In 2007, Nokia purchased Navteq Corp., producer of digital maps used in car navigation equipment, for US$ 8.1 billion. Navteq became one of the more successfully developed services in Nokia’s arsenal: “more than 90% of commercially available GPS-enabled wireless solutions use

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Emerging Nokia?

Navteq maps.”31 Nokia brought the group in-house to work on location-specific applications. Unlike the iPhone’s location tools, which were provided through external applications, Nokia’s navigation services were embedded in the devices, increasing the range of applications that could be generated using geographic data. The main draw of the service was that maps of 180 countries could be downloaded from a computer in advance, eliminating the need for future downloading.

Nokia in Emerging Markets
An increasing percentage of Nokia’s revenue growth from 2000 to 2009 was fueled by its strong grip on emerging markets. China and India alone accounted for almost 20% of worldwide revenue in 2008. When revenues from South and Central America, Africa, the Middle East and countries in Asia were added, emerging markets account for 60% of revenue, 27% of assets, and 43% of employees.

Manufacturing
Nokia extended its geographic footprint to emerging markets first through exports and later by opening production facilities. In 1985, Nokia established a joint venture with China Putian to start handset production in China, a market then dominated by Motorola. In Latin America, Nokia opened plants in Brazil and Mexico to supply handsets not only to the North American market, but also to Central and South America. The plant in Chennai, India, which opened in 2006, served Southeast Asia, Africa, and the Middle East, and was Nokia’s most efficient plant. When Nokia failed to identify the trend towards clamshell handsets in Asia, they realized that they needed to get to know the local environment better. “For three years we asked headquarters to introduce a clamshell model in China,” Giles recalled. When the decision came through, the Chinese R&D center designed a phone that “looked like a terracotta warrior: it had a pen in the back that looked like the warrior’s sword.” When it was finally introduced in the market in 2005, it failed. The clamshell trend faded and Nokia was still associated with monoblock handsets. The lesson was clear that “…a one-size-fits-all approach just doesn’t work,” Olli-Pekka Kallasvuo said.32 To understand local markets, Nokia employed a group of anthropologists who observed the human behaviors that have an impact on technology and cell phone use. They discovered that phones were used by groups and not by individuals in emerging markets. In India it was a family, in Africa it was a community. “Business people often tend to lump all of the growing countries outside the West into one category…. Each of these markets is uniquely differently and complex,” Kallasvuo said.33

Instead of offering low-end handsets to price conscious customers, Nokia developed handsets tailored to local conditions. “When you think about it, these are some of the most critical, most discerning customers on the planet, by necessity,” Kallasvuo said.34 “Nokia has never said the emerging markets are about shipping last year’s technology or so-called third world technology or reusing. It’s about first-generation leading edge technology; it just has to be within the affordability constraints,”35 said Simonson. The Nokia model 1616 became a successful example of a technology developed in emerging markets for emerging markets. Although its features would look basic to western consumers, they represented technology adapted to the needs of emerging markets: a dust resistant keypad and an extra-strength case that protected the phone in rural markets; AM/FM radio capability because many homes lacked a separate radio; extended-life battery; built-in flashlight and calendar; e-mail and an address book for multiple users since the phone would be used by all members in a family. Improvements in logistics, sourcing, and mass 8

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production allowed Nokia to reduce the price of a 1616 handset by two-thirds in five years to US$32.36 In contrast, the average sales price of handsets was US$206 and US$238 in the U.S. and Europe, respectively.37

Said Simonson, “You do it by developing technology that allows you to go down the cost curve but still deliver things that are aspirational,” because “there’s a tremendous common aspiration for the same technology across the world.”38 To lower production costs, Nokia redesigned its logistics and production process. Production was divided into two steps, the first assembling the basic components of the handset – the engine – and the second adapting the handset to country-specific needs and customizing it to operators’ requirements. “Efficient massive production and technology is what allows Nokia to be competitive in price-sensitive markets,”39 said Martti Salomaa, a veteran senior plant manager with experience in Finland, Mexico, Hungary, and India. Nokia’s marketing strategy also focused on making the product relevant to consumers. Nokia’s “Made for India” campaign emphasized the qualities of Nokia’s 1100 phone, and a subsequent Hindi language SMS campaign strengthened brand preference for Nokia in India. Nokia also launched “VAN operations,” which outfitted a special purpose van as a “showroom on wheels” and allowed Nokia to market a consistent brand image across India.

Sales and distribution
Selling to the poor, or to the “bottom of the pyramid,” became a goal for many companies in emerging markets, with the aim of alleviating poverty for the masses while also increasing company profits. However, only a few companies were successful in this endeavor. Geographic dispersion of the population and the lack of subsidies for and distribution of handsets meant that Nokia was on its own in terms of sales, distribution, and repairs. “We want to be the Hindustan Unilever in telecommunications,” said Alex Lambeek, Vice President of Mobile Phones Marketing. “Nokia is transforming from an engineering-centered company to a consumer-centered company,”40 Lambeek noted. But Nokia was not historically so. Rick Simonson recalled a strategy session he attended right after the launch of the iPod and iTunes where the group said that Apple hadn’t done anything revolutionary and RIMs wasn’t anything to worry about. They said Nokia’s products did everything that the Blackberry could. When Simonson queried the group to ask how many people had actually used an iPod or a Blackberry, only three others raised their hands (out of a group of 60). Simonson said,

You have to break that when you get so successful and so technologically-driven. I insisted we always bought all the new devices. A lot of the first responses were, ‘our device does that.’ Yes, that was true, but you had to drill through six different menus to get there and most people don’t like that or don’t know how. I know I don’t. That’s what trapped us. We got so good and created so much value and had such wonderful prowess in terms of these technologies but we got a little too enamored with our technology and lost track of what the competition was doing and we were doing more of justifying how ours could do that rather than saying, ‘Wow, what a fantastic innovation, why didn’t I think of that?’41

The task of creating a distribution network was herculean in markets with large rural populations, and some handset manufacturers retreated from remote rural markets altogether. Sony-Ericsson and Samsung shied away from rural India to focus on the urban areas, creating an opening for Nokia. By investing in their own network system, Nokia claimed 65% of the rural market in 2007. As Lambeek said, “Investing in the right thing at the right time is key in emerging markets.”42

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Emerging Nokia?

For distribution across India, Nokia relied on HCL Infosystems, a local company with a nationwide network for computer and laptop distribution. Smaller, independently-owned firms known as Redistribution Stockists (RDS) delivered handsets to retailers in urban centers (60% of total volume) and rural markets (40% of total volume). For rural markets, a network of Microdistributors (MD) reached villages or towns of fewer than 30,000 people. The multilayered distribution organization ensured that, by 2005, Nokia had not only the greatest market share in India, but six times the market share of Samsung and Sony-Ericsson.43

Customer service and repairs also required an extensive network of independent outlets: 800 plus Nokia Care Centers covered 412 towns. In the top 75 cities, there was a Care Center within 20 square kilometers. Additionally, there were 150 plus collection points in the most remote locations and 15 mobile vans that covered 100 plus towns. The system was able to process 500,000 repairs per month with more than 90% being returned to the consumer in less than 24 hours. In Latin America, Nokia retained a dedicated team to manage the relationship with America Movil and Telefonica and to also coordinate sales and services across the region. Said Simonson, “Without a doubt, we are looking to be the operator’s best partner. In the history of the industry, we’ve both done better when we’ve partnered together and they leverage off of our brand and our quality and our know-how.”44 Nokia maintained its position as the leading vendor in the region, with a market share of 34.0% in 2008-2009, followed by Motorola with an 18.6% market share. Nokia’s decision to pursue the low-end market in the emerging markets was made in the fall of 2004. The decision was driven by two factors. Firstly, Nokia drove incremental cash flow in the low end. Simonson said, “You don’t deposit in a bank or pay a dividend with ASP to your shareholders, you do it with cash. It’s all about how do you maximize the total gross profit total cash flow and we could do that by playing into low end and super low end because we could take advantage of the scale. It’s the combination of the brand, the quality of the products, the sourcing, and distribution.” Secondly, they viewed it as an opportunity to “earn the trust of that customer and have them become a lifelong Nokia customer.” It was a way for Nokia to move the customer up the value chain. In Africa, Nokia used the distribution model that they had perfected in other areas in which they got out before their competitors and occupied the ground. They moved from selling to distributors to selling directly to the customer. All the while, Samsung was on their tail, busily trying to catch up to the progress Nokia had already made in India.

New Service Initiatives
Life tools In 2007, Jawahar Kanjilal, Nokia’s Global Head for Emerging Market Services, based in Singapore, received a new assignment. “Headquarters gave us total freedom,” Kanjilal said. “We had just two restrictions: We needed to develop a completely new services product instead of transplanting a product designed for a developed market, and whatever we can come up would not have to be relevant for developed markets.”

India, with its large rural population, quickly emerged as a laboratory to develop new services. Natesh B.V, the head of the Emerging Market Services group said, “We were surprised when we found unique usage patterns.” The group’s analyses found that charging cell phones was not always easy given intermittent electricity access. After months of extensive market research, Kanjilal’s team developed Life Tools, a suite of mobile information services in the main Indian languages. Life Tools provided content in three areas: market and agricultural information, education, and entertainment. Traditionally, farmers in rural India sold their products to middlemen who in turn 10

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Emerging Nokia?

710-429

sold to consumers. Farmers did not know the final asking price, so they sold their products for less than the market rate. For 30 rupees per month, Nokia Life Tools provided subscribers with the market prices in a 100km radius. “We realized that cell phones could solve many information asymmetries in rural India. Farmers would be better off by using that information,” said Kanjilal. Education services in Life Tools provided subscribers with access to general knowledge and courses in English. Children could practice for national exams and receive their scores on their mobile phones. Life Tools also had an entertainment section, which, for the cost of 10 rupees per month, allowed subscribers to personalize their phones with the latest ringtones, trivia, news and gossip, daily horoscopes, and cricket results – a hit with India’s cricket-mad population. Other companies also saw the opportunity for services in the emerging markets. Reuters had offered a service similar to Life Tools in India since 2007, called “Reuters Market Lite,” but they only had 125,000 users, who paid 200 rupees ($4.20) for a three-month subscription. “Assembling the ecosystem of firms that feed information to Life Tools or developed software for the system is crucial to this strategy,” Shivakumar mentioned. Both content and software had to be specially designed to use SMS technology because 3G networks were still not available in India. Agricultural data came mainly from government sources, while small start-ups provided the remaining pieces.

Launched in India in June 2009 and Indonesia in November 2009, by December 2009, Life Tools had one million subscribers, and planned to expand into other emerging markets. In August 2008, Nokia opened a regional research center in Nairobi, Kenya, to study consumer behavior and telecommunication needs in low-income communities. Others, too, were active here. In Uganda, MTN, Google, and the Grameen Foundation developed the “Clinic Finder” application, which helped people find nearby medical clinics, and a “Health Tips” service that enabled people to evaluate their symptoms.

Nokia Money In March 2009, Nokia invested in Obopay, a mobile payments company based in California, and was piloting Nokia Money, its financial services platform, in India. The service, through a partnership with India’s YES Bank, enabled electronic banking – remittances, transfers, bill payments, and airtime recharges – through the mobile phone, “with simplicity akin to sending an SMS or text message.”45

Nokia hoped to leverage the Obopay technology and export the model to other countries, assuming that the regulations country to country would be close enough to ensure scalability. In contrast, Vodafone, through its partnership with Safaricom had success with M-PESA, a mobile phone-based money transfer service, but it was specific to the Kenya market and couldn’t be exported to other countries. McDowell said, “One of our premises is, you should be able to exchange money with anybody, not just ones that you share a bank and operator with. And that goes for handsets as well. We know that we have to support this on non-Nokia handsets.”46 Nokia planned to charge customers a service fee, somewhere in the range of two percent to four percent, similar to a transaction fee assessed by a credit card company. According to Suresh Vedula, head of Nokia Money, “There will be a small amount charged for cash-in and a small percentage for cash-out. A merchant will pay a small amount on each transaction.”47 Nokia was staying abreast of the latest innovations occurring in other industries in the emerging markets to see how different models could be applied to mobile phones. Nokia believed the models that spun out from online gaming in China, where games were offered for free or through 11

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Emerging Nokia?

microtransactions, presented one such example. Even when offering a product for free, companies could make money through advertising or through upgrades to the product. Additional experimentations included location specific advertising and mobile couponing (where you can walk past a store and obtain, on your cell phone, a coupon to shop there), both of which were in their infancy. Nokia executives pointed out that these emerging market experiences affected monetization of services worldwide.

Nokia at a Crossroads
Shivakumar was telling Giles and Braam about the interview that Simonson gave to Barron’s four years ago in which he said, “The U.S. was the third world of wireless” because, at that time, there was no creativity or consumer choice in the market. However, the article’s author left out his following statement: “But, that’s changing, and the U.S. is going to be the source of innovation, leading the world with the combination of media and Internet coming together.” According to Simonson, “this was a prediction that came true – that’s the good part. The bad part is that we at Nokia missed it in the U.S.”48 Innovation within the industry had occurred in different countries at different times. Five to 10 years ago, it was happening in Europe and Southeast Asia. Now it was happening in Silicon Valley, India, and China.

As Shivakumar, Giles, and Braam sipped the last of their coffees, they felt excited and hopeful for the future of mobile industry and Nokia’s role in it. Given all they discussed, should they focus primarily on developed or on emerging markets? Or should they try and compete in both? As Simonson said, the question within the industry just a few years ago was “why don’t you forget about the emerging markets and just be a developed [world] high ASP manufacturer? The notion that there would be an explosion in the low end in the emerging markets and that it could be profitable; that operators could make money on incremental two to five euro average revenue per user (ARPU) was unheard of.”49

12
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Emerging Nokia?

Exhibit 1

710-429

Nokia’s Geographic Breakdown

Non-current Assetsa, Handsets (€ m)
Greater China
Finland
India
Great Britain
Germany
United States of Americab
Other
Total Segment Assets

2004
880
3,429
..
502
353
1,025
2,751
8,940

2005
1,120
3,619
416
437
390
1,437
3,031
10,450

2006
1,257
4,165
618
523
615
1,270
3,456
11,904

2007
2,480
5,595
1,028
649
2,842
1,279
11,389
25,262

2008
434
1,154
154
668
306
7,037
2,751
12,504

2009
358
1,698
180
228
243
5,859
1,377
9,943

Revenues (€ m)
Europe
Middle-East & Africa
Greater China
Asia-Pacific
North America
Latin America
Total Revenues

2004
12,281
3,510
2,992
4,544
3,540
2,504
29,371

2005
14,297
4,554
3,846
6,007
2,841
2,646
34,191

2006
15,587
5,277
5,361
8,361
2,970
3,565
41,121

2007
20,030
7,211
6,398
11,295
2,278
3,846
51,058

2008
18,842
7,265
6,420
11,344
2,068
4,771
50,710

2009
14,790
5,605
6,429
8,967
2,061
3,132
40,984

Employeesc
Europe
Middle-East & Africa
Greater China
Asia-Pacific
North America
Latin America
Total Employees

2004
35,893
176
5,007
3,163
7,276
3,990
55,505

2005
37,053
355
6,119
4,518
6,369
4,460
58,874

2006
39,306
1,021
7,452
9,868
5,574
5,262
68,483

2007
58,090
4,509
13,272
18,117
5,817
12,457
112,262

2008
64,339
5,238
14,879
22,002
8,862
13,125
128,445

2009
57,490
4,172
15,774
24,382
7,911
13,824
123,553

2004
2,660
3,416
..
2,261
1,730
938
884
768
..
1,091
909

2005
3,403
2,743
2,022
2,405
1,982
1,410
1,160
923
727
614
..

2006
4,913
2,815
2,713
2,425
2,060
1,518
1,394
1139
1,069
1,044
..

2007
5,898
2,124
3,684
2,574
2,641
2,012
1,792
1830
1,754
1,257
..

2008
5,916
1,907
3,719
2,382
2,294
2,083
1,774
1497
2,046
1,902
..

2009
5,940
1,731
2,809
1,916
1,733
1,528
1,252
1468
1,458
1,333
..

Top ten markets by revenue (€ m)
China
USA
India
UK
Germany
Russia
Italy
Spain
Indonesia
Brazil
United Arab Emirates

Source: Compiled from Nokia’s annual and quarterly reports, via http://www.nokia.com, accessed April 2010. a Comprises intangible and tangible assets and property, plant, and equipment. b Includes NAVTEQ since July 2008.

c As of December 31 of each year

13
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710-429

Exhibit 2

Emerging Nokia?

Nokia’s Financials (€ m)

Total revenues
Cost of Sales
Gross profit
R&D
SG&A
Net income
Total assets
Total liabilities
Total stockholders' equity
Gross margin (%)
R&D/Sales(%)
Return on sales (%)

1985
1,853
1,615
160
87
..
56
1,963
1,199
764
9%
5%
3%

1990
3,722
2,731
811
196
..
100
3,571
2,276
1,295
22%
5%
3%

1995
6,191
4,145
1,739
308
1,022
331
5,534
3,117
2,417
28%
5%
5%

2000
30,376
18,774
10,593
2,340
4,967
3,938
19,489
8,504
10,985
35%
8%
13%

2005
34,191
22,209
11,982
3,825
3,570
3,616
22,298
9,938
12,360
35%
11%
11%

2006
41,121
27,742
13,378
3,897
3,980
4,306
22,617
10,557
12,060
33%
10%
11%

2007
51,058
33,781
17,277
5,636
5,560
7,205
37,599
20,261
17,338
34%
11%
14%

2008
50,710
33,337
17,373
5,968
5,664
3,988
39,582
23,072
16,510
34%
12%
8%

2009
40,984
27,720
13,264
5,909
5,078
891
35,738
20,989
14,749
32%
14%
2%

Source: 1985-2000 data retrieved from Thomson Reuters, accessed March 2010, and Nokia’s annual reports. Note: Total liabilities for 2008 and 2009 do not include unallocated liabilities.

Exhibit 3

Nokia’s Financials by Business Segment (€ m)

Assets
Devices & Services
Mobile Phones
Multimedia
Enterprise Solutions
Networks/Nokia Siemens Networks
NAVTEQ
Unallocated Assets
Common Assets
Eliminations
Total Assets
Revenue
Devices & Services
Mobile Phones
Multimedia
Enterprise Solutions
Networks/Nokia Siemens Networks
NAVTEQ
Other
Total Revenue
Operating Profits
Devices & Services
Mobile Phones
Multimedia
Enterprise Solutions
Networks/Nokia Siemens Networks
NAVTEQ
Total Operating Profits

2004
7,810
3,758
787
210
3,055
..
13,729
1,142
-12
22,669
2004
22,871
18,429
3,636
806
6,367
..
..
29,238
2004
3,748
3,768
179
-199
878
..
8,374

2005
5,931
4,355
1,374
202
3,437
..
11,848
1,135
-53
22,298
2005
27,629
20,811
5,979
839
6,556
..
6
34,191
2005
4,176
3,598
836
-258
885
..
9,237

2006
6,999
4,921
1,474
604
3,746
..
10,713
1,190
-31
22,617
2006
33,661
24,769
7,877
1,015
7,453
..
7
41,121
2006
5,161
4,100
1,319
-258
808
..
11,130

2007
23,914
5,234
2,339
777
15,564
..
12,337
1,713
-365
37,599
2007
37,668
25,083
10,537
2,048
13,376
..
14
51,058
2007
7,931
5,434
2,230
267
-1,308
..
14,554

2008
10,300
..
..
..
15,652
7,177
9,641
..
-3,188
39,582
2008
35,084
..
..
..
15,308
318
..
50,710
2008
5,816
..
..
..
-301
-153
5,362

2009
9,203
..
..
..
11,015
6,145
12,479
..
-3,104
35,738
2009
27,841
..
..
..
12,564
579
..
40,984
2009
3,314
..
..
..
-1,639
-344
1,331

14
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For the exclusive use of J. Luo, 2015.
Emerging Nokia?

Exhibit 3

710-429

(continued)

Average Employees
Devices & Services
Mobile Phones
Multimedia
Enterprise Solutions
Networks/Nokia Siemens Networks
Common Group Functions
NAVTEQ
Nokia Group

2004
7,871
2,853
2,851
2,167
15,463

2005
7,582
2,647
2,750
2,185
17,676

2006
8,961
3,639
3,058
2,264
20,277

2007
9,278
3,475
3,708
2,095
50,336

30,177
53,511

31,638
56,896

36,086
65,324

40,920
100,534

2008
57,443

2009
56,462

59,965
3,969
346
121,723

62,129
4,282
298
123,171

Source: Nokia’s annual reports.

Exhibit 4

Nokia's Organizational Structure

Group Executive
Board Board
Group Executive

Services
Devices
Rick Simonson NY

Markets
D. Shivakumar India
Colin Giles Global
Chris Brahm Africa

Nokia
Siemens
Networks
NAVTEQ

Corporate Development Office
CorporateMary
Functions
McDowell - NY
Corporate Functions
Source: Adapted from Nokia’s website, www.nokia.com, accessed January 2010.

15
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710-429

Emerging Nokia?

Exhibit 5

Mobile Industry Structure, 1985-2010
1985-1998

Customer
Mobile
handset
manufacturer

Mobile
network
operator

(e.g. Nokia, Ericsson,
Motorola)

Suppliers
(mechanical parts,
chips, batteries,
antennas, cases)

Mobile
network
manufacturer

(e.g. Vodafone,
AT&T,
Telefonica,
Telia, Orange)

Consumer

Business

(Nokia, Ericsson,
Motorola, Alcatel)

1998-2010

Basic software providers
(OS, security, browser)
(e.g. Microsoft, Google, Symbian
Foundation)

(e.g. Qulacomm)

(e.g. Open Handset Allaince,
Symbian Foundation)

Mobile network
operators

ODM
(e.g. Compal, HTC)

IP provider

Application
developers

Customer

(e.g. Vodafone, AT&T,
Telefonica, Telia, Orange)

Mobile
handset
manufacturer
(e.g. Nokia, Motorola,
Sony-Ericsson)

Consumer
Retailers
(e.g. Best Buy, Tesco, Aldi)

Business

Suppliers
(mechanical
parts, chips,
batteries,
antennas, cases)

Mobile network
manufacturer

Virtual mobile
network
operator
(e.g. Virgin Mobile,
Easymobile)

(e.g. Nokia Siemens
Networks, Huawei)

Source: Created by casewriter.

16
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Emerging Nokia?

Exhibit 6

710-429

Allocation of Customer Value Through Mobile Generations

Source: Adapted from “Mobile Handsets Study: Convergence is Now,” Accenture, 2005, via http://www.accenture.com, accessed January 2010.

Exhibit 7

Mobile Phone Average Sale Price (ASP) ($)

500
450
400
350
300
250

Global Smartphones
Global Non-smartphones

200

Nokia Smartphones

150

Nokia Non-smartphones

100
50
0

Source: Compiled from Nokia annual reports and Morgan Stanley analyst reports, via Thomson Reuters, accessed February 2010.

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710-429

Exhibit 8

Emerging Nokia?

Main Handset Manufacturer Data, 2007

Nokia

Motorola

Sony
Ericsson

LG

Samsung

Palm

RIM

Apple

HTC

Units (millions)

437

159

103

..

..

3

14

2

10

ASP ($)

136

119

196

..

149

297

348

576

394

Europe

35

13

47

24

26

13

28

18

32

Asia

39

16

29

38

40

16

14

-

14

North America

3

51

17

28

26

51

54

82

54

Latin America

8

12

4

6

5

12

4

..

..

15

8

3

4

3

8

..

..

..

Revenues by Region (%)

Rest of the World
Financial Ratios
Asset Turnover

1.35

1.18

0.77

1.52

1.16

1.53

1.15

0.82

1.33

Pretax Margin

9.8

-8.75

8.45

2.56

5.42

-12

30.13

21.23

20.83

Return on Assets

11.22

-14.18

5.01

2.03

6.19

-9.12

29.7

14.94

27.82

Gross Profit Margin

32.45

26.79

35.94

24.1

25.68

30.19

49.46

34.31

33.2

Operating Profit Margin

11.68

-1.2

10.07

6.41

4.97

-7.21

28.9

19.32

19.92

P/E Ratio

14.56

1.18

14.11

27.5

20.06

n/a

19.89

32.34

10.91

Source: Compiled from “World Smartphone and Feature Phone Markets,” July 2008, via and Frost & Sullivan database, accessed February 2010.

18
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Emerging Nokia?

Exhibit 9

710-429

Handset Manufacturer Worldwide Market Share (%)

45
40
35
30

Nokia

25

Motorola
Samsung

20

LG

15

Sony Ericsson
Other

10
5
0

Source: Compiled from Frost Gartner Dataquest, accessed February 2010.

Exhibit 10

Selected Manufacturer Market Capitalization

250

U.S. Billions

200

150

Samsung Electronics
Nokia

100

Motorola
Apple Inc

50

Dec-94
Dec-95
Dec-96
Dec-97
Dec-98
Dec-99
Dec-00
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09

0

Source: Compiled from Thomson Reuters, accessed June 2010.

19
This document is authorized for use only by Jialin Luo in Strategic Management taught by Dr Ramon Baltazar, at Dalhousie University from January 2015 to July 2015.

61.4
86

Nokia's Market Share (%)

Nokia's ASP*

118
179
301
157

Enhanced Phones

Smart Phones - Entry-Level

Smart Phones - Feature

Average

62,325
15,192
15,565

Enhanced Phones

Smart Phones - Entry-Level

Smart Phones - Feature

82,850

15,975

86,887

15,666

180

351

209

121

40

57%

99

7.2

84.9

293

345

N. America

Americas

12,248

16,456

76,755

27,177

178

335

210

132

37

17%

98

32.8

80.3

457

569

LatAm

39,143

45,522

281,837

275,564

174

338

192

133

33

26%

96

42.3

45.5

1,718

3,776

AP excl. Japan

1

311

452

308

368

115

30%

171

0.3

86.6

110

127

Japan

21,844

1,992

11,926

Asia-Pacific

72,505

74,977

63,378

9,484

181

330

206

144

45

43%

100

39.4

122.9

617

502

W. Europe

9,619

9,447

41,082

31,350

162

304

175

128

40

19%

89

48.0

127.5

301

236

E. Europe

Europe

-20-

Source: Compiled from Gartner database, accessed March 2010, ITU, Nokia, and Morgan Stanley “Nokia: European Handset Survey Highlights Apple Threat,” via Thomson Reuters, accessed April 2010.

* Estimated by casewriters

63,867

Basic Phones

Mobile Device Sales to End Users by Device Category
2010-2013 (Thousands of Units)

29

Basic Phones

Mobile Device Average Selling Prices, 2010-2013 (USD)

% of subscribers that replace handset (2010-2013)

15%

58.0

Penetration Rate (%)

Projections

535

Total Mobile Subscriptions (Millions)

Middle
East/Africa

922

Regional Subscription Data, 2008

Population (Millions)

Exhibit 11

710-429

For the exclusive use of J. Luo, 2015.

This document is authorized for use only by Jialin Luo in Strategic Management taught by Dr Ramon Baltazar, at Dalhousie University from January 2015 to July 2015.

For the exclusive use of J. Luo, 2015.
Emerging Nokia?

Exhibit 12

710-429

Key Features of Nokia’s Ovi Store vs. Competing Application Stores

Exclusive App Source
Paid Apps
Free Apps
Phone Client
Desktop Client
Non-App Content
Billing System
Carrier-specific Stores
Developer Share

Nokia Ovi
Store
Yes
Yes
Yes
Yes
Yes
Yes
CC, Carrier*
Yes
70%

iPhone App
Store
Yes
Yes
Yes
Yes
Yes
Yes
iTunes
No
70%

Blackberry
App World
No
Yes
Yes
Yes
No
No
PayPal
No
80%

Windows
Mobile
Marketplace
No
Yes
Yes
Yes
TBD
TBD
CC, Carrier*
Yes
70%

Palm
App
Android App
Catalog
Store
Maybe
No
Yes
Yes
Yes
Yes
Yes
Yes
TBD
No
No
No
TBD Google Checkout
TBD
Yes
TBD
70%

Source: Adapted from CA Cheuvreux Analyst Report on Nokia, September 4, 2009, via Thomson Reuters, accessed January 2010.
*Windows Mobile Marketplace and the Nokia Ovi Store accept payment using credit cards and indirectly through carrier fees.

21
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For the exclusive use of J. Luo, 2015.
710-429

Emerging Nokia?

Endnotes
1

“Asia: Economist: Slowing Economy a Problem for Nokia,” Esmerk Finnish News, February 2, 2009, via Factiva, accessed February 2010.
2

Bruce Upbin, “The Next Billion: Nokia Covers the Globe, but its Phones are a Flop in the U.S. and it’s a Weakling on the Web. There’s a Plan to Change All That,” Forbes, November 12, 2007, via Factiva, accessed January 2010.

3

“Nokia Has Announced Plans to Restructure its Salo Manufacturing Plant in Finland,” Computer Weekly, February 16, 2010, via Factiva, accessed April 2010.
4

“A Finnish Fable Espoo,” The Economist, October 14, 2000, via Factiva, accessed February 2010.

5

Entry for Nokia Corporation, History, via Hoover’s Online, accessed November 2009.

6

Benn Steil, David G. Victor, and Richard R. Nelson, Eds., Technological Innovation & Economic Performance, (Princeton: Princeton University Press, 2002), p. 225.
7

Martti Haikio, Nokia: The Inside Story, (London, U.K.: Pearson, 2002), p. 25.

8 “The Giant in the Palm of your Hand: Nokia’s Turnaround,” The Economist, February 12, 2005, via Factiva, accessed February 2010.
9

http://www.interbrand.com/best_global_brands_intro.aspx?langid=1000, accessed April 2010.

10

“Nokia
Aims
Way
Beyond
Handsets,”
http://www.businessweek.com, accessed March 2010.

BusinessWeek,

September

10,

2007,

11

Interview with Mary McDowell, White Plains, NY, April 5, 2010.

12

http://www.nokia.com/about-nokia/company/structure, accessed April 2010.

13

Nokia Q4 2008 Press Release, PR Newswire, January 22, 2009, via Factiva, accessed February 2010.

14

http://www.retrobrick.com/moto8000.html, accessed February 2010.

15

Case writer calculations based on ITU data. Average annual growth rate from 1990 to 2000.

via

16 Daniel Langendorf, “Motorola’s decline in mobile industry has been coming for a long time” via http://www.last100.com/2008/03/26/motorolas-decline-in-mobile-industry-has-been-coming-for-a-long-time, accessed on March 2, 2010.

17

Gartner

18 Sara Silver, “Apple, RIM Outsmart Phone Market,” The Wall Street Journal, July 20, 2009, via Factiva, accessed February 2010.
19

Keynote presentation by Olli-Pekka Kallasvuo at CES 2010.

20

Case writer calculation based on data for Brazil, China, India, Indonesia, Russia, South Africa and Nigeria.

21

Interview with Mary McDowell, White Plains, NY, April 5, 2010.

22

http://www.mtn.co.ug/News-Room/Current-News/MTNZone-Calls-to-cost-1-=.aspx, accessed January

2010.
23

http://www.mtn.co.ug/News-Room/Current-News/MTNZone-Calls-to-cost-1-=.aspx, accessed January

2010.
24

Interview with Mary McDowell, White Plains, NY, April 5, 2010.

25

Data from WCIS.

26

Gartner, Worldwide Smartphone Data, accessed January 2010.

22
This document is authorized for use only by Jialin Luo in Strategic Management taught by Dr Ramon Baltazar, at Dalhousie University from January 2015 to July 2015.

For the exclusive use of J. Luo, 2015.
Emerging Nokia?

710-429

27

Kevin J. O’Brien, “Nokia Profit Rises on Smartphone Sales and Cost-Cutting,” The New York Times, January 29, 2010, accessed via Factiva, February 2010.
28

Interview with Mary McDowell, White Plains, NY, April 5, 2010.

29

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

30

For Nokia’s OVi, the world is enough, Om Malik

31

Nokia backgrounder on navteq

32

Keynote presentation by Olli-Pekka Kallasvuo at CES 2010.

33

Keynote presentation by Olli-Pekka Kallasvuo at CES 2010.

34

Keynote presentation by Olli-Pekka Kallasvuo at CES 2010.

35

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

36

Keynote presentation by Olli-Pekka Kallasvuo at CES 2010.

37

Data retrieved from Gartner.

38

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

39

Interview with Martti Salomma, India, December 2009.

40

Interview with Alex Lambeek, India, December 2009.

41

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

42

Interview with Alex Lambeek, India, December 2009.

43

Nokia materialsfrom interviews.

44

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

45

Josey Puliyenthuruthel, “Nokia Looks Beyond Handsets,” Business Today, April 4, 2010.

46

Interview with Mary McDowell, White Plains, NY, April 5, 2010.

47

Josey Puliyenthuruthel, “Nokia Looks Beyond Handsets,” Business Today, April 4, 2010.

48

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

49

Interview with Rick Simonson, White Plains, NY, April 5, 2010.

23
This document is authorized for use only by Jialin Luo in Strategic Management taught by Dr Ramon Baltazar, at Dalhousie University from January 2015 to July 2015.

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