Nokia, Innovation and market shifts
Case study on Nokia Corporations
By Sijan Gurung,
University of Oslo.
This paper is written as a part of assignment UNIK4000 - Technology, Innovation and Product Development. This paper is about the Nokia Corporation, its Innovations and the market trends throughout this period. According to Henry Chesbrough (2003), “The story of Lucent and Cisco is hardly an isolated instance. IBM’s research prowess in computing provided little protection against Intel and Microsoft in the personal computer hardware and software businesses. Similarly, Motorola, Siemens and other industrial titans watched helplessly as Nokia catapulted itself to the forefront of wireless telephony in just 20 years, building on its industrial experience from earlier decades in the low-tech industries of wood pulp and rubber boots.”  This statement explains that how a company like Cisco was successful against Lucent by implementing open innovation. While Lucent Technologies were enjoying huge R&D from Bell Labs and were busy on their own close innovation research, Cisco, who were lacking huge internal R&D were taking inputs from external R&D and firms. Following the open innovation patterns Cisco were not only successful but also able to outstand Lucent Technologies who were backed by huge R&D. The same implies with other companies in other fields, namely Nokia and Microsoft. But how does such successful company can go nearly to extinction. What leads Nokia to be out casted from the market? Even spending millions on Research & Development, What goes wrong with Nokia? These are the questions that are going to be answered by this paper, or at least try to address.
Brief History of Nokia
Nokia is one traditional player and they were the industry leader in the total mobile phone industry in 2010. Nokia started as a company in 1865 and have been forestry, a rubber, a cable, and electronics and ultimately mobile phone company during its lifetime. Nokia began to experiment with telecom equipment during the 60’s, but the first many years were not successful. Their mobile phone business became a success when present chairman of the board, Jorma Ollila, started as CEO in January 1992. Nokia sold a lot of business divisions and began to focus on mobile phones. Nokia and Ericsson were pioneers within GSM and when the European countries choose GSM as standard, the two companies got a good start within the mobile phone industry. Ollila has been a huge contributor for Nokia’s overall success since the company went from $3.5 billion in revenues by 1992 to $54.3 billion when he retired as CEO in 2006. Nokia was initially doing close innovation when it realized the market trends, then adapted to open innovation norms and started collaborating with other companies for development which resulted in their own OS i.e. Symbian. Since Nokia had assumption that their main strength were in hardware rather than software, they wanted to make a common software base so that there will not be any competition on later field. In 2002, Nokia began to focus even more on the smartphone business and invested intensely because of pressure from Microsoft. Nokia got a good start within the smartphones market, but their success did not last as their dominance was shrinking. In 2010 Samsung and Sony Ericsson were the last to leave Symbian in favor of Android. Nokia reacted by hiring the former head of Microsoft’s business division, Stephen Elop, as their new CEO by September 2010. Elop quickly realized that Nokia could not deliver the same experience as Apple or Android and he knew that something radical had to happen. By February 11th 2011 Stephen Elop announced that Nokia was going to cooperate with their former competitor, Microsoft to adopt Windows Phone 7.5 (WP7.5) and that their own smartphone OSs, Symbian and Meego, would be phased out. As part of the restructuring plan, Nokia planned to reduce...
References: 1. “The Era of Open Innovation”, Henry W. Chesbrough, April 15, 2003 from MIT Sloan Management Review .
6. “Nokia – Jorma Ollila – Mobile revolution – Story of Nokia". Nokia Corporation. (Retrieved 21 Mar 2009)
8. “Nokia’s Pioneering GSM Research and Development to be Awarded by Eduard Rhein Foundation” (Press release). Nokia Corporation. 17 October 1997. (Retrieved 7 April 2012)
11. Richard Goodwin, The History of Mobile Phones : 1973 to 2007, 3 April 2013 at 18.21 , http://www.knowyourmobile.com/nokia/history-mobile-phones/19848/history-mobile-phones-1973-2007 (Accessed 25 Oct 2013).
13. “Nokia : Culture will out “ – Adam Greenfield - http://speedbird.wordpress.com/2011/02/19/nokia-culture-will-out/ (Accessed: 4 Dec 2013)
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