- Antoine Fonfreyde
Corporate history: the fall of Nokia
Nokia, which ruled the mobile phone market for years, declined as quickly as it rose. A look back at the highlights of this iconic company, from success to demise.
Nokia, the undisputed leader in the mobile phone market for almost two decades, eventually fell heavily victim to its own strategy and increasingly aggressive competition. In this article, we take a look at the key facts and dates that marked the history of this Finnish company, from its heyday to its decline.
Nokia's golden years: innovation and dominance
Nokia's meteoric rise dates back to the early 1990s. The company, founded in 1865 in Finland, entered the mobile phone business in earnest and quickly achieved phenomenal success through technological innovation and an aggressive marketing strategy. The Nokia 3310, released in 2000, is one of the iconic products of this era.
In the early 2000s, Nokia was synonymous with mobile phones. The Finnish brand was the market leader with a market share of almost 50% in 2007. Nokia was able to innovate and offer products adapted to the needs of consumers: robust phones with long battery life and innovative features for the time, such as the first integrated cameras or MP3 players.
During this period, Nokia invested heavily in research and development, which enabled it to regularly offer new models and remain at the forefront of technology. The Finnish company was also a pioneer in the field of smartphones, with the launch of the Nokia 7650 in 2002, which included a camera and a colour screen, and the Nokia N95 in 2007, which offered a true multimedia experience.
The turning point of the smartphone and increased competition
The arrival of the Apple iPhone in 2007 and the launch of the Android operating system by Google in the same year marked a turning point in the mobile phone industry. Nokia was slow to react to this new competition and relied on its own operating system, Symbian, which struggled to win over consumers. The Finnish company is gradually losing market share.
In 2011, Nokia joined forces with Microsoft to develop smartphones running Windows Phone. Despite quality devices, such as the Lumia range, this alliance does not manage to reverse the trend, and Nokia continues to lose ground to Apple and Android smartphone manufacturers. Nokia's delays in developing new products and low adoption of Windows Phone contribute to this decline.
Asian competition, particularly from brands such as Samsung, Huawei and Xiaomi, is also undermining Nokia's market position. These new players offer smartphones at competitive prices and with technical features that are often superior to those of Nokia products. Faced with this increased competition, the Finnish brand is struggling to differentiate itself and convince consumers.
The decline and sale of the mobile division
Nokia's sales have been falling steadily over the years. In 2012, the company announced a record loss of 4.9 billion euros. This was the first annual loss Nokia had suffered since it entered the mobile phone business in 1992. Nokia's market share is eroding rapidly, falling from 49% in 2007 to less than 5% in 2013.
Faced with this situation, Nokia sold its mobile division to Microsoft in 2014 for €5.4 billion. This transaction marked the end of Nokia's epic in the field of mobile phones. The Finnish brand then refocused on other sectors of activity, notably telecommunication networks and cartography with its subsidiary HERE. This diversification strategy enabled the company to regain a certain financial stability and to develop new skills in promising areas.
In 2020, Nokia announced a new strategy and a new organisation in order to strengthen its position in the fields of mobile and fixed networks, cloud and network services, and patented technologies. In the same year, the company also appoints a new CEO, Pekka Lundmark.
In addition, Nokia began restructuring its operations and cutting costs. The company cut many jobs and closed a number of production and research facilities to focus on areas where it had a competitive advantage.
All these measures have paid off. They have enabled Nokia to exceed its financial targets for 2021 and to post growth in both revenue and profitability. The company has also improved its competitive position in the field of 5G and signed several important contracts with operators such as T-Mobile, Verizon, and Orange.
A timid revival and uncertainty
In 2016, the Nokia brand made a comeback in the smartphone and mobile phone market thanks to a licensing agreement with the Finnish company HMD Global. The latter is launching several Android smartphone models and reissues of iconic phones, such as the Nokia 3310. It also offers original and innovative models, such as the Nokia 8.3 5G, the world's first smartphone to support all 5G frequency bands. The decision to move to the Android operating system, which has been widely adopted by consumers, has put Nokia back in the running.
Despite some successes, the Nokia brand is struggling to regain its former glory in a market now dominated by other giants such as Apple, Samsung, Huawei or Xiaomi. Nokia's market share remains very low, and the brand's future in the smartphone sector is uncertain.
To try to stand out from the competition, Nokia relies on innovation and the quality of its products. For example, the brand offers smartphones with powerful cameras, such as the Nokia 9 PureView, which has five photo sensors, or the Nokia 7.2, with its triple camera. In addition, Nokia continues to invest in research and development to bring cutting-edge technologies, such as 5G, to its new smartphone models.
The importance of the emerging market and entry-level phones
Nokia is also trying to differentiate itself by focusing on emerging markets and entry-level phones. The Finnish brand has historically been popular in these regions due to the robustness and ease of use of its phones. By targeting these markets, Nokia hopes to attract customers looking for affordable and reliable products.
To this end, Nokia offers competitively priced phones with basic but essential features for everyday use. The brand is also banking on nostalgia by re-releasing some of its iconic models and updating them. The 2017 Nokia 3310, for example, has a colour screen, a camera and a better battery than the original. These phones are successful with consumers, but they are not enough to compensate for the loss of market share in the smartphone sector.
In order to strengthen its market presence, Nokia is also entering into strategic partnerships with other industry players. The alliance with HMD Global is an example of this approach, allowing Nokia to re-enter the smartphone market without having to directly manage the production and distribution of its devices.
In addition, Nokia is partnering with other companies to develop innovative technological solutions, particularly in the area of telecommunication networks. For example, the Finnish company is collaborating with the American giant Qualcomm to develop 5G solutions and with the German industrial group Siemens to create network equipment.
The company is also active in more unexpected sectors such as health, education, and the environment. For example, Nokia is working with AeroFarms to optimise agricultural production using 5G and artificial intelligence.
The story of Nokia is, therefore, that of a giant that was able to reign over the mobile phone market for years, before experiencing a brutal decline due to questionable strategic choices and increasingly fierce competition. Today, despite a tentative comeback, Nokia's future in the smartphone industry remains uncertain, and it is difficult to predict whether it will ever regain its place among the market leaders. However, the brand's efforts to innovate and offer quality products could enable it to win back some of its audience and restore its reputation in the years to come.