Presentation on failure of nokia
- 1. Presented by:- Abhishek Thakur Akshat Oswal EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 2. ABOUT NOKIA : • In 1871 Fredrik Idestam opened his second mill on Nokianvirta river which gave the name Nokia Ab in 1871. • Nokia began with making paper – incidentally one of the first communication technologies. • In 1898, Eduard Polón founds the Finnish Rubber Works, which later becomes Nokia’s rubber business, making everything from galoshes to tires. • In 1912, Arvid Wickström sets up the Finnish Cable Works, the foundation of Nokia’s cable and electronics business. • In 1963, starts developing radio telephones for the army and emergency services – Nokia’s first foray into telecommunications • And by 1987, Nokia is the third largest TV manufacturer in Europe. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 3. The Mobile Era • Nokia sets the ball rolling in 1979, creating radio telephone company Mobira Oy as a joint venture with leading Finnish TV maker Salora • Then in 1981, the Nordic Mobile Telephone (NMT) service, the world’s first international cellular network and the first to allow international roaming, is launched. • In 1984, Nokia launches the Mobira Talkman portable car phone. Resembling a military field telephone, it’s a fairly cumbersome piece of kit – but it’s a start. • In 1987, GSM (Global System for Mobile communications) is adopted as the European standard for digital mobile technology. With its high-quality voice calls, international roaming and support for text messages, GSM ignites a global mobile revolution. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 4. NOKIA IN NEW AGE: • In 1992, Nokia launches its first digital handheld GSM phone, the Nokia 1011. • In 1994, Nokia launches the 2100 series, the first phones to feature the Nokia Tune ringtone • The Nokia 2100 series goes on to sell 20 million phones worldwide. Nokia’s target was 400,000. • By 1998, Nokia is the world leader in mobile phones. • Between 1996 and 2001, Nokia’s turnover increases almost fivefold from EUR 6.5 billion to EUR 31 billion. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 5. Nokia- The leader in mobile technology • In 1999, Nokia launches the Nokia 7110, a phone capable of rudimentary web-based functions, including email. • Then in November 2001 Nokia launches its first phone with a built- in camera, the Nokia 7650, and in September 2002 its first video capture phone, the Nokia 3650. • In 2002 nokia 6650 is launched with the 3g technology. • In 2005, Nokia sold its billionth phone – a Nokia 1100 – in Nigeria, and global mobile phone subscriptions passed 2 billion. Two years later, Nokia is recognized as the 5th most valued brand in the world. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 6. The tumble down! EMSE 6005.10 Organizational Behavior for the Engineering Managers First hit when competition started. Second hit when Competitors took over
- 7. Competition… • While it was not totally unexpected, what caught Nokia off- guard is the rate at which competitors where innovating new technology. • Since the launch of the iPhone/Android phones, Nokia failed to keep up with the industry. While other kept proceeding ahead aggressively by ‘hook or crook’. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 8. Competition… EMSE 6005.10 Organizational Behavior for the Engineering Managers • If analyzed through the Technology Lens, Nokia primarily failed to innovate attractive technology and features. • For example, though Nokia had touchscreen phones, it did not attract customers as much as compared to Apple iPhones. • The software being developed were using old development models and newer concepts such as User Experience and User Interface were being neglected. • Nokia was clinging onto Symbian OS for too long. It had reached its peak.
- 9. EMSE 6005.10 Organizational Behavior for the Engineering Managers Time for Change? • With the company facing fierce competition, Nokia started reporting financial losses and started loosing grip on the market. • Olli-Pekka Kallasvuo, as President and CEO, saw the company's rise to become the world's preeminent mobile brand — but was also at the helm as Nokia fell distantly behind a new wave of competition. • He was seen off by the management and he was succeeded by Stephen Elop on September 21, 2010.
- 10. EMSE 6005.10 Organizational Behavior for the Engineering Managers Human resources? • Market share fell drastically from 45% to 34% in 2011 • Nokia posted a loss of 368 million euros for Q1 2011 • As per Stephen Elop’s initial memo, which leaked to the press, the company was on a ‘burning platform’. This was a reference to the Symbian OS the company had been using for so long. • This was regarded as very discouraging and one of the most damaging memo in corporate governance. • Although Elop tried his best, the company saw its worst days.
- 11. Redrafting Strategies • In 2011, Nokia joined forces with Microsoft to strengthen its position in the smartphone market. • The strategic partnership saw Nokia dump Symbian OS and adopt the Windows Phone operating system and establish an alternative ecosystem to rivals iOS and Android. But it was too late. • Under the leadership of the Stephen Elop, Nokia decided to stick to only and only Windows OS while Android was a free alternative. • Nokia launched Windows Phones series dubbed as the Nokia Lumia. Fast-forward to 2013, Nokia has a full portfolio of great Windows Phone 8 smartphones, from a 520 through the award-winning Lumia 920 and the ground-breaking Lumia 1020, which enables photography never seen before in a smartphone. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 12. Redrafting Strategies EMSE 6005.10 Organizational Behavior for the Engineering Managers • In September 2013, Nokia announces that it has entered into an agreement with Microsoft whereby Microsoft would purchase substantially all Devices & Services, the Nokia business which makes mobile phones and smartphones. • Stephen Elop facilitated this deal and his role in it has been questionable. • Though Nokia is now reporting profits, it had lost its glory in the market it once dominated single-handedly.
- 13. What did Stephen Elop do worng? Inspecting with the organization and human performance lens. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 15. EMSE 6005.10 Organizational Behavior for the Engineering Managers Wrong decisions. • While the entire smartphone OS industry was evolving, manufacturers moved on and adopted various operating systems like Android, Windows, Bada, Meego, et cetera, Nokia decided to stick to Windows OS only. • As Android and iOS became more popular, Nokia and its windows phones failed to attract any attention. • Though the new technologies developed by Nokia were ground breaking, they were not promising enough.
- 16. EMSE 6005.10 Organizational Behavior for the Engineering Managers Results • During the 3 years Elop was Nokia CEO, Nokia revenues fell 40%, Nokia profits fell 95%, Nokia market share collapsed in smartphones from 34% to 3.4% • Nokia's credit rating went from AAA to junk, Nokia's share price dropped 60% in value and Nokia's market capitalization lost a minimum of $13 Billion in value. • The Financial Times calculated that Nokia shareholders ended up paying Elop a bonus of 1 million Euros for every 1.5 Billion in market capital that Elop was able to destroy while Nokia CEO
- 17. Rumor Mill • Stephen Elop was working with Microsoft’s Business Division before moving to Nokia. • He was the first non-Finnish CEO of Nokia and it is argued that Stephen was sent with the sole purpose of devaluating Nokia as to make it easier and cheaper for Microsoft to buy it. • Microsoft being a software giant always had ambitions to acquire a hardware sector firm and as Nokia dipped to the bottom, Microsoft announced that it had bought Nokia for $7.2 Billion. EMSE 6005.10 Organizational Behavior for the Engineering Managers • While all this happened, Stephen comes back to Microsoft as VP of Microsoft's Devices & Services business unit and gets a signing bonus of $25 Million
- 18. Conclusion • From Technology perspective, Nokia did not deliver as per expectations based on previous performance • From the Strategy perspective, though Nokia did eventually come up with nice lucrative products, it lost in the race against time due to poor strategies and sly competition. • From the organizational and people perspective, the new CEO’s attitude and competency proved to be fatal for the company. • The entire Rubik of Organization , people and strategy failed to deliver for Nokia. EMSE 6005.10 Organizational Behavior for the Engineering Managers
- 19. Questions are welcomed. EMSE 6005.10 Organizational Behavior for the Engineering Managers