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What reasons led to the downfall of Nokia? The Decline and Fall Story of Nokia

NOKIA, a formerly well-known brand in the mobile phone sector, has seen both success and loss along the way. Between the end of the 1990s and the beginning of the 2000s, Nokia dominated the mobile phone market. It finally achieved a significant market share because of its reputation for setting trends and providing iconic designs.

History of Nokia Downfall

In 2003, the Nokia 1100—its best-selling smartphone to date—was created. In just six years, the market value of Nokia’s high-end handsets has dropped by about 90% due to the company’s ongoing quality decline. After it’s decline quickened in 2011, Microsoft acquired the company in 2013.

What reasons led to the downfall of Nokia? The Decline and Fall Story of Nokia
Credit: brandminds

Only 5% of smartphones sold worldwide by the end of 2007 were Apple products, with Nokia cellphones accounting for 50% of the market. Although it trailed the competition, they released the “iPhone killer” in 2010.

Probably the most famous instance of a disruptive technology eliminating a market leader is the demise of Nokia. It was one of the most well-known mobile phone companies worldwide. I think a lot of us still remember carrying around those big Nokia phones (3310, anyone?) and showing them off to our friends.

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What reasons led to the downfall of Nokia? The Decline and Fall Story of Nokia

The N95, which debuted in 2007 and included a 5 MP camera, stereo speakers, GPS, and Wi-Fi, was the company’s reaction to the smartphone revolution. These were not really groundbreaking specs.

However, it’s possible that its loss was more caused by its resistance to adapt and evolve with the times than by this specific release.

Why Was Nokia’s Monopoly Abandoned?

With its application-based operating system and complete touchscreen, the monopolistic brand failed to adapt to the change. Customers started to turn back as the years went by since it did not live up to their expectations. One of the main drawbacks was the company’s emphasis on the Symbian series.

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What reasons led to the downfall of Nokia? The Decline and Fall Story of Nokia

Nokia remained committed to Symbian, while all of its rivals were moving toward other platforms like Android or iOS. The company experienced such losses because it did not take the risk of using the Windows phone until 2011, and as a result of its sluggish response.

The Fall of Nokia

If top executives admitted they weren’t as technologically advanced as Apple, they risked losing suppliers, consumers, and investors. Middle managers were intimidated by upper management when they were accused of lacking the ambition to achieve their objectives. Middle management deceived top management by saying that it was pointless to tell the truth.

Moreover, they moved the production of its smartphones to Asia. Following suit, the company’s share price plummeted to a loss of €1.3 billion. A number of experts conjectured that Microsoft might acquire the company in light of its announcement to close its last manufacturing in Finland and its 10,000 more job cuts. After eking out an 18-month survival, it generated a profit again in 2013. But for €5.44 billion (£4.6 billion), Microsoft acquired the Nokia Telecommunication (Handset and Network) business.

They were underestimating the influence of software on the mobile industry. Instead, the business became quite problematic as a result of relying on hardware.

With the introduction of the iPhone, which completely changed the smartphone market, Apple joined the market and the company was unable to survive. Rapid changes in consumer preferences, ineffective marketing tactics, and technology improvements were the main causes of Nokia’s demise.

An illustration of how even large firms can lose market share if they don’t adapt to changing conditions and keep a watch on their competitors is the Nokia debacle. For now, the new Nokia phones are sold by HMD Global but it is still not in the growing phase.

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