If you ever need to throw a phone at someone, you may consider a Nokia. Props to those who know which model is being referred to. In 1865, mining engineer Fredrik Idestam set up a wood pulp mill at the Tammerkoski Rapids in southwestern Finland, and by 1871, the company had taken its name from the nearby Nokianvirta river at the Tammerkoski Rapids in Tampere. That’s right; Nokia is not Japanese or Swedish, it is Finnish.
At its zenith, Nokia commanded nearly 40 percent of global mobile shipments and saw its turnover soar from €6.5 billion to €31 billion (approximately RM31 to RM148) between 1996 and 2001. Yet within just a few short years, its market share nosedived into single digits while its mobile division’s revenue plunged by over 90%. What led this once-indomitable giant— from pioneering car phones to launching revolutionary devices like the Nokia 1011 and 2100 series that far exceeded even the company’s modest sales targets— to become a cautionary tale? What happened to Nokia?
Adapting to Trends
In the early era of mobile communication, handsets were built for usability, durability, simplicity, and reliability. Icons like the Nokia 3310, which sold over 250 million units worldwide, and even the quirky Nokia Communicator epitomized a time when phones were straightforward tools for staying connected rather than portable productivity hubs or entertainment centers.
However, as the industry pivoted to smartphones— a revolution defined by touchscreens, dynamic app ecosystems, and constant connectivity— Nokia’s robust, utilitarian designs became liabilities. Competitors such as Apple and Samsung captured the public’s imagination with intuitive, interactive devices that redefined what a phone could be, leaving Nokia in the dust.
Nokia’s glory years were defined by its commitment to creating phones that simply worked. But when the industry pivoted to smartphones— a revolution in design, interactivity, and connectivity— the company’s inherent strengths turned into liabilities. As the world embraced touchscreens and app ecosystems in iOS and Android, Nokia’s legacy of robust, utilitarian design couldn’t keep pace.
Strategy Miscalculations and Stubbornness
Nokia’s decline was not only due to external pressures; their internal stubbornness played a significant role as well. At a time when consumers were embracing a new generation of mobile technology, Nokia clung to its old playbook.
Nokia phones at the time ran Symbian OS, which was unfortunately getting dated and lackluster. Although Symbian was the first modern mobile operating system, it was the last to evolve. The fragmentation of the system hindered its progress. While being an open-source operating system theoretically offers flexibility, customizability, and better support, in practice, it was slow to adapt. Its inconsistent implementation made it unappealing to app developers and meant poor app support.
Organisational Inertia and Leadership Woes
Beneath Nokia’s celebrated brand lay an internal culture riddled with inertia. As the market shifted, the company was hampered by bureaucracy and sluggish decision-making. A reorganization during the time intended to boost agility instead sowed discontent among key stakeholders and top management, sparking a brain drain that stripped Nokia of the talent that had driven its earlier success.
Leadership instability compounded these issues. With two CEO changes occurring amid the unfolding crisis, Nokia’s strategic vision became fragmented. When both the top and middle layers of the organization were mired in uncertainty, the company couldn’t effectively rally to address the disruptive changes in its industry. In other words, a building that is shaky on the top and bottom is an organised pile of rubble.
In their desperate situation, Nokia and Microsoft found hope in each other: one needed an operating system, and the other needed a phone to run it. In 2011, the tragedy known as the Windows Phone was born.
Despite promising launches like the Nokia Lumia and Asha series, this left Nokia increasingly dependent on a struggling Windows OS, while Android and iOS surged ahead, eroding its hard-earned reputation and branding it as a company that simply couldn’t cope with change. Ultimately, Nokia’s saga serves as a humbling reminder that even the most legendary reputations can only take you so far, and in a world driven by relentless innovation, no brand is immune to the need for continual evolution.
Today, the legacy of Nokia continues through its focus on networking solutions. Meanwhile, HMD Global Oy, the mobile phone division that was sold to Microsoft and later repurchased, now produces feature phones and Android smartphones that emphasize repairability, all under the Nokia brand. While not the former glory, at least they’ll stick around.
Sources: The Guardian, Medium, Alantis Press
Gan contributed to this article.
