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Information System Essay

3852 words - 16 pages

The Rise and fall of Nokia
Case Study

Abdullah Maashi
Xiaomeng Guo
Fang Zou
Jian Zhao

Dr. Bartlomiej Hanus

Nokia is an over 100 year-old communications and technology corporation. It was the word leading mobile handset manufacturer. It evolved gradually from being it pulp paper manufacturer in the 19th century to electronics manufacturer in 1980s to a mobile phones’ in produces 1990s. By the late 2000s the rivalry among the competitors became very strong and the Nokia position as a market leader in mobile devices was threatened by competition lower-cost smartphones producers. It was supposed to make the right decision because ...view middle of the document...

New competitors from Asia, including South Korean manufacture Samsung, entered markets in Europe that Nokia had dominated. Many operators in Europe and the U.S. agreed to terms with Asian contract manufacturers or handset-vendors to provide lower-cost handsets. As more manufacturing was outsourced, original design manufacturer (ODMs), many of which were based in Taiwan, produced phones for other firms to sell under their brands. The competition was one of the real problems for Nokia and it challenged it.
The actual problem
The main problem, which was the reason for Nokia’s failure, is the operating system. Nokia was using the Symbian as an operation system. This was not the right operating system and it was described as a clunky, which means it was difficult to develop. For this reason the developers chose not to write applications for it. It was one of the oldest platforms. Nokia was working slowly and they had no clear idea how to make successful transition. While its operating system was suffering, it was spending a huge amount of money in development. In 2008 and 2009 it spent the hugest amount of money in its history in research and development, which was around €5900 million in each year without getting any improvement in its smartphones markets. In 2007 apple spent just $150 million to develop the iphone while in same time Nokia spent around 5900 million. It was spending the money maniacally just to win the market. I can explain this by Kallasvuo words “we had our head in the sand.”
According to market watch website Apple Company’s revenue in 2009 was $42.6 billion and they spent 1.3 billion for its Research & Development. In the other hand, Nokia’s revenue in same year was €40.984 billion and it spent €5.9 billion for its Research & Development. In 2010 Apple’s revenue increase to $65 billion with not huge increase in its spending for Research & Development while Nokia’s revenue increase to just $42 billion with not huge decrease in its Research & Development. This meant Nokia spent around five-fold what Apple spent for its Research & Development in these two years and in same time Apple’s revenue increase around $13 billion and Nokia’s revenue increase just €2 billion. This is a good example show as how Nokia was crazy in its spending without any clear advantage among the competitors.
After this poor performance, in 2010 Elop, the CEO for Nokia, mad the worst decision in Nokia’s history. He decided to abandon Symbian and replace it with Microsoft’s Windows Phone 7 software. Nokia share fell 14% in the day of the Windows announcement. In term of apps, Microsoft’s Windows operating system was the weakest system among the existing systems. It had just 6,500 apps and it was not desirable from the customers. In 2010, the same year when Nokia replaced its operating system by Microsoft’s Windows operating system, Microsoft Windows mobile and windows phone was getting just 4% from the market and this according to...

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