Brief Summary
This video tells the story of Nokia's rise and fall in the mobile phone market, highlighting the decisions that led to their decline and the subsequent turnaround under a new CEO.
- Nokia was once a dominant force in the mobile phone market, generating over $76 billion in revenue in 2008.
- The introduction of the iPhone in 2007 and the rise of Android smartphones led to Nokia's decline.
- Nokia's attempt to compete with the iPhone with the N97 failed due to a clunky design and an outdated operating system.
- Stephen Elop, Nokia's new CEO, implemented a strategy that involved partnering with Microsoft and adopting the Windows Phone operating system.
- This partnership proved to be a colossal failure, leading to significant financial losses and a decline in market share.
- Rajeev Suri, appointed as CEO in 2014, restructured Nokia, focusing on stability and investing in 5G technology.
- Suri's strategy proved successful, leading to a turnaround for Nokia and a return to profitability.
The Dire State Of Nokia
In 2008, Nokia was at the peak of its success, generating over $76 billion in revenue. However, the company's dominance was short-lived. The introduction of the iPhone in 2007 marked a turning point in the mobile phone market, with its sleek design, touchscreen interface, and user-friendly experience. Nokia, initially dismissive of the iPhone, failed to adapt to the changing market demands. They released the N97, a phone with a touchscreen but a clunky design and an outdated operating system, Symbian, which was not as user-friendly or developer-friendly as Android or iOS. The N97 was a commercial failure, and Nokia realized they needed to make a significant change.
Signs Of Weakness
Nokia's initial response to the iPhone was one of arrogance and dismissal. Internal reports revealed that Nokia engineers mocked the iPhone, claiming it was expensive to manufacture and lacked durability. They believed it was a niche product, failing to recognize the potential of the touchscreen and the shift in consumer preferences. However, the market quickly proved them wrong. Consumers flocked to smartphones, and competitors like HTC and Google released their own Android-powered devices. Nokia's failure to adapt and innovate led to a decline in market share and a growing sense of urgency within the company.
The Man Who Destroyed Nokia
In 2010, Stephen Elop, a former Microsoft executive known for his leadership and ability to drive change, was appointed as Nokia's new CEO. On his first day, he delivered a speech known as the "Burning Platform" speech, which highlighted the company's dire situation and the need for drastic action. Elop argued that Nokia's platform was burning, facing intense competition from Apple and Android. He emphasized the importance of ecosystems, which included not only hardware and software but also developers, applications, and other services. While the speech was intended to motivate employees, it also damaged Nokia's brand and decreased shareholder confidence. Elop's goal was to create a sense of crisis to push through his changes, which included a strategic partnership with Microsoft and the adoption of the Windows Phone operating system.
A White Knight
While Nokia's phone division struggled under Elop's leadership, another division, Nokia Solutions and Networks, was thriving. In 2014, Rajeev Suri, who had been leading this division since 2009, was appointed as Nokia's new CEO. Suri's approach was the opposite of Elop's. He focused on stability and long-term growth, restructuring the company and investing in new technologies. Suri's first action was to enact a massive share buyback, rebuilding trust with shareholders and ensuring Nokia's financial stability. He then invested in 5G technology, acquiring Alcatel-Lucent and its prestigious Bell Labs, which owned over 29,000 patents. Nokia's investment in 5G paid off, with the company becoming a leader in the market and securing over 300 commercial 5G agreements by 2024. Suri's strategy transformed Nokia from a struggling mobile phone company to a leading provider of 5G network infrastructure.
