How Did the Emergency of GSM Aid the Ability of Nokia to Become a Global Leader - Admission/Application Essay Example

Name of Student) (Course Instructor) (Course title) (Date of submission) How did the emergency of GSM as a single standard for mobile phones across Europe aid the ability of Nokia to become a global leader? Global system for mobile communication (GSM) standard for digital cellular communication is recognized and accepted globally. The GSM standardization group was initiated in 1982 with the purpose to create a common mobile telephone standard for Europe. The group was to prepare specifications to be used by a pan-European mobile cellular radio system that operated at 900 MHz (Sauter 1). By then, GSM standard was the most widely circulated telecom standard globally and largely contributed to the global breakthrough and leadership in the market for Nokia (Palmberg & Martikainen 61). This section argues that the GSM standard opened up new markets for Nokia and contributed to diffusion of innovations, enabling Nokia to successfully enter the market ahead of its competitors. Before the 1990s market liberalization, telecom markets in Europe were strongly controlled by national governments and various PTT monopolists. However, European telecommunications policy became highly characterized by principles of harmonization of regulatory framework conditions, market liberalization, and the promotion of telecommunications industry (Selian 6). The establishment of the GSM standard increased the momentum for these developments as it led to companies, such as Nokia to standardize its working processes, hence achieving great success in the global market. Essentially, Nokia swiftly realized the advantage of the GSM standard and the need to achieve a competitive edge in the mobile technology by adopting the standard (Palmberg & Martikainen 65). Given the nature of digital economies, it implies that a company that gains control over evolution in network is likely to become a leader in the digital market place. The case of GSM showed that having command over technologies has global economic outcomes. By Nokia possessing latent competencies in GSM-related technologies, explaining Nokia’s succeeding success across the globe. Among the factors that contributed to Nokia taking advantage of GSM standard was the realization that capitalizing on local solutions to developing mobile technologies to meet the needs of the global market would not be able to produce the economies of scale and significant market penetration. Nokia realized that in order to penetrate international market, it was justified to invest in GSM-related technologies and programs (Palmberg & Martikainen 65). GSM was not simply a product standard, but a network standard. Thus, this was extremely significant to Nokia in terms of the benefits it could derive from implementing the standard. Prior to GSM, the quality of telecommunications services provided by Nokia was low and handsets were very expensive. The introduction of GSM standard opened up European market to competition, increasing demand for cellular phones (Selian 6). Nokia used this opportunity and its capability to nurture the new technologies by GSM and make them work to its advantages making it become a global leader. During 1980s, there was rapid growth of analog cellular telephones in Europe, especially in the United Kingdom and Scandinavia. During development, telecommunication industry experienced many problems. It is because each nation established its own system and produced equipment that could only operate within their respective boundaries (Selian 7). This limited the market to which companies like Nokia could sell their services. In fact, there were only a few compatible systems that were meant to provide solely local cellular solutions. The introduction of GSM-related technologies according to Palmberg and Martikainen (65) supported Nokia to provide flexible and reliable cellular solutions at the global level with little competition from other players in the telecommunication industry in Europe. During early 1990s, the existing networks a significant challenge of keeping up with the demand in the market. Nevertheless, Nokia was able to make new developments business with support from the GSM standard (Nokia Siemens Network 6). After publication of the first phase of the GSM specification in 1990 and commercialization of the Short Messaging Services (SMS) message in 1992, Nokia produced the first handheld GSM mobile phone known as Nokia 1011. The following year, Nokia commenced GSM+ project that supported new data transfer and voice codec’s (Nokia Siemens Network 6). The GSM’s Short Message Service helped Nokia to achieve wide popularity at the time. SMS is a bi-directional service that was adopted by Nokia to support sending of short alphanumeric message in a process of store-and-forward. It can be used in cell-broadcast and point-to-point (Selian 11). The fact the Nokia took advantage of this GSM technology faster explains its competitive advantage in the telecommunication industry at the time. This also indicates how Nokia adopted the GSM standard faster than its competitors, making it a global leader. Initial deployments of wireless networks in Europe supported by GSM-related technologies were based on digital technologies and were circuit-switched. With the help of GSM standard, Nokia’s products offered spectral efficiency in management of limited frequency bands and an attractive combination performance that attracted many consumers in European and global market (Palmberg & Martikainen 64). Additionally, the digital technology adopted by Nokia helped in the development of product characteristics, such as data communications and speech security over high quality transmissions. During the period when GSM standard was developed, the perception by many stakeholders was that a complete migration to digital cellular would cause digital systems to suffer various technical difficulties. Nevertheless, the GSM standard proved to have many benefits, including enhanced security, improved data transmission capabilities, resourceful use of radio-magnetic spectrum, and extended battery life (Selian 7), all which led to the breakthrough of Nokia into the global landscape. One of the important features of GSM technology is the GSM standard employed Time Division Multiple Access (TDMA) technology (Selian 7). The TDMA highly supported Nokia and increased its flexibility to access a wide range of suppliers and improved its potential to provide its product quicker into the European and global marketplace. With the goal of achieving global coverage, Nokia sought to be compatible with GSM-related technologies, such as promoting voice efficiency (Palmberg & Martikainen 70). The digital nature of GSM allowed Nokia to support transmission of data to and from Integrated Services Digital Network (ISDN). The ISDN uses Pulse Coded Modulation (PCM) for multiplexing voice lines over optical fiber lines and high-speed trunks. The development of GSM standard was also accompanied by political battle over which band TDMA solution to adopt: a narrow-band of wide-band TDMA solution. While other companies invested in the wide-band alternative, Nokia invested heavily in the narrow-band solution (Selian 11). After intensive lobbying, more companies, even those that had adopted the wide-band solution changed to the narrow-band alternative which was an advantage to Nokia. The most original and significant characteristic of GSM that helped Nokia to become a global leader a head of its close competitors, such as Alcatel and Ericsson was the ability to allow cellular phone users to make a choice of their preferred network and operator, as well as international roaming (Selian 11). Nokia succeeded in achieving international roaming by using identical networks and handsets, giving it an upper hand in telecommunication industry in European market and global market. Conclusively, emergency of GSM standard reduced market and technological uncertainty and acted as a basis for market penetration for Nokia. Since its initiation in 1982, GSM standard has contributed to the success of Nokia in both the European market and the global market. GSM discontinuously supplied cellular technologies which helped Nokia to emerge as a global leader. The GSM standard was introduced in the telecommunications industry in Europe at the time when Nokia had the appropriate competencies to adopt the new technologies, which it did. Therefore, Nokia’s success in the European and global market is attributed to its ability to adopt the GSM standard faster and to produce competitive products that matched the GSM standard, hence making it achieve economies of scale. Work Cited Nokia Siemens Networks. “The building block of Mobile broadband Celebrating GSM 20 years.” 2011. Palmberg, Christopher, and Olli Martikainen. "The GSM standard and Nokia as an incubating entrant." Innovation 7.1 (2005): 61-78. Sauter, Martin. "Global System for Mobile Communications (GSM)." From GSM to LTE-Advanced: An Introduction to Mobile Networks and Mobile Broadband: 1-71. Selian, Audrey. "3G Mobile Licensing Policy: From GSM to IMT-2000–a comparative analysis." Proceedings from the 3G LICENSING WORKSHOP, September. 2001. Read More