Nokia Product Innovation - Case Study Example

NOKIA PRODUCT INNOVATION Student’s Name Course Professor’s Name University City (State) Date Contents Contents 3 Brand Innovation proposal 12 Table of Figures Figure 1 Nokia 1100 is the world's most sold cell phone 6 Figure 2Nokia Lumia 6 Figure 3 High-end iPhone 7 7 Figure 4 Nokia N97 launched in 2009 8 Figure 5 iPhone and Samsung dominate the smartphone market 9 Figure 6 Nokia N79 was marketed as a sports phone 11 Nokia Product Innovation Throughout the 1990s until 2007 when Apple introduced the iPhone, Nokia was the leading mobile phone company in the whole world. The company’s market share further dropped when phones that run on Google’s Android software were introduced in 2008. Both Apple and Android phones became an instant hit with the public at a time when Nokia had invested in hardware production at the expense of software innovation. Its attempt to counter competition by introducing smartphones that ran on its software failed as they were of low quality. Likewise, its partnership with Microsoft in 2011 was not successful as projected. Nonetheless, Nokia seeks to introduce new Android-powered smartphones in the market before 2016 ends. Moreover, the company has to renovate its brand and ensure that its products meet customer expectations to seize a significant share of the market. History The origin of Nokia can be traced back to 1865 when Finnish Engineer Fredrik Idestam established a paper pulp factory in Southern Finland. Due to a high demand for wood pulp, he opened a second mill and named it Nokia AB. Soon, the company merged with Finnish Cable Works LTD and other companies, with interests in cable, rubber, forestry, electronics, and power businesses. In 1982, following the deregulation of European telecommunications industries, Nokia launched the first fully-digital telephone exchange in Europe and the world’s first car phone for the Nordic Mobile Telephone analog standard. In 1991, a Nokia phone made the first global system for mobile communications (GSM) call. At the same time, the company decided to concentrate fully on its telecommunications and mobile business by dropping its investments in chemicals, paper, television, and power plant. By 1998, the company became the global leader in cell phones, a trend which lasted for more than a decade. Figure 1 Nokia 1100 is the world's most sold cell phone In 2007, the company joined its telecommunications operations with Siemens to create Nokia Siemens Network joint venture. In 2011, Nokia collaborated with Microsoft and released the Nokia Lumia smartphones. Subsequently, in 2014, it welcomed Microsoft’s proposal to purchase most of its products and services; however, the agreement has now expired, and the company has hinted that it will introduce three new Android devices late this year. Figure 2Nokia Lumia However, the company, which was the world’s leading mobile phone, began facing both internal and external challenges that saw its fortune dwindle. Part of the company’s problems stemmed from increased competition from companies such as Apple and Google. Nokia’s chief executive admitted to the public that some of the mistakes that the company’s management have made over the years were the reason they were left behind by their rivals. The company has also been criticized for its failure to diversify its management even though it is a global company. Notably, Finnish executives have run the company since its formation in 1865. Senior managers of the company have also been accused of deliberately keeping their counterparts at arm’s length, which affects business decisions. Figure 3 High-end iPhone 7 The other challenge was the failure to develop new products at a period when the mobile industry was experiencing exponential growth. For example, when Apple introduced the iPhone in 2007, Nokia had no product that matched that experience. Still, the company lost a significant grip on the market when Android was introduced in 2009. The company faced serious challenges in adapting to sudden technological changes in the mobile industry. It channeled it resources more toward hardware innovation at the expense of operating software (OS). Although top managers knew that Nokia had to have a better operating system to compete with Apple’s iOS, they were aware that it would take time to have one. Further, they were reluctant to admit to the public the inadequacy of their OS for panic of losing their suppliers, customers, investors. The pressure to catch up with Apple led to further problems for Nokia. For example, they ended up giving undue attention and resources to the development of new phone devices instead of creating an OS that would challenge Apple’s (Johnson 2016). In 1997, it introduced the N95 smartphone that had full music features, full internet browsing, GPS navigation, a large but had serious quality problems. Subsequent phones such as the 5800 and N97 that were launched in 2008 and 2009 respectively also faced quality issues. Its alliance with Microsoft in 2011 further accelerated the company’s decline in its market value decreased by 90% in just six years. Figure 4 Nokia N97 launched in 2009 Culture Huy (2016) attributes the fall of Nokia from the top of the smartphone pyramid to three factors. Firstly, the company was technically inferior to Apple. Secondly, it was unconcerned, and lastly, its management team did not see the iPhone coming. In addition, Huy says that Nokia lost the smartphone battle because of a culture of fear that was shared among the company’s management team, which made them unable to respond to Apple’s competition. The then company top managers are said to have a scary reputation, which was widely shared by middle managers. Besides, they were extremely emotional and often screamed at employees. Some of Nokia’s employees claimed that it was tough to point out problems to their seniors. To make matters worse, employees were always threatened with demotions. Competition The main competitors of Nokia include Apple, which dominates the high-end, Samsung, OPPO, Huawei, and Vivo. Other respectable names include Sony and LG although they have failed to have a real impact on the market. As of 2015, Samsung commands the largest smartphone market share at 23.3% followed by Apple at 13.4% then Huawei at 7.6% (IDC 2016). OPPO smartphone market share is 3.2%, Vivo 2.9% and others 49.6%. Figure 5 iPhone and Samsung dominate the smartphone market Ethos According to the Nokia’s code of conduct, as published on its website, the company says that it values the opinions of others and is acutely aware that trust is core to its competitiveness and success (Nokia 2014). The company its brand and reputation that it has managed to build over the years, thus strive to maintain the highest degree of ethical conduct in all activities. The company says that it is devoted to the maintenance of a working environment in which workers are free to raise concerns regarding violations of its ethics. In addition, the company requires that all its employees accustom themselves with and uphold ethics in their day-to-day functions. The company has also provided both an email address and phone contact where members of the public can report suspected violations of its code of conduct. The company through links with NGOs has been keen on environmental conservation measures. In 2013, it won a European Union award in the category of the Corporate Social Responsibility Scheme (Nokia 2014). Besides, Nokia ensures that it uses environmentally friendly materials and has channeled resources in the recycling of old mobile phones. The company also encourages its management team to use video conferencing and teleconferencing as opposed to business travels to reduce C02 emissions. Equally, it advises the public to use bicycles or public transport when going to work. The company’s ensures that energy in its buildings are not wasted apart from engaging in community projects that are geared towards conserving the environment such as the Himalayas wetlands conservation. For long, Nokia has been targeting all categories of the market through diverse mobile devices and services (Nokia 2014). For example, it marketed its Nokia N79 as a sports phone whereas the Nokia Roxo was made for young women. The company recognizes women as a major target market that is why its phones come in pink and gold color. Nonetheless, with an expected launching of their products this year after missing in the market for two years, Nokia may opt to target either the high-end customers like Apple or the low end. Figure 6 Nokia N79 was marketed as a sports phone Values Values are designed to guide organizations’ decision- making processes and educate potential customers as well as clients what a company is about. Additionally, core values are serve as retention and retention tools as job seekers apply for positions in organizations whose values they consider important. The values of Nokia include respect, achievement, renewal, and challenge (Ind, 2007, p. 55). The company expects its staff to have respect towards one another, never to be complacent and embrace teamwork for maximum output. Nokia aims to sustain and an environment where workers, clients, suppliers and other stakeholders can empower themselves, and enhance their ties through sharing and developing ideas. Gratton (2010) says that the discipline, philosophy, and flexibility have enabled Nokia to modify its human resources to adapt the changing customer needs (156). However, Gratton views reflect the years that Nokia was still the leading mobile company in the whole world. Brand Innovation proposal Before introducing new smartphones, Nokia should carefully analyze the market as well as find a good market strategy. Notably, many companies like HTC have tried new things like different casing materials and various software options but still lose market share to competitors like Apple and China’s Xiaomi. It should take note of external environmental factors that may affect its operations such as government regulation, socio-cultural forces, and technological forces. For example, the society may react against expensive smartphones and opt for less costly ones. Also, a stagnant middle-class the world over may shrink the market for smartphones. Nokia ought to introduce products that are well designed and have exceptional features. The company can be able to sustain its growth and brand equity through a steady supply of new products and services (Badr 2016). Maintaining a constant flow of innovative devices and services will keep the company ahead as well as reinforce its relevance and evolve its equity to sustain long-term growth. Apple, for example has succeeded being relevant as it launching a new iPhone after every nine months. Equally, Samsung also releases its high-end series, every year, which gives its customers something to look forward to. The company should be able to attract a younger audience through products that are well designed. It is important to note that the company can attract new customers by identifying a gap in people’s needs today and catering for them for them to build relevance again in the phone market. For example, Samsung managed to penetrate the market with advanced products and a good marketing strategy. By building its brand image, Samsung has managed to share the high-end market with Apple. Nokia also needs to shift focus from smartphone hardware to software. Notably, the success of Apple iPhone is attributed to it's both industrial design and software, which has made it to be miles ahead of the entire industry. The company considers working with Android after its initial move to work with Microsoft failed to excite the market. Hall (2016) says that already the company plans to launch three Android phones in a bid to tap into the smartphone market by the end of 2016. Briden (2016) claims that the phones are expected to have high-end specs and high-end features such as Snapdragon 820 processors, 22.6 MP grapheme cameras, Android 7.0 Nougat, metal construction and dust resistance, and metal construction. Reisinger (2015) explains that it is extremely hard to survive on the midrange and advises Nokia to target either high-end or low-cost buyer. He says that Apple is performing very well in the high-end space of the market whereas low-cost models work best in emerging markets. On the other hand, he demonstrates that it is in the middle market where companies like Samsung, HTC, LG, and Amazon are struggling to make money. It is, therefore prudent that Nokia makes the right decision to target the right market segment. Moreover, the company should target China, which is the world’s biggest consumer market and Africa, which is an emerging market. Nokia should create enough awareness about its product particularly in Africa, which is likely to experience the biggest growth in consumer spending in the next decade. The company should make sure that its new phones are secure. Reisinger (2015) argues that enterprise security is becoming increasingly important in the corporate world that is dominated by mobile devices. Nokia should push its partners to maximize the safety of both hardware and software of its devices. Mainly, it should offer an alternative to Samsung’s Knox or BlackBerry’s enterprise services to appeal to the corporate segment. Apple customers, on numerous occasions, have been under attack from hackers who hack into their devices to steal confidential information and use them for commercial purposes. Nonetheless, Apple remains the safest smartphone in the whole world. Conclusively, Nokia for a long time was the world’s leading smartphone company before losing the market to Apple who introduced the iPhone in 2009. The company started facing problems when it failed to launch products that were of the same level as Apple and other competitors. Mainly, it concentrated more on hardware as opposed to software innovation, which ultimately led to losing its market share to competitors. Likewise, attempts by the company to make a comeback failed in 2011 when it partnered with Microsoft and introduced the Nokia Lumia smartphones that ran on Windows software. As part of its brand renovation, the company ought to shift focus from hardware to software, target a particular market segment, ensure its products are secure, and perform a thorough market research. Reference List Badr, A., 2016. How can Nokia reinvent the brand and build new equity?. [online] Campaignlive.co.uk. Available at: http://www.campaignlive.co.uk/article/nokia-reinvent-brand-build-new-equity/1406773# [Accessed 5 Oct. 2016]. Briden, P., 2016. Nokia WILL Return in 2016 With Three Android Phones: Specs, Hardware & Release Date Rumours. [online] Know Your Mobile. Available at: http://www.knowyourmobile.com/mobile-phones/nokia-c1/23369/nokia-c1-leaks-running-android-windows-10-ahead-q4-2016-launch-A1 [Accessed 5 Oct. 2016]. Gratton, L., 2010. Hot Spots: Why Some Teams, Workplaces, and Organization Buzz with Energy-And Others Dont's. ReadHowYouWant.com. Hall, C., 2016. Nokia Android phones: What can we expect to see? - Pocket-lint. [online] Pocket-lint.com. Available at: http://www.pocket-lint.com/news/137751-nokia-android-phones-what-can-we-expect-to-see [Accessed 5 Oct. 2016]. Huy, Q., 2015. Who Killed Nokia? Nokia Did. [online] INSEAD Knowledge. Available at: http://knowledge.insead.edu/strategy/who-killed-nokia-nokia-did-4268 [Accessed 5 Oct. 2016]. IDC., (2016). IDC: Smartphone Vendor Market Share. [online] www.idc.com. Available at: http://www.idc.com/prodserv/smartphone-market-share.jsp [Accessed 6 Oct. 2016]. Ind, N.,2007. Living the brand. London: Kogan Page. Johnson, B., 2011. Nokia crisis highlights internal struggle - BBC News. [online] BBC News. Available at: http://www.bbc.com/news/technology-12414595 [Accessed 4 Oct. 2016]. Nokia., 2014. Nokia Our Company. [online] Available at: http://company.nokia.com/en/about-us/our-company [Accessed 5 Oct. 2016]. Reisinger, D.,2015. 10 Things Nokia Must Consider Before Getting Back Into Smartphones. [online] Eweek.com. Available at: http://www.eweek.com/mobile/slideshows/10-things-nokia-must-consider-before-getting-back-into-smartphones.html [Accessed 5 Oct. 2016]. Read More