The Rise and Fall of Nokia

In this article from PandoDaily, Farhad Manjoo predicts that Nokia’s end as a company is near. Specifically, he claims that Nokia’s reliance on other companies’ software is the primary reason why Nokia is currently struggling; whereas successful mobile companies such as Google and Apple provide the software and, occasionally, the hardware for the massively popular Android and iPhone devices, “Nokia…always thought of itself as being in the device business. It made hardware, and it only cared about software to the extent that it needed code to run on those devices.” A memo sent to Nokia’s employees by recently appointed CEO Stephen Elop supports Manjoo’s claim. In it, Elop points out that while Nokia had continued to create solid hardware, they had failed to create entire device ecosystems.

In spite of Elop’s timely analysis of the issue, Nokia is nevertheless in decline. Referencing Apple’s 1990s similar decline in the face of Microsoft’s market ubiquity, Manjoo suggests that Apple was able to regain strength by “changing the rules of the game”, offering a solution that went beyond simply providing PCs. Nokia, however, isn’t showing the same type of innovation. In an attempt to quickly reverse their deterioration, Nokia has partnered with Windows in distributing their mobile OS. However, their success now relies on that of the Windows mobile OS, and Nokia/Windows Lumia phones aren’t selling as well as either company would hope. While Elop has hopes for the upcoming Windows 8 phones, Manjoo is not as optimistic regarding Nokia’s overall fate.

On a broader scale, however, this article is very telling as to how the device market has changed in the past years. Nokia’s decline suggests that it’s no longer economically feasible for IT production companies to produce only one element of a total product and subsequently expect to be both independent from other companies and financially successful. Rather, to succeed in the current business climate, companies need to consider providing combined IT solutions to consumers’ problems.