Nokia and the Global Mobile Phone Industry

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Case Details:

Case Code : BSTR167
Case Length : 12 Pages
Period : 1999-05
Organization : MG Rover
Pub Date : 2005
Teaching Note : Available
Countries : Global
Industry : Mobile Phone

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"We want to be the company that brings this industry to the next phase. And if we have a little bit of a bump in the road in 2004, that's immaterial."

- Jorma Ollila, CEO of Nokia, in mid 2004.1

"Nokia didn't have the coolness factor. They didn't really do flip phones; they were a little late with cameras, and they didn't push them. Coolness in the consumer space is a big deal, and they were stodgy."

- Jack Gold, vice president of Meta Group, a Connecticut-based technology consulting firm, in 2005.2

Positive Signs

The announcement of Nokia Corporation's (Nokia) quarterly results in April 2005 was a much awaited event as far as the global mobile phone industry was concerned. The company, which had emerged as an industry leader in the late 1990s, had run into rough weather in 2003-2004, with sales and earnings falling below expected levels. So much so that when the company announced poor results in the first quarter of 2004, several analysts declared that it was the beginning of the end of Nokia's dominance in the industry.

However, Nokia was not ready to throw in the towel quite so easily. The company put up a tough fight over the second half of 2004 to recapture its lost position in the market.

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It introduced several new models, modified designs, and aggressively promoted products with a view to increasing its market share, which had fallen to a low of around 28 percent in early 2004 from an average of 35 percent over the previous three years.

Nokia's efforts started paying off by late 2004. The company announced satisfactory results for the fourth quarter of 2004 and market share for the year 2004 also stabilized at 32 percent by the end of the year. Jorma Ollila (Ollila), Nokia's CEO, while acknowledging that 2004 had been a challenging year, declared that the company was poised to recover in 2005. Ollila's prediction came true when the company announced better than expected results for the first quarter of 2005, ending March 31.

In the first quarter of 2005, Nokia's sales increased 17 percent over the corresponding quarter of the previous year to $9.65 billion.

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1] Kevin Maney, "CEO Ollila says Nokia's 'sisu' will see it past tough times,"USA Today, July 20, 2004.

2] Nelson D. Schwartz, "Has Nokia Lost It?"Fortune, January 11, 2005.


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