We have discussed about Nokia failing to hold on to its market share in mobile handset. So what are the reasons for its failure? The reason is very simple.
Failure of the in-house Symbian OS – Nokia was the first to introduce multi tasking on phones. There were many applications on the phones launched by Nokia. They also launched specialized phones for gaming in the NGAGE series. But Apple iOS in 2007 and Android OS in 2008 hurt it badly. Why did Nokia not embrace the technology? The general perception is they made a mistake of choosing the Windows platform as their future. This is not true as we will discover later. But it affected them so much that they are almost out of business in the category now.
| Operating System Percentage Sales Change in USA | |||
| Jan-14 | Jan-15 | Percentage Change | |
| iOS | 41.7 | 38.2 | -8.39 |
| Android | 52.3 | 58.7 | 12.24 |
| RIM | 0.6 | 0.2 | -66.67 |
| Windows | 5.3 |
6.7 |
26.42 |
| Symbian | 0.1 | 0.1 | 0.00 |
| Other | 0.3 | 0.1 | -66.67 |
Percentage Change in Sales of Operating Systems
The business has definitely shifted towards the Android OS with Apple still fighting. The era of Smartphone came and Nokia lost the market.
In 2014 Smartphone was dirt cheap and locally made, which eventually put Nokia out of the market. Samsung was the biggest gainer in the process. A small player it now has largest share of the Android phone market.
The Android, iOS and Symbian story is a classic case of disruptive technology bringing a successful company down. So what is disruptive technology? To understand the concept first coined by Clayton Christensen in his book “The Innovator’s Dilemma” we need to understand sustaining technology first.
Sustaining Technology – The new technologies that help improve a product’s performance are called sustaining technology. They will improve the performance of product already established as valued by the customer. The improvement in performance is along the lines the customer prefers. So, a sustaining technology is one which leads to a company’s success and never leads to failure. Most of the technologies are sustaining ones.
Disruptive Technology – The technology which brings a different value to the market altogether is disruptive. They will not be as good as the products which are established in the market. They will rather have additional features which are new. The thing that makes disruptive technology tick is the ease of use. There are many examples like the desktop computer being a disruptive technology for the Mainframe, and the cell phone being a disruptive technology for the Pager.
Another reason for failure is the progress of technology at a faster rate than actually required. In the honest effort to delight the customer and be ahead of competition companies invest in disruptive technology. The technology might not be popular now but can kill their creator in future. The extra feature becomes the main feature and drives the top companies away from the market. It is very evident the way pen drives came to the market. They were an innovation done by disk companies, and now these companies are going out of business.
So the established companies will not invest in disruptive technology. It is not a rational financial decision to make. The products of disruptive technology are simple and cheap and promise low margins, which is not lucrative for big players. These products are commercialized in emerging or unknown markets. They are not significant for the larger companies. And the most important thing is the most valued of the customers do not have the need for these products.
So, companies with good management and values will listen to their customers and not invest in the disruptive technology. They are concerned about profits and are doing well in the current scenario. Here is where they fail. The same holds true for Nokia and IBM. They did not invest in the disruptive technology in their segments and lost out too much to smaller players.
davidbartleby 