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Why Nokia Missed the Smartphone Shift - Video học tiếng Anh
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Why Nokia Missed the Smartphone Shift
Why Nokia Missed the Smartphone Shift
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0:00
Nokia didn't lose the smartphone war overnight.
0:06
At its peak, it was the world's largest mobile phone company.
0:10
Its devices were everywhere.
0:12
At its height, Nokia was a force to be reckoned with in the mobile phone industry.
0:16
For millions of people, Nokia wasn't just a brand. It encapsulated the mobile phone.
0:22
So, how does a company like that lose its lead? The answer isn't
0:26
just competition. It's that the rules of the industry changed.
0:29
It was difficult for top managers to understand and accept the capabilities
0:34
that Nokia had were no longer optimal in the new conditions.
0:40
Phones were no longer just hardware. They were becoming software platforms
0:44
built around apps, developers, and ecosystems.
0:47
And Nokia didn't just fall behind. It misread where the value in the industry was going.
1:03
I'm Arjun Kharpal and in this episode of Built for Billions, we're looking at how Nokia went
1:07
from dominating the mobile phone industry to losing its lead in the smartphone era.
1:14
At the turn of the millennium, Nokia mobile phones were everywhere.
1:20
At its height, Nokia was a force to be reckoned with in the mobile phone
1:24
industry. Customers would walk into stores and just say, "I want a Nokia."
1:28
Nokia wasn't the market leader to start with. I remember the times when it was just a competitor
1:33
and wanted to become even serious to be considered within the market leaders.
1:37
In the beginning, it was definitely just a way to try and make products or
1:41
ideas and concepts that would make sense and would, you know, become as good as possible.
1:46
Just a decade earlier, Motorola dominated the market with bulky,
1:50
expensive devices like the DynaTAC.
1:52
But Nokia took a different approach.
1:55
Its devices were smaller, lighter, with longer battery life,
1:58
and designed for everyday use. That shift helped redefine what a mobile phone could be.
2:04
Bear in mind, in the early 1990s, all you did with a phone was actually held it to your head
2:08
and talked to it. They moved to this transition where we went from a voice interaction with a
2:14
mobile phone, to a visual interaction with a mobile phone. The way we use phones today,
2:18
they saw the potential of mobile data and internet connectivity. And then they
2:22
started to build out this incredibly highly segmented product portfolio catering for
2:28
lots of different personas of customers with phones at every single price point as well.
2:32
As demand for mobile phones grew,
2:34
Nokia made a critical strategic shift. In the 1990s, it became a leader in GSM,
2:40
the global standard that allowed mobile phones to connect across networks and countries.
2:46
That gave Nokia a powerful advantage, allowing it to scale production,
2:50
expand globally, and bring mobile phones to the mass market.
2:54
GSM arrives and opens this multitude of opportunities for Nokia. This particular product,
2:59
the Nokia 2110, was a device which I think is the genesis of the modern mobile phone.
3:05
This device, I think they had an estimate of selling something like 400,000 units,
3:10
they went on to sell 20 million. Absolute powerhouse of a device
3:14
and also it had the iconic Nokia ringtone on it as well...
3:21
NOKIA RINGTONE PLAYS
3:21
Which was very, very important.
3:22
As bandwidth grew it was possible to send like an image or something like that,
3:27
then of course you can start creating the opportunities around it as well. So,
3:30
you need to create the need slightly before you can deliver, but also you may need to make
3:35
sure that you can produce it so that you can deliver by the time someone wants it.
3:38
Nokia wasn't just building phones. It was building a business around volume, efficiency,
3:43
and global scale. That strategy reached its peak with devices like the Nokia 3310.
3:49
Simple, durable, and affordable - it became one of the most successful phones ever made.
3:54
"Introducing the Nokia 3300 series wireless phones."
3:57
At that moment, 126 million devices sold, the population of Japan. It
4:03
blew people's minds. And I think for many people of a certain age,
4:08
this device was their first phone. It's synonymous with what a phone is. And this is
4:13
the device that meant that the phone was always going to be a part of people's everyday lives.
4:18
If you look at the Nokia design philosophy with the eyes of today,
4:23
I would say that it was also very diverse. So,
4:26
it was different kinds of solutions and products for different kinds of people.
4:30
So, there wasn't an assumption that you know something would be okay for everyone,
4:34
rather trying to understand what would be particularly for that user group good.
4:39
So, if you had a fashion range for example, it would design-wise be very bold.
4:44
Or if you would have something that was more of an entrepreneurial or enterprise solution,
4:48
it would be a lot more timid, and not so flamboyant, maybe.
4:52
You could see the results also in how the understanding of humans and their
4:57
needs go all the way to the end products too.
5:00
That strategy drove explosive growth.
5:03
Nokia was worth more than $290 billion at the time, making it the most valuable company in
5:08
Europe, and it continued to dominate the market by producing dozens of different phones each year.
5:14
Devices like the Nokia 1100 became global hits,
5:17
selling more than 250 million units and becoming the bestselling mobile phone of all time.
5:22
It was a huge shift from having a technical device to actually having something that's part of you.
5:29
It became a lifestyle tool, I'd say, when it became more accessible, when more people
5:34
could afford to get one and it wasn't only businessmen in a tie who would have them.
5:40
And that's where it became more of a way to express who you are,
5:44
rather than just a functionality.
5:46
Phones were getting more affordable and they were going to the masses,
5:49
and they also started to embrace the services that would go around phones.
5:53
At their peak, you know, 40% market share, an unthinkable chunk of a
5:58
massive market. You had to wonder, well, how could anyone get to that stage again?
6:03
Nokia's strength was its ability to build and sell phones at massive scale across every price point.
6:09
That model made it dominant, but it also meant Nokia was focused
6:12
on hardware at a time when the industry was about to change.
6:17
"And we are calling it...iPhone."
6:23
In 2007, Apple introduced the iPhone.
6:26
When the iPhone came out, Nokia's top management had very good understanding
6:32
of its specifications and potential impact on Nokia's market share and it put a huge
6:38
pressure on the middle management. Top managers were constantly under the
6:43
illusion that Nokia's response to the iPhone is almost ready for launch,
6:49
and they therefore didn't make any bigger changes in the processes and structures of Nokia.
6:56
It kind of quickly became clear that this was something.
7:00
No one could really see it. So, Nokia initially was like, "Yeah,
7:03
we get it. It's kind of interesting, but we're going to be okay."
7:06
The iPhone wasn't just another handset. It turned the phone into a software platform
7:10
built around apps, developers, and a completely different user experience.
7:15
Meanwhile, Nokia software, Symbian, had been built for an earlier generation of phones,
7:19
and as smartphones became more complex, it struggled to keep up.
7:23
They created this operating system together with Ericsson, Siemens,
7:28
Motorola and even some of the Japanese, for example.
7:31
Symbian was a great success. This cooperation between manufacturers,
7:34
all these different brands, but of course ultimately if you're trying to do something
7:37
as a committee, and you've got time-to-market pressures, you've got competition pressures,
7:42
you want devices to look different, it starts to become very, very difficult.
7:46
For years, Nokia had optimized for hardware - design, engineering and scale.
7:51
But now the value in the industry was shifting from devices to ecosystems.
7:56
Nokia's philosophy of a mobile phone was a device that was totally
8:02
utterly optimized for performance.
8:04
If you're trying to compress stuff all of the time, as they were with Symbian,
8:07
and you've got years and years of code that you're working with, you kind of push one
8:12
thing and another thing pops out, and they were starting to find that they were getting lots of
8:16
challenges with the operating system because it just wouldn't scale the way they needed to.
8:22
Although it took them a step forward, I think ultimately it did hamstring
8:27
them a little bit because of the fact that they were always having to work
8:29
cooperatively and try and address all the needs of all the different manufacturers.
8:34
Software people had very limited visibility to the end customers because top management
8:40
would have their visibility to the customer, they had market intelligence who communicated to the
8:46
product units, and then the product units sent requirements to the shared software platform.
8:52
So, it created a lot of internal complexity and very limited visibility to the end customer.
9:00
When the iPhone launched in 2007, Nokia was still reporting strong sales. But over the
9:05
next few years, its position as the world's leading mobile phone maker began to slip.
9:10
iPhone created so much anxiety among Nokia's board members and top managers
9:16
that they practically forbade Nokia people from using the iPhone. They said,
9:23
"don't even mention that word in this building."
9:26
Stephen Elop was the first one who actually brought iPhones to the product development
9:32
and compared them to Nokia phones and was saying look how far behind we are,
9:37
and this is how he woke up the organization.
9:40
But the problem wasn't just the product it was how decisions were made inside Nokia decades
9:45
of dominance had created a culture where bad news didn't travel and critical decisions were delayed.
9:50
When you grow really big, it might also be difficult to do really sharp decisions.
9:56
Nokia's failure was ultimately about emotional dynamics in decision making
10:02
and how they shaped Nokia's technology choices.
10:06
In 2011, Nokia made a decisive move. It partnered with Microsoft,
10:10
abandoning its own software and betting on Windows phone.
10:15
I believe the strategic decision to go for Microsoft and for Windows phone was
10:20
because of the fact that Nokia believed that it had to do something different and
10:24
believed that it had the skill set internally. They had this very nice
10:28
Metro user interface with Smart Tiles which looked quite interesting.
10:33
So, initial excitement, people really liked it, but then perhaps that slight
10:37
disappointment that once you picked up the phone, the whole app ecosystem wasn't there.
10:42
So, all of those apps that we were seeing on Android and iPhone,
10:44
although some anchor apps were there, they were just kind of missing.
10:48
Windows Phone failed to attract developers and without apps,
10:51
it couldn't compete with iOS or Android.
10:54
In 2 years, those two ecosystems dominated the market and Nokia's value collapsed.
11:00
Nokia underestimated the importance of external developers and how to work with
11:08
external developers. So, in iPhone, Android, they really invested heavily to attracting
11:17
the developers. Nokia was actually paying to developers so that they would develop
11:22
apps for Nokia phones, because no one wanted to do it on their own.
11:27
In 2014, Nokia made its final move. It finalized the sale of its mobile phone business to Microsoft
11:33
for 5.4 billion euros, bringing an end to its decades of dominance in the industry.
11:39
The company that once defined the mobile phone era had exited it.
11:43
But that wasn't the end for Nokia. In the next episode, we look at the part
11:46
of the business that survived, and how it became the foundation for Nokia's comeback.
11:51
The whole future is AI native networks. It's going to be,
11:55
we think, fundamentally different than what has been delivered with the prior generations.
