of
Nokia’s Mobile Phone
Product Life Cycle of Nokia’s Mobile Phone
We buy products from the market. Our preference for products changes with time. New products with better facilities come into market replacing old products. Just like us, these products also exhibit a life cycle. Some products may have a longer life cycle and some shorter. Colgate toothpaste has remained popular over a long time whereas design for a dress loses popularity in one season. Product life cycle can be described as changes in consumer demand over time. It analyses the product evolution in four product life cycle stages. They are the market introduction, growth, maturity and decline (Mr. Dashboard, 2016). We have described product life cycle of Nokia mobile phone.
Background
Starting as a wood pulp mill in 1865, Nokia, a Finnish company, evolved to become one of world’s greatest mobile phone manufacturer. It experienced three transformations over a hundred years of the business process - from rubber, paper to cable, from cable to mobile phones, from mobile phone to mobile Internet. It remained the leader of the mobile phone market for 14 years before its failure to capitalize mobile internet market.
Analyzing Product Life Cycle
Introduction Phase: Nokia introduced the first car phone, the Mobira Talkman in 1984 following up with portable and commercially available, the Mobira Cityman in 1987. Throughout the 1980s, mobile phones remained very expensive and manufactured for only commercial market. Motorola with its predominance in the US market was the biggest player. In the initial stage, competitors were very few but sales were also low due to the high price, the absence of the stable and reliable network, and to the consumer uncertainty about true usefulness of the new product.
Digital system replaced the analog signal with the introduction of the GSM (Global System for Mobile communication) protocol in 1991 in Europe and in 1995 in the United States. Nokia exploited the opportunity and launched its first GSM mobile phone, the Nokia 1011, in 1992. This brought in a revolution in the development of mobile phones. With the reduction in size and weight, the portability improved.
Growth Phase: There was huge reduction in cost due to economics of scale. The mobile network now covered wide area. This resulted in the increase of the popularity of the mobile phone. Nokia made huge investment on R & D trying to find out new features and incorporate them into new mobile phones. It launched the 2100 series in 1994 that became highly successful. It managed to sell 20 million units (Angelini, 2013, p-25). Nokia’s incremental rate increase remained at around 50%. With production of one billion mobile phone by 1998, Nokia became the world’s largest mobile phone manufacturer surpassing Motorola (Jia & Yin, 2015, p-447).
With Nokia’s strong market presence, other competitors lost ground as shown in the following Table.
Nokia grew further with the export of mobile phones to developing countries especially China. Nokia increased its turnover from €6.5bn to €31bn in the period 1996 to 2001.
Maturity Stage: With the increasing amount of consumers using mobile phones, and the changes in people’s lifestyles, new features required to be incorporated to satisfy the diverse preferences. Nokia was able to develop and release the greatest number of these product innovations that helped it to gain and maintain its leadership in this industry. Nokia launched the first mobile phone with a built-in camera, Nokia 7650, in 2001. Following year, it launched first 3G phone, Nokia 6650. Sale of Nokia’s mobile phone grew further with export to new markets of developing countries. Its market share reached 40% by the year 2007 (Jia & Yin, 2015, p-448). Nokia sold Nokia 9210 smart phone – the first smartphone with an organizer, MS-Word, and MS-Excel.
Decline Stage: Entry of iPhone, manufactured by Apple in 2007 changed customer preference. iPhone developed Ios as its operating system for its smart phone which was far superior in functionalities to Symbian OS being used in Nokia smartphone. In the year 2008, Google released Android, its new smart phone operating system. Samsung and many other companies started selling its smart phones with Android as the operating system. By 2011, Nokia’s market share has dropped to 14% far below Apple and Samsung.
Sales share of each mobile phone brand in December 2012 (Jia & Yin, 2015, p-449)
Source: Dediu, 2012.
Source: Dediu, 2012.
Source: Dediu, 2012.
With long history of manufacturing mobile phone and with highly motivated management leadership, decline in Nokia’s mobile market share has attracted many management studies. Some of the reasons cited are deviation in the business tactic and failure to grasp the market accurately (Jia & Yin, 2015, p-449).
Economic Impact
Nokia contributed significantly to GDP growth of Finland. It accounted for roughly one-third of GDP growth of Finland in the peak year of 2001 (Palmberg, & Martikainen, 2003, p-1). During 1990s, it was largest employer in Finland. Moreover, the contribution of Nokia to diversification and revitalization of Finish industries is significant. It provided the stimulus to Finnish industries to diversify from the traditional forestry and engineering industries towards high-technology industries.
References
Angelini, M. (2013). “Business Model Analysis in the Fast-Evolving Mobile Phone Market: The Nokia Case”. Department of Economics and Business, LUISS Guido Carli, Rome, Italy. Retrieved from http://tesi.eprints.luiss.it/11863/1/angelini-mattia-tesi-2014.pdf
Dediu, H. (2012, Feb. 3). Apple retained its top rank in profitability and regained the top spot in mobile phone revenue. Asymco. Retrieved July 30 2016, from http://www.asymco.com/ 2012/02/03/first-apples-rank-in-mobile-phone-profitability-and-revenues/
Jia, J.Z. and Yin, Y.C. (2015) Analysis of Nokia’s Decline from Marketing Perspective. Open Journal of Business and Management, 3, 446-452. Retrieved July 30 2016, from http://dx.doi.org/10.4236/ojbm.2015.34045
Nokia, Sony, Samsung and Apple Market Value. (2013, April 23). Thomson Reuters. Retrieved July 30 2016, from http://blog.thomsonreuters.com/index.php/tag/market-value/
Palmberg, C. & Martikainen, O. (2003, May 23). Overcoming A Technological Discontinuity - The case of the Finnish Telecom industry and the GSM. The Research Institute of the Finnish Economy (ETLA), Lönnrotinkatu, Helsinki, Finland. Retrieved July 30 2016, from http://www.etla.fi/wp-content/uploads/2012/09/dp855.pdf
Statista. (2016). Nokia's net sales from 1999 to 2015 (in billion euros). . Retrieved July 30 2016, from http://www.statista.com/statistics/267819/nokias-net-sales-since-1999/
