- Joined
- Jan 3, 2009
- Messages
- 2,605
- Points
- 0
15 Sep, 2010, 01.10AM ,Bloomberg
LONDON: What was the most successful European company of the 1990s? Easy. The Finnish mobile phone manufacturer Nokia Oyj. And the most disappointing one of the 2000s? Easy again. Nokia.
A company once held up as an example of how Europe could still compete in technology and create new industrial giants, Nokia has been in steep decline — a point emphasized last week by its decision to hire the first non-Finn as chief executive officer, charged with turning the business around.
And just as the company's rise held lessons about how Europe could succeed, its downfall tells us much about why the region so often fails. Nokia rested too comfortably on its laurels. It was never willing to re-invent its business, even if it meant completely changing its products. It was never located at the heart of the information technology industry, among competitors who might force it to keep innovating. Other European companies should study Nokia's fate to make sure they don't repeat it.
A decade ago, Nokia was the most successful business Europe had produced in a generation. It captured the emerging market for mobile phones and built the industry's most powerful brand.
Reversal of Fortune
It doesn't look so good now. In the last three years, the news out of Nokia has only been bad. Since Apple Inc. introduced its iPhone in January 2007, Nokia shares have fallen by 47%. The company's brand, once one of the coolest in the world, is battered. In a ranking of global brands by Millward Brown Optimor this year, Nokia ranked No. 43, dropping 30 places in 12 months. Its profit margins have been shrinking, along with the average price of its phones and its market share.
True, it still has more than one-third of global mobile phone sales. But it looks stranded in the middle of the market. Korean electronics manufacturers such as Samsung Electronics Co. are leading the main consumer market. Apple's iPhone and Research In Motion Ltd.'s BlackBerry dominate the upscale, smartphone industry.
Importing Leadership
Last week, Nokia recognised the scale of its challenges, hiring Stephen Elop, the head of Microsoft Corp.'s business unit, to turn the company around. Can he succeed? Everyone will wish him well. But if the guy knows so much about phones, he's kept it a secret. Microsoft has never made any progress in that industry. The cruel truth is that for all its residual market share, Nokia looks like a has-been. It misread the way the mobile phone industry was merging with computing and social networking. It is probably now too late to turn that around.
There are uncomfortable lessons here for European industry.
First, never rest on your laurels. Nokia got to the top of its industry quickly. But once there, it became complacent in an industry where laziness is fatal.
It worried too much about hanging onto its market share, rather than creating new products to excite customers.
LONDON: What was the most successful European company of the 1990s? Easy. The Finnish mobile phone manufacturer Nokia Oyj. And the most disappointing one of the 2000s? Easy again. Nokia.
A company once held up as an example of how Europe could still compete in technology and create new industrial giants, Nokia has been in steep decline — a point emphasized last week by its decision to hire the first non-Finn as chief executive officer, charged with turning the business around.
And just as the company's rise held lessons about how Europe could succeed, its downfall tells us much about why the region so often fails. Nokia rested too comfortably on its laurels. It was never willing to re-invent its business, even if it meant completely changing its products. It was never located at the heart of the information technology industry, among competitors who might force it to keep innovating. Other European companies should study Nokia's fate to make sure they don't repeat it.
A decade ago, Nokia was the most successful business Europe had produced in a generation. It captured the emerging market for mobile phones and built the industry's most powerful brand.
Reversal of Fortune
It doesn't look so good now. In the last three years, the news out of Nokia has only been bad. Since Apple Inc. introduced its iPhone in January 2007, Nokia shares have fallen by 47%. The company's brand, once one of the coolest in the world, is battered. In a ranking of global brands by Millward Brown Optimor this year, Nokia ranked No. 43, dropping 30 places in 12 months. Its profit margins have been shrinking, along with the average price of its phones and its market share.
True, it still has more than one-third of global mobile phone sales. But it looks stranded in the middle of the market. Korean electronics manufacturers such as Samsung Electronics Co. are leading the main consumer market. Apple's iPhone and Research In Motion Ltd.'s BlackBerry dominate the upscale, smartphone industry.
Importing Leadership
Last week, Nokia recognised the scale of its challenges, hiring Stephen Elop, the head of Microsoft Corp.'s business unit, to turn the company around. Can he succeed? Everyone will wish him well. But if the guy knows so much about phones, he's kept it a secret. Microsoft has never made any progress in that industry. The cruel truth is that for all its residual market share, Nokia looks like a has-been. It misread the way the mobile phone industry was merging with computing and social networking. It is probably now too late to turn that around.
There are uncomfortable lessons here for European industry.
First, never rest on your laurels. Nokia got to the top of its industry quickly. But once there, it became complacent in an industry where laziness is fatal.
It worried too much about hanging onto its market share, rather than creating new products to excite customers.
