Having Ruled for a Long Time, Why Did Nokia Go Bankrupt?

Nokia once stood as the world’s mobile-phone giant. From the 1990s into the early 2000s, Nokia phones were dominant and used by millions across many countries. According to CCS Insight analyst Ben Wood, Nokia at the time had become almost synonymous with the mobile industry itself. ‘People didn’t talk about the brand as much as the numbers, such as 3210 or whichever model they had,’ Wood said. That culture is a far cry from today, when people first name the brand before the model or variant.

Yet that dominance gradually collapsed after Apple’s emergence with the iPhone in 2007. Within a few years, Nokia’s smartphone market share plummeted. The share fell to 43.7 percent, then 41.1 percent, then 34.2 percent in the following years. By mid-2011, its share had collapsed to just 3 percent. So why did Nokia go bankrupt and lose its dominance in the mobile industry? Several factors are suspected: not only technology factors, but also tied to corporate culture, leadership, and strategic direction.

According to Ben Wood, one of the turning points was when Apple founder Steve Jobs introduced the iPhone in January 2007. Wood says that Nokia was overconfident in its market position at the time. ‘They felt they could not be wrong,’ he said, cited from the BBC. The iPhone changed the direction of the smartphone industry. If Nokia previously led through hardware innovations, Apple placed software at the centre of the user experience. ‘Nokia built great phones. They enjoyed an extraordinary decade of hardware innovation. But Apple showed that what was needed was essentially a rectangular box with a screen, while the rest depended on software,’ Wood noted.

One aspect widely highlighted was Nokia’s Symbian operating system. Many analysts believed the platform could not keep pace with Apple’s iOS.