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Nokia’s Comeback — Is it Revival of an Iconic Brand?

Article in Asian Case Research Journal · December 2019

DOI: 10.1142/S0218927519500172

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 ASIAN CASE RESEARCH JOURNAL, VOL. 23, ISSUE 2, 415–426 (2019)

ACRJ
Nokia’s Comeback — Is it Revival
This case was prepared by
Assistant Professor Neha of an Iconic Brand?
Zaidi and Associate Pro-
fessor Pallavi Tyagi of Gal-
gotias University, India, and INTRODUCTION
Associate Professor Animesh
Singh of Sharda University,
India, as a basis for class-
room discussion rather than
The case deals with Nokia’s (once a market leader in mobile
to illustrate either effective handset industry) downfall (refer Exhibit 1), acquisition by
or ineffective handling of an
administrative or business Microsoft and its subsequent strategies to re-enter the world
situation. of smartphones, globally and in the Indian market.
Please send all correspondence Since 2001, the Indian mobile handset market is wit-
to Assistant Professor Neha nessing intensifying competition from global brands like
Zaidi, School of Business,
Galgotias University, Greater Samsung, Apple and Motorola and domestic players like
Noida, Uttar Pradesh 203201, Micromax, Karbonn, Intel, Lava and iBall. The competition has
India. E-mail: nehazaidi2008@
yahoo.com worsened with the entry of Chinese mobile phone companies
(Xiaomi, Huawei, Yureka, Gionee, etc.) which over the years
have flooded the Indian market with offerings that are low-
priced and have several features.
Nokia was a leader of the Indian mobile handset
industry for over a decade until it was surpassed by Samsung
(a South Korean company) with its wide range of product
portfolios and use of better and user-friendly technology.
Nokia failed to keep in pace with the changing customers’
demands and was too dependent on its operating system
(Symbian) that was complex, while its competitors used a
much simpler and a more user-friendly operating system —
Android, and this proved to be the final nail to its coffin (refer
to Exhibit 2).
After years of falling sales and loosing market to com-
petitors, Nokia’s mobile handset business was finally acquired

© 2019 by World Scientific Publishing Co. DOI: 10.1142/S0218927519500172

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 416 ACRJ

by Microsoft in 2014.1 Post-acquisition, Microsoft made

several strategic changes to the acquired business but could
not make any mark in the competitive market. July 2015 saw
Microsoft’s write-off of $7.6 billion from the Nokia deal. Fur-
thermore, a layoff of more than 7000 employees working in
its device division was announced by the company. Finally,
in May 2016, Microsoft announced the selling rights of Nokia
to HMD Global and feature phone business assets to FIH
Mobile (a subsidiary of Foxconn) for $350 million.2 Nokia had
re-entered the mobile phones’ market in the first quarter of
2017. Many changes were made to the strategies followed in
the past. Will it be a revival of an iconic brand?

CASE BODY

In 1995, the Indian mobile industry made a slow take-off.

Several private players who entered the industry exited within
few years because of low profits, stringent governmental poli-
cies, high licensing fees and absence of an efficient regulatory
body. Initially, the number of mobile phone subscribers was
less, and the number was growing on a sluggish pace —
as phones were expensive, call rates were high and it was
unaffordable for many. The “1 million subscribers” milestone
was achieved in the year 1998.
A year later, the government announced a new telecom
policy that withdrew entry barriers. The government allowed
the sharing of infrastructure between operators which
enabled sharing of cost. Moreover, the operators could move
from fixed license fee to one-time entry fee. These relax-
ations in governmental policies allowed companies to achieve
their break-even faster. These changes in regulations brought
a spurting growth in the demand for mobile phones. The
number of mobile phones sold reached 5 million by 2001 and
this number doubled in the next year.

1
http://www.businessinsider.in/Nokia-confirms-re-entry-into-mobile-phone-market-
through-licensing/article show/ (accessed 14 August 2016).
2
https://www.theverge.com/2015/7/8/8910999/microsoft-job-cuts-2015-nokia-write-
off (assessed 2 January 2016).

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 NOKIA’S COMEBACK — IS IT REVIVAL OF AN ICONIC BRAND? 417

Nokia, a Finland-based company, entered India in 1995

and was able to achieve the leadership position for almost a
decade. The company was among the first few handset com-
panies which entered the Indian market. The company soon
got hold of the Indian market and started its manufacturing
facilities on a large scale at Chennai (India).3
At that time, people were not much aware about
brands like Apple and Samsung, and Nokia phones were a
craze among consumers. The products were well liked by
the people of India as they were customized according to
Indian conditions, were user-friendly, had user menu and
ringtones in local languages (In 1998, it introduced its first
Indian ringtone Saare Jahan se Accha.), had sturdy looks
and could withstand extreme weather conditions of India.
The first camera phone (Nokia 7650) was introduced in
the Indian market in the year 2002, a year later Nokia 1100
was introduced as the company’s first “Made for India”
phone. The company also introduced text messaging in Hindi
subsequently.
Nokia received the “Brand of The Year” title by the
Confederation of Indian Industry, India’s apex industry asso-
ciation, in 2005 for its high brand recall, preference among
customers and effective distribution.
But with intensifying competition, changing customer
needs, technological advancements and smartphone trend,
Nokia found itself in a battlefield with strong opponents
leveraging their core competencies and adapting to the rapid
churns in technology, and consequently Nokia could not
sustain its position in India and the rest of the world and its
share started falling.
The share of the company started falling in 2009, after
Google released its smartphone operating system Android,
which became a new market reform. HTC was the first
company to launch a smartphone based on the Android
operating system in the Indian market in the year 2009. The
share of Nokia mobile handsets started dropping all around

3
http://blogs.wsj.com/indiarealtime/2013/09/03/nokia-in-india-a-brief-timeline/
(accessed 2 January 2017).

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 418 ACRJ

the world; its share fell from 33% in 2010 to 14% in 2011
in the smartphone market (refer Exhibit 3), and its rank
dropped to third after Apple and Samsung. “In the year
2013, Nokia’s revenue from Indian operations was around
97.80 billion rupees which was much below the previous
year’s revenue of Rs. 119.25 billion,” according to the Indian
Telecom Trade publication, a New Delhi-based voice and
data. The publication attributed this fall of revenue to “a few
strategic missteps”.
The publication further added that the drop in Nokia’s
market share started when the company failed to identify
customer’s need of a dual-SIM phone and the same was made
available by Indian players.

Mistakes That Led to Nokia’s Failure

(1) Dependence on Symbian operating system: Too much depen-

dence on Symbian operating system is considered as the main
reason of Nokia’s downfall. In 2008, Android was introduced
by Google which had more applications than Symbian and
had a better user interface. Despite many attempts to improve
the Symbian operating system, Nokia could not create
uniqueness in the operating system. Although the company
later ditched its own operating system — Symbian — it was
too late and little to recover the loss (refer Exhibit 4).

(2) Adopted Windows phone as its principal smartphone strategy:

In 2011, Nokia established its strategic partnership with
Microsoft and agreed to adopt Windows in its smartphones
which proved to be a wrong strategy for the company.
Nokia’s choice of sticking to Microsoft Windows software
instead of opting for Google’s Android operating system
made the customers switch to other competing brands that
used Android platform.

(3) Nokia became a laggard in smartphone market: While iPhone

and Samsung came up with innovative features in their
smartphones, Nokia was reluctant to make an innovative

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 NOKIA’S COMEBACK — IS IT REVIVAL OF AN ICONIC BRAND? 419

move. Samsung because of its core competence of innovation

gained momentum and was able to take away Nokia’s share in
the market. Nokia was too late to realize it.

(4) Losing on both ends: It was not just the smartphones front
that Nokia was losing from competitors like Samsung, Sony,
Apple and Blackberry. Nokia started losing its ground at
lower ends too as it could anticipate competition in the lower
end of the market. The shares of epic models like Nokia 1100
started falling. The company introduced Nokia Asha series,
but the attempt to regain the market was made too late.

In September 2013, Nokia, the mobile handset company,

was acquired by Microsoft at a price of around 7.2 billion
dollars. The deal brought together Windows Phone 8 with its
major hardware supporter, giving the company the integrated
mobile offering it was looking for.
Microsoft Ex-CEO Steve Ballmer called the acquisition
“a bold step into the future”. Th e driving force behind the
acquisition was Nokia’s low-end Asha brand, which Micro-
soft acquired, with the hope that Asha would give Micro-
soft a far larger reach for its Windows Phone and access
to a larger customer base in developing countries that the
company planned to use as a ramp for its Windows Phone.
Microsoft made several alterations to Nokia’s strategy
which included withdrawing NokiaX, the Android smart-
phone from the market. However, Microsoft phones were not
able to make any impact on the market.

NOKIA’S RE-ENTRY

Nokia re-entered the Global Market through licensing mode in

the first quarter of 2017. Its re-entry was a nostalgic moment
for many Indian mobile phone users.
In May 2016, Microsoft announced the selling of rights
of the Nokia brand to HMD Global (a new Finnish company)
for the next 10 years and the feature phone business assets to

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 420 ACRJ

FIH Mobile (a subsidiary of Foxconn) for $350 million.4 These

two companies are now working together to create Nokia-
branded Android phones and tablets for the next 10 years.5
In a separate agreement, Nokia granted HMD Global the
exclusive global license to create Nokia-branded mobile phones
and tablets for the next 10 years. Nokia has given license,
branding rights and cellular standard essential patent licenses
to HMD Global to manufacture Nokia brand phones globally
(excluding Japan); in return of it, Nokia will get royalty pay-
ments and a seat in the board of directors. However, no finan-
cial investment has been made by Nokia in the company.
Nokia technology has also entered into an agreement
with FIH Mobile that owns the rest of Microsoft’s feature
phone business assets, including manufacturing, sales and
distribution. Both HMD Global and FIH Mobile in collabora-
tion would support the developing of a global business for
Nokia-branded mobile phones and tablets.
These agreements together will make HMD the only
global licensee for all types of Nokia-branded mobile phones
and tablets.6
“Today marks the beginning of an exciting new chapter
for the Nokia brand in an industry where Nokia remains a
truly iconic name. Instead of Nokia returning to manufac-
turing mobile phones itself, HMD plans to produce mobile
phones and tablets that can leverage and grow the value of
the Nokia brand in global markets. Working with HMD and
FIH will let us participate in one of the largest consumer
electronics markets in the world while staying true to our
licensing business model,” said Ramzi Haida, President of
Nokia Technologies. Prabhakar Mundkur, Lateral Thinker and
Culturist, Mindover Matter, believes that Nokia still has a lot
of residual equity in the Indian market which might work in
Nokia’s favor (refer Exhibit 5).

4
http://www.thehindu.com/sci-tech/technology/microsoft-sells-nokia-branding-
rights-to-hmd-global-foxconn/article8616797.ece (accessed 29 October 2017).
5
http://www.slashgear.com/microsoft-sells-nokia-brand-to-foxconn-and-hmd-
global-18440501/ (assessed 28 November 2017).
6
http://indianexpress.com/article/technology/mobile-tabs/nokia-android-smart-
phones-tablets-launch-q4-2016-hmd-global-2982784/ (assessed 16 September 2016).

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 NOKIA’S COMEBACK — IS IT REVIVAL OF AN ICONIC BRAND? 421

“They (Nokia) definitely have a tough job ahead to

convince people that the brand has moved ahead. If they
are moving to Android as the new reports suggests, I see it
as a good move because Android has the biggest share of the
phone market. Earlier when it was Windows driven, Nokia
had a little chance to revive because Windows phones are
still not the preferred platform given the number of apps on
Android,” said Mundkur.
It has been two years since Nokia has entered into the
Indian handset market but has not yet made any remark-
able impression in the customer’s mind. In the first quarter
of 2019, Nokia with its new owner had witnessed its lowest
smartphone market share of 1.7% in India. While its feature
phone market share has risen from 3% in Q2 of 2017 to 8.4%
in the first quarter of 2019.7
As per the experts in the industry, competition does not
lie in the feature phone business. Navkender Singh, Research
Director at IDC, India, said “The volume and value is in
smartphones.” Nokia is left far behind the competition and it
is too difficult for the company to catch up now.
But the company is optimistic, and as per the company’s
spokesperson Nokia’s growth has been good, and the
brand is doing well with its penetration in some key global
markets.
Nokia’s new avatar is running on an Android platform,
still it does not assure its success as the phone business has
changed a lot in these last many years, and with the tough
competition in most markets, including India where now
Chinese brands rule the market, it will not be easy for Nokia
to regain the lost ground.8
It is too early to judge Nokia’s comeback to the market.
Time will unveil whether people will accept the new avatar
of Nokia!

7
http://www.forbesindia.com/article/special/nokias-smartphone-woes-persist/
53425/1 (accessed 15 July 2019).
8
http://indiatoday.intoday.in/technology/story/nokia-announces-return-to-phone-
business-with-android-phones-tablets/1/671099.html (assessed 25 November 2016).

S0218927519500172.indd 421 03-04-20 5:01:57 PM

 422 ACRJ

REFERENCES

BI India Bureau, 2016. “Good news: Nokia confirms comeback to

smartphone business with android phones, tablets”, Business
Insider India, 18 May, https://www.businessinsider.in/good-
news-nokia-confirms-comeback-to-smartphone-business-with-
android-phones-tablets/articleshow/52329119.cms (accessed 26
October 2016).Cord, D. J., 2014. The Decline and Fall of Nokia.
Helsinki, Finland: Schildts & Söderströms.
Singh, R., 2019. “Nokia’s smartphone woes persist”, Forbes India,
8 May, http://www.forbesindia.com/article/special/nokias-
smartphone-woes-persist/53425/1 (accessed 15 July 2019).
Anwer, J., 2016. “Nokia announces return to phone business with
Android phones, tablets”, India Today, 18 May, http://indiatoday.
intoday.in/technology/story/nokia-announces-return-to-phone-
business-with-android-phones-tablets/1/671099.html (accessed
25 November 2016).
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.
Pandey, N., 2018. “HMD Global to make Nokia phones in India by
2022”, Live Mint, 5 April, https://www.livemint.com/Compani
es/1d67BidkomnPSkx1Gmbf8N/HMD-Global-to-make-Nokia-
phones-in-India-by-2022.html (accessed 20 October 2018).
Sharma, G. S. and Perepu, I., 2014. “Nokia: Losing ground in India”,
Case Code No. BSTR447, IBS Centre for Management Research,
Hyderabad, India.
Barr, C. S., 2016. “Microsoft sells Nokia brand use to Foxconn and
HMD Global”, Slash Gear, 18 May, http://www.slashgear.com/
microsoft-sells-nokia-brand-to-foxconn-and-hmd-global-
18440501/ (accessed 28 November 2017).
PTI, 2016. “Microsoft sells Nokia branding rights to HMD Global,
Foxconn”, The Hindu, 18 May, http://www.thehindu.com/sci-
tech/technology/microsoft-sells-nokia-branding-rights-to-hmd-
global-foxconn/article8616797.ece (accessed 29 October 2017).
Tech Desk, 2016. “Nokia branded Android smartphones and tablets
set to launch in Q4 2016”, The Indian Express, 18 August,
http://indianexpress.com/article/technology/mobile-tabs/
nokia-android-smartphones-tablets-launch-q4-2016-hmd-
global-2982784/
(accessed 18 September 2016).

S0218927519500172.indd 422 03-04-20 5:01:57 PM

 NOKIA’S COMEBACK — IS IT REVIVAL OF AN ICONIC BRAND? 423

Warren, T., 2015. “Microsoft writes off $7.6 billion from Nokia deal,
announces 7,800 job cuts”, The Verge, 8 July, https://www.
theverge.com/2015/7/8/8910999/microsoft-job-cuts-2015-nokia-
write-off (accessed 2 January 2016).
Jai Krishna, R., 2013. “Nokia in India, a brief timeline”, The
Wall Street Journal, 3 September, http://blogs.wsj.com/
indiarealtime/2013/09/03/nokia-in-india-a-brief-timeline/
(accessed 2 January 2017).
Pierce, D., 2013. “Microsoft buying Nokia’s phone business in a $7.2
billion bid for its mobile future”, The Verge, 2 September, http://
www.theverge.com/2013/9/2/4688530/microsoft-buys-nokias-
devices-and-services-unit (accessed 25 November 2016).

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Exhibit 1

Downfall of Nokia’s Market Share


Source: Nokia, Microsoft, Gartner, Quartz analysis (qz.com), accessed 17 February 2018.

Exhibit 2

Global Market Shares held by Leading Smartphone Operating

Systems in Sales to End Users from Q1 2009 to Q3 2015

1400

1200

1000

800

600

400

200

0
02ͲAprͲ12 02ͲAprͲ13 02ͲAprͲ14 02ͲAprͲ15 02ͲAprͲ16 02ͲAprͲ17

63MOONSStockPrice


Source: Gartner© Statistica (2015).

S0218927519500172.indd 424 03-04-20 5:01:57 PM

 NOKIA’S COMEBACK — IS IT REVIVAL OF AN ICONIC BRAND? 425

Exhibit 3

Sales Downfall from Q4 2010 to Q4 2012

Source: Nokia’s failure story (https://www.linkedin.com/pulse/nokia-failure-story-

ibrahim-abd-elaziz/).

Exhibit 4

India Smartphone OS Shipments and Market Share in Q2 2016



Source: Strategy Analytics.

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 426 ACRJ

Exhibit 5

Current Google Trends around Nokia

Source: Google Trends, 2017–2018.

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