Nokia's failure to anticipate the impact of new competitors


At the time of the iPhone launch in 2007, Nokia was a dominant player in the mobile phone market. The company had a strong market share and was successful with its feature phones. This success might have led to a sense of complacency, causing Nokia to underestimate the potential of smartphones and the shift towards more advanced devices. This was exacerbated with Android's launch.

Misjudgment of the market. Nokia had been successful with its traditional mobile phone business, which primarily focused on voice calls and text messaging. But Nokia had already missed some many trends already, the Flip phone form factor comes to mind and also thinness... who can forget the Christmas 2004 rush for the Motorola RAZR which had people waiting for months to get their hands on one! Nokia further misjudged the growing importance of smartphones, which offered a more comprehensive set of features, including internet browsing, multimedia capabilities, and third-party applications.

In January 2007 the day after the first iPhone unveiling, Nokia's annual sales kick off commenced in Miami. One of the most prominent leaders in Nokia (the Harley Davidson riding one) stood up to do his keynote and paused initially to address the elephant in the room. His words went something like this... "Some of you want to discuss this announcement from this...this fruit company. They made a phone call, so what! Let's move on." Fundamentally it showed a lack of understanding to the shift, Nokia believed voice quality was the key USP, and yes Nokia's voice quality from the 2000's trumps pretty much even modern smartphones. But what percentage of interaction today with a smartphone is actually voice? Importantly Apple was not a totally new entrant, they had experience with the Newton and also a prior attempt through collaboration with Motorola. The Motorola partnership should have indicated where the future lay, with Apple's attempt to embed service offerings in the device. By the time of the iPhone announcement Apple was already on the 5th Generation of the iPod. And the iPod was moved from a niche gadget of the Apple fanboy crowd, to the dominant way to consume digital music.

What the iPhone did was it launched a combination of three devices: a widescreen iPod with touch controls; a mobile phone; and a breakthrough Internet communicator. 

Recognising the importance of the USA carriers, Apple created the device during a secretive and unprecedented collaboration with Cingular Wireless (now part of AT&T). This in stark contrast to Nokia who actively avoided the USA carriers, and alienated themselves in the market.  - discussed in more detail here: Understanding Nokia's Struggles in the US Mobile Market.

Software and ecosystem shortcomings accelerated the iPhone and Nokia was slow to adapt to the shift towards software-centric smartphones. The iPhone's iOS ecosystem and the App Store played a crucial role in its success. Nokia's Symbian operating system, which was widely used in its smartphones at the time, was not as developer-friendly or user-friendly as iOS.

Lack of touch-screen focus: The iPhone introduced a revolutionary touch-screen interface, which was a departure from the physical keyboard-dominated designs of many existing smartphones. Nokia was slow to embrace touch-screen technology in its devices, initially sticking with physical keypads and later introducing resistive touch screens. The iPhone in contrast was also finished in premium like materials with a metal body and capacitive touch glass screen where Nokia was still using plastic for the body and screens.


Android did not directly compete with Nokia at its launch; rather, Android is an operating system for mobile devices that was developed by Android Inc., which was later acquired by Google in 2005. Android became a significant player in the mobile market by providing an open-source platform that could be used by various manufacturers to build smartphones.

Several factors contributed to Android's success over Nokia:

Open Source: Android is an open-source platform, allowing manufacturers to customize it to suit their hardware and design preferences. This attracted a diverse range of smartphone makers, leading to a broad ecosystem of Android devices. Although Symbian (Nokia) was also open source, it was not adopted by any other manufacturers in mobile handsets, perhaps because of Nokia's continued increase in the shareholding in the Symbian consortium to the point of 100% ownership by the late 2000's.

App Ecosystem: Android had a robust app ecosystem, with a vast array of applications available on the Google Play Store. This was a key factor in attracting users and developers to the platform.

Hardware Diversity: Android was not tied to any specific hardware manufacturer, allowing various companies like Samsung, HTC, and others to produce a wide range of smartphones with different features, sizes, and price points. This gave consumers more choices compared to Nokia's limited smartphone lineup.

Touchscreen Revolution: Android entered the market when smartphones were transitioning to touchscreen interfaces. Nokia initially struggled to adopt touchscreens and was slow to respond to the changing consumer preferences.

Marketing and Partnerships: Google invested heavily in marketing Android and established partnerships with multiple hardware manufacturers and carriers, helping to promote the platform and increase its adoption.

While Android's success was a factor in the decline of Nokia's dominance in the mobile market, it's essential to recognise that Nokia faced challenges on multiple fronts, including its own strategic decisions and a failure to adapt quickly to the changing landscape of the smartphone industry.

Nokia was also always moaning over the spilt milk.... 

When the iPhone was announced Steve Jobs proclaimed that the dream of video calling was realised through the iPhone. When in fact video calling was enabled through launch of 3G networks supporting w-CDMA (not to be confused with analogue CDMA) in ±2003. Nokia had video calling from the launch of 3G. But instead of launching an extensive consumer campaign to highlight functionality where Nokia ruled the roost... Finnish politeness/humbleness relegated it to grumbling behind closed doors that Jobs lied.

Similarly, it was a perception that Google was deliberately violating patents to get critical mass with Android without slowing themselves down to licence and negotiate rights to use. The feeling was they would get scale and deal with legal outcomes later. Nokia had (and still has) a treasure trove of patents, but again instead of being aggressive and litigating extensively, there back room groaning. 

As mentioned in the first article (Nokia's end times, a different perspective) a sequence of smaller compounding issues resulted in Nokia's failure in the mobile handset space. and whilst the iPhone and Android launching were a large part of Nokia's slide into history, there are additional internal parts to Nokia's own contribution to allowing these new entrants to thrive. More to come...

Headline image created with Microsoft Designer