ABSTRACT
Nokia’s restructuring came just in time for the telecommunication boom of the 1990s.2 Between 1998 and 2004, Ollila brought Nokia from a domestic company to the top cell-phone giant in the world, controlling one-third of the $100 billion phone market and making it the world’s largest vendor of telecom equipment. But even with its success, it wasn’t long before aggressive Asian competitors, such as LG Electronics, Sony-Ericsson, and Samsung, begun to introduce phones equipped with jazzier images, better cameras, and a wider selection of styles and features to appeal to customers. Nokia’s market share dropped from about 38 percent worldwide in 2003 to 30 percent during the first nine months of 2004. Its share went down even more dramatically in the European market, from 51 percent to 32.6 percent that same year. As profits declined, Wall Street expressed concern and stock prices dropped by 14 percent over the next one-and-a-half years.3 While focusing on technology and functions, Nokia had ignored elements such as phone size, ease of use, colors, screen size, sleek styling, and the like, features that appealed to customers. Also, Nokia appeared to have overlooked a very important player in the industry-the mobile operators, such as Vodafone. In effect, they were the lead customers because they chose which handsets to carry. Finally, Nokia had not as yet experienced the full brunt of competition from Asian companies, which were much more aggressive.4
