1. Strategic Analysis of
Nokia’s Smartphone Market
Corporate Policy
and Strategic Management
Group A

2. Content

3. Content
1. Smartphone – Introduction

4. Content
1. Smartphone – Introduction
2. Nokia – Description of company

5. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?

6. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis

7. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces

8. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements

9. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis

10. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
8. Strategic Diagnosis of Nokia
Smartphone Industry

11. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
8. Strategic Diagnosis of Nokia
Smartphone Industry
9. Strategy Formulation

12. Content
1. Smartphone – Introduction
2. Nokia – Description of company
3. Why Nokia, why smartphones?
4. Industry Analysis
5. Porter´s 5 Forces
6. Complements
7. SWOT Analysis
8. Strategic Diagnosis of Nokia
Smartphone Industry
9. Strategy Formulation
10. Q&A

13. Smartphone - Introduction

14. Smartphone - Introduction
No industry standard definition of a smartphone

15. Smartphone - Introduction
Mobile phone offering advanced capabilities…

16. Smartphone - Introduction
PC-like
functionality

17. Smartphone - Introduction
a phone that runs complete operating
system software providing a standardized
interface and platform for application
developers

18. Smartphone - Introduction
A phone with
advanced
features

19. Smartphone - Introduction

20. Nokia
Description of
Company

21. Nokia – Description of company
Nokia envisions a world where
connecting people to what
matters empowers them the most
of every moment
Olli-Pekka Kallasvuo, Nokia CEO

22. Nokia – Description of company

23. Nokia – Description of company
 Manufacturer of mobile devices

24. Nokia – Description of company
 Manufacturer of mobile devices
 Leader in converging Internet and
communication industries

25. Nokia – Description of company
 Manufacturer of mobile devices
 Leader in converging Internet and
communication industries
 Wide range of devices

26. Nokia – Description of company
 Manufacturer of mobile devices
 Leader in converging Internet and
communication industries
 Wide range of devices
 Major consumer segments

27. Nokia – Description of company
 Manufacturer of mobile devices
 Leader in converging Internet and
communication industries
 Wide range of devices
 Major consumer segments
 Music, maps, media, messaging and
games

28. Nokia Organization

29. Nokia Organization
Devices: Develops and manages the mobile device portfolio,
includes the sources of components.

30. Nokia Organization
Services & Software: Develops consumer Internet services
in 5 areas (music, maps, media, messaging and games), and
works to deliver the services in an easily, accessible
manner to consumers.

31. Nokia Organization
Markets: Manages supply chains, sales channel, brand and
marketing activities.

32. Nokia Organization
Corporate Development Office. Gives operational support
to the units and explores corporate strategic and future
growth opportunities.

33. Nokia Organization
Nokia Siemens Network: Provides wireless and fixed network
infrastructure, communications and networks service platforms
and professional services to operators and service providers.

34. Nokia Organization
NAVTEQ: Provides digital map data for automotive navigation
systems, mobile navigation devices, Internet-based mapping
applications, and government and business solutions.

35. Nokia Organization

36. 2008 Facts and Figures

37. 2008 Facts and Figures
Head office in Finland

38. 2008 Facts and Figures
World’s #1 manufacturer
of mobile devices

39. 2008 Facts and Figures
39% share of global device
market in 2008

40. 2008 Facts and Figures
Mobile device volumes
468 million units

41. 2008 Facts and Figures
Net sales EUR
50.7 billion

42. 2008 Facts and Figures
Operating profit EUR 5.0 billion

43. 2008 Facts and Figures
128,445 employees
at year end

44. 2008 Facts and Figures
R&D investment EUR 6.0 billion

45. 2008 Facts and Figures
Sales in more than 150 countries

46. 2008 Facts and Figures

47. Strategic Objectives

48. Strategic Objectives
 Irresistible solutions and vibrant
ecosystems

49. Strategic Objectives
 Irresistible solutions and vibrant
ecosystems
 Direct and continuous consumer
relationships.

50. Strategic Objectives
 Irresistible solutions and vibrant
ecosystems
 Direct and continuous consumer
relationships.
 Best devices
 Broadening their geographic reach
 Broadening their device base will grow
their service business

51. Strategic Objectives
 Irresistible solutions and vibrant
ecosystems
 Direct and continuous consumer
relationships.
 Best devices
 Broadening their geographic reach
 Broadening their device base will grow
their service business
 Smart services
 Creating relevant and personalized
services
 Target: 300 million people using their
smart services by 2012

52. Why Nokia, Why
Smartphones?

53. Why Nokia, why smartphones?

54. Why Nokia, why smartphones?
Smartphone segment is one of the rapidly growing segments
in the mobile handset industry

55. Why Nokia, why smartphones?

56. Why Nokia, why smartphones?
Manufacturers Market Share YoY Growth Rate
Nokia 44.3% 10.4%
Rim 20.9% 77%
Apple 13.7% 62.6%
Though Nokia is a market leader in the entire mobile industry,
its performance in smartphone market is abysmal in comparison
with its competitors

57. Why Nokia, why smartphones?
Nokia

58. Why Nokia, why smartphones?
Nokia

59. Why Nokia, why smartphones?
 Strategy for
Nokia Nokia to jump to
Star Category in
BCG Matrix

60. Why Nokia, why smartphones?
 Strategy for
Nokia Nokia to jump to
Star Category in
BCG Matrix
 Focusing on
external
atributes

61. Industry Analysis

62. Porter’s 5 Forces

63. Porter’s 5 Forces
Competitive Rivalry
(Intense)
• Rivalry is intense among existing players
• No much differentiation in product features
• Exit barriers have to be evaluated in
correlation with value chain analysis

64. Porter’s 5 Forces
Bargaining Power of Suppliers
(Moderate)
• Software provider
• Hardware provider

65. Porter’s 5 Forces
Bargaining Power of Customers
(High)
• More choice of product and limited
differentiation
• Elastic demand
• Less asymmetric information
• Less switching costs

66. Porter’s 5 Forces
Threat of New Entrants
(Low)
• Huge capital requirements
• Economies of scale
• Product differentiation
• Distribution channel
• Absolute cost advantage
• Governmental and legal barriers
• Retaliation
• Brand

67. Porter’s 5 Forces
Threat of Substitute Products
(Moderate)
• Depends on the impact of substitute products
• Variety of functions
• Other substitute products: notebooks, PDAs,
tablet PCs

68. Porter’s 5 Forces

69. Complements (Moderate)

70. Complements (Moderate)
 Email

71. Complements (Moderate)
 Email
 Maps & GPS

72. Complements (Moderate)
 Email
 Maps & GPS
 Applications
 Music & other media related
applications
 Utility applications
 Internet based
…

73. SWOT Analysis
Strengths Weakness
• Brand Awareness • Not good at software
• Technology leader in • Performance of Symbian OS
Manufacturing Mobiles is lackluster
• Market leader • Increasing dissatisfaction
• Presence across 150 levels with its smartphone
countries • Very weak market share in
US
Opportunities Threats
• Huge loyal customer base • Rapidly changing industry
• Huge presence in • Chances of missing
developing countries Inflection point is high
• Can use its infrastructure • Threat of entry from new
business (Nokia Siemens players, Microsoft might
Network) to reduce the enter smartphones market.
bargaining power of mobile Google has just entered the
operators market with Nexus One.

74. Strategic Diagnosis of
Nokia Smartphone
Industry

75. Product Analysis

76. Product Analysis

77. Product Analysis
 Nokia’s N97 is
feature-richer
than iPhone

78. Product Analysis
 Nokia’s N97 is
feature-richer
than iPhone

79. Product Analysis
 Nokia’s N97 is
feature-richer
than iPhone
BUT:

80. Product Analysis
 Nokia’s N97 is
feature-richer
than iPhone
BUT:
 Nokia sold 1st qtr
of launch: 500,000
phones

81. Product Analysis
 Nokia’s N97 is
feature-richer
than iPhone
BUT:
 Nokia sold 1st qtr
of launch: 500,000
phones
 iPhone sold 1st
week of launch:
1,000,000 phones

82. Smartphone Satisfaction
Platform Satisfaction Index
iPhone 92%
Android 77%
Palm Pre 77%
Blackberry 73%
Palm Treo 70%
Symbian (Nokia) 66%
Windows 66%

83. Smartphone Satisfaction
Platform Satisfaction Index
iPhone 92%
Android 77%
Palm Pre 77%
Blackberry 73%
Palm Treo 70%
Symbian (Nokia) 66%
Windows 66%

84. Segmentation Analysis

85. Segmentation Analysis
 Entertainment
Users
 N Series

86. Segmentation Analysis
 Entertainment
Users
 N Series
 Communication
Users
 E Series

87. Segmentation Analysis
 Entertainment
Users
 N Series
 Communication
Users
 E Series
 Information
Users

88. Segmentation Analysis
 Entertainment
Users
 N Series
 Communication
Users
 E Series
 Information
Users

89. Global Internet traffic
through smartphones
Global Traffic September 2009 October 2009
By Platform Share Share
Apple iPhone 43% 50%
Symbian 29% 25%
(Nokia)
Android 10% 11%
RIM BlackBerry 8% 7%
Windows Mobile 5% 3%
Others 5% 4%

90. Global Internet traffic
through smartphones
Global Traffic September 2009 October 2009
By Platform Share Share
Apple iPhone 43% 50%
Symbian 29% 25%
(Nokia)
Android 10% 11%
RIM BlackBerry 8% 7%
Windows Mobile 5% 3%
Others 5% 4%

91. Product-line analysis

92. Product-line analysis
Broad
range of
products

93. Product-line analysis
NSeries launched since
2007: N76, N77, N81,
N92, N93i, N95
2008: N78, N79, N85, N96
2009: N86, N97, N97 Mini

94. Product-line analysis
NSeries launched since
2007: N76, N77, N81,
N92, N93i, N95
2008: N78, N79, N85, N96
2009: N86, N97, N97 Mini
In that same period,
Apple released only
one Smartphone:
iPhone

95. Product-line analysis
ESeries launched since
2007: E51, E61i, E65, E90
2008: E63, E66, E71
2009: E52, E55, E72, E75

96. Product-line analysis
ESeries launched since
2007: E51, E61i, E65, E90
2008: E63, E66, E71
2009: E52, E55, E72, E75
In that same period,
Blackberry
has launched far
fewer phones than
Nokia.

97. Product-line analysis

98. Product-line analysis

99. Product-line analysis

100. Product-line analysis
Product embraced by
the right consumer

101. Product-line analysis
Product embraced by
the right consumer

102. Product-line analysis
Product embraced by
the right consumer
Sufficient consumers in
each segment

103. Product-line analysis
Product embraced by
the right consumer
Sufficient consumers in
each segment

104. Product-line analysis
Product embraced by
the right consumer
Nokia
is doing consumers in
Sufficient
each segment
neither

105. Product-line analysis
Product embraced by
the right consumer
Nokia
is doing consumers in
Sufficient
each segment
neither

106. Value Chain

107. Value Chain
Telecom operators
exert control

108. Value Chain
Telecom operators
exert control
Telecom operators
influence the total
sales of
smartphones

109. Value Chain
Voice ARPU is going
down

110. Value Chain
Voice ARPU is going
down
The future is DATA!

111. Value Chain

112. Value Chain

113. Strategy
Formulation

114. Product differentiation

115. Product differentiation
 Applicactions are the product
differentiatior

116. Product differentiation
 Applicactions are the product
differentiatior
 Nokia’s OVI Store

117. Product differentiation
 Applicactions are the product
differentiatior
 Nokia’s OVI Store
 Projection: in 2014 6.67 billion
applications would be downloaded

118. Product differentiation
 Applicactions are the product
differentiatior
 Nokia’s OVI Store
 Projection: in 2014 6.67 billion
applications would be downloaded
 Increase User Satisfaction Index

119. Product differentiation
 Applicactions are the product
differentiatior
 Nokia’s OVI Store
 Projection: in 2014 6.67 billion
applications would be downloaded
 Increase User Satisfaction Index
 Alliance with software developers

120. Product differentiation
 Applicactions are the product
differentiatior
 Nokia’s OVI Store
 Projection: in 2014 6.67 billion
applications would be downloaded
 Increase User Satisfaction Index
 Alliance with software developers
 Increase community strengh of Maemo

121. Product differentiation
 Applicactions are the product
differentiatior
 Nokia’s OVI Store
 Projection: in 2014 6.67 billion
applications would be downloaded
 Increase User Satisfaction Index
 Alliance with software developers
 Increase community strengh of Maemo

122. Cost differentiation
Mobile Operating
Manufacturer Profits
Nokia 30.7
Apple 36.4
Samsung 13.3
RIM 15.4
LG 4.2
HTC 5.1
Motorola -0.1
Sony Ericsson -0.1

123. Cost differentiation
 Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4
Samsung 13.3
RIM 15.4
LG 4.2
HTC 5.1
Motorola -0.1
Sony Ericsson -0.1

124. Cost differentiation
 Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4  Pressure on
Samsung 13.3 competitors
RIM 15.4
LG 4.2
HTC 5.1
Motorola -0.1
Sony Ericsson -0.1

125. Cost differentiation
 Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4  Pressure on
Samsung 13.3 competitors
RIM 15.4  Cost leadership
LG 4.2 an invincible
HTC 5.1 position against
Motorola -0.1 competitors
Sony Ericsson -0.1

126. Cost differentiation
 Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4  Pressure on
Samsung 13.3 competitors
RIM 15.4  Cost leadership
LG 4.2 an invincible
HTC 5.1 position against
Motorola -0.1 competitors
Sony Ericsson -0.1  Fight head-on
with Apple

127. Cost differentiation
 Nokia can set an
Mobile Operating industry
Manufacturer Profits benchmark for
Nokia 30.7 operating profits
Apple 36.4  Pressure on
Samsung 13.3 competitors
RIM 15.4  Cost leadership
LG 4.2 an invincible
HTC 5.1 position against
Motorola -0.1 competitors
Sony Ericsson -0.1  Fight head-on
with Apple

128. Competitive Strategy
NOKIA
Mass
Market Broad
Low cost mass differentiation
market strategy strategy
Niche
Market Focus
Low cost niche differentiation
market strategy strategy
Cost Product
Advantage Differentiation

129. Competitive Strategy
NOKIA
Mass
Market Broad
Low cost mass differentiation
market strategy strategy
Niche
Market Focus
Low cost niche differentiation
market strategy strategy
Cost Product
Advantage Differentiation

130. Competitive Strategy
NOKIA
Mass
Market Broad
Low cost mass differentiation
market strategy strategy
Niche
Market Focus
Low cost niche differentiation
market strategy strategy
Cost Product
Advantage Differentiation

131. Functional Strategy

132. Functional Strategy
 Reduce product portfolio

133. Functional Strategy
 Reduce product portfolio
 Opportunity for targeting
information users

134. Functional Strategy
 Reduce product portfolio
 Opportunity for targeting
information users
 Target specific customers and
specific lifestyles

135. Functional Strategy
 Reduce product portfolio
 Opportunity for targeting
information users
 Target specific customers and
specific lifestyles
 Connect emotionally with the target

136. Functional Strategy
 Reduce product portfolio
 Opportunity for targeting
information users
 Target specific customers and
specific lifestyles
 Connect emotionally with the target
 Define roadmap of Operating Systems
(Symbian or Maemo)

137. Functional Strategy
 Reduce product portfolio
 Opportunity for targeting
information users
 Target specific customers and
specific lifestyles
 Connect emotionally with the target
 Define roadmap of Operating Systems
(Symbian or Maemo)
 Tight vigil on inflection points

138. Functional Strategy
 Reduce product portfolio
 Opportunity for targeting
information users
 Target specific customers and
specific lifestyles
 Connect emotionally with the target
 Define roadmap of Operating Systems
(Symbian or Maemo)
 Tight vigil on inflection points

139. Corporate Strategy
 Continue divestments
 Concentrate resources and energy in
smartphone business

140. Corporate Strategy
 Continue divestments
 Concentrate resources and energy in
smartphone business

141. Q&A