Abstract

In early 2004, Nokia, the global leader in mobile phones, has seen its market share plunge from 36% in 2003 to 28%. This is the first time since 2001 that the company's market share has dipped below 30%. Nokia faces competition from consumer electronics manufacturers such as Sony, Nintendo, Dell and business device and solution providers such as Microsoft. Nokia's heavy bet on 'candy bar' models (non-folding design) has also been responsible for the decline in the market share. The demand for these models has shrunk in emerging markets such as Asia. There, rivals such as Motorola and Samsung have come up with new clamshell designs (flip-phones) which have proved to be instant hits with consumers. As commoditisation intensifies and the bargaining power of network operators continues to increase, it looks as though Nokia might have to reduce prices, leading to lower margins in the future.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Nokia, Samsung, Motorola, LG Electronics, Mobile phones, Losing market share, N-Gage, N-Gage QD, Restructuring, Clamshell, Flip phones, Design, Strategy, Trouble at Nokia