Fail of mobile-phone giants


Today’s smartphone devices dominate in the technology market of communications. Majority of us use devices from IPhone, Samsung and a number of other Android based brands. All these devices from different companies look very alike. But just a decade ago the market of communication devices was way more diverse. There also were such Giants as Nokia, Motorola and Sony. But now, you probably won’t find these suppliers on the market. What happened to them? Why did they disappear?

Nokia’s fall by many observers has three reasons:

  • Nokia’s technology was inferior to Apple’s
  • The arrogance among top-level managers
  • Lack of vision

An assistant professor in strategic management at Aalto University Tim O. Vuori and a professor of Strategy at INSEAD Singapore Qui Huy led a qualitative research. The results of the study were published in the 2015 paper Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle, where they came to conclusion:

Nokia’s ultimate fall can be put down to internal politics. In short, Nokia people weakened Nokia people and thus made the company increasingly vulnerable to competitive forces. When fear permeated all levels, the lower rungs of the organization turned inward to protect resources, themselves and their units, giving little away, fearing harm to their personal careers. Top managers failed to motivate the middle managers with their heavy handed approaches, and they were in the dark with what was really going on.

Here are main reasons why Motorola failed:

  • Motorola missed the movement to 3G
  • Motorola stopped innovating
  • Motorola had weak corporate communication culture

Instead of listening to their customers, Motorola’s management was preoccupied with desires of the U.S. wireless carriers who were not very interested in new 3G net. Exactly at this point when other market players were adapting to new demands, Motorola lost its chance.

The outdated features of Motorola’s phones played a huge role in why it lost its top place in the mobile market. Other vendors provide more features, innovative ideas and better customer service for the lower price, these factors make it almost impossible to compete for Motorola in the world of communication devices.

Sony’s weak sides that led to failure:

  • High prices for an average phone
  • Good ideas, bad execution
  • Slow development

Sony entered into the mobile-phone business in 2001 in cooperation with Ericsson. At the peak in 2007, Sony Ericsson had a 9% global share of the market. But things tumbled abruptly thereafter as the iPhone and new Android phones started changing the market forever. Against these game changers, Sony offered overly priced phones with an average set of the features. Consumers instantly switched to cheaper phones with better design in all departments. Sony’s management reacted to this shift, but the reaction was too slow, and the execution of the great ideas was affected by high operational costs and ineffective supervision.

As we can see all three companies failed in the cell phone market partially due to lack of good management, vision and good execution. If a business wants to grow and be successful, these stories of failure are worthy lessons to learn.

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