Mobile classic becomes casualty of phone wars

Stone age classic? An old Nokia phone still in use and a smartwatch of the future.

Microsoft’s takeover of Nokia marks the Nordic company’s final defeat in the battle to dominate the mobile phone market. Will relentless innovation mean even Apple will one day be overtaken?

‘The humiliation is complete,’ one technology enthusiast tweeted.

Once a giant of the mobile phone business and a source of great national pride in Finland, Nokia has in recent years seen its share of the market fall dramatically, with the company’s share price following suit. On Tuesday, Microsoft, the American software giant, announced it was taking over Nokia’s mobile device business: final proof that the company had been crushed by competition from the supremely fashionable Apple iPhone, and from other smartphones made by companies like Samsung and HTC.

Founded in 1865 as a paper mill, the Nokia company has cleverly adapted to new markets over 140 years: at one point it even made rubber galoshes and boots to a design that survives as a classic even now. But after the early 2000s, when it was riding high, the company failed to beat off challengers for its position as the best designer of mobile phones.

In 2007, the year in which Apple launched the iphone, Nokia was responsible for 40% of all global handset sales. But by this year the once-confident company’s fortunes were looking bleak. It sold 53.7 million mobile phones during the second three months of this year, down 27% even on last year.

But sales of its new Lumia phones, which run a Microsoft operating system, rose during the period. The takeover deal should now give the American company a chance to carve out a position in the mobile market: it has been heavily criticised for failing to move with the times as people have moved en masse away from PCs and laptops towards phones and tablets.

Later this week Samsung is due to unveil its so-called smartwatch, opening up a new front in the mobile wars: ‘the wrist is interesting’ said the Apple CEO Tim Cook recently.

For others, the Nokia phone has been a trusted and reliable tool, displaying all the best attributes of design: attractiveness, utility, durability. The humiliation of the company which made such a hugely successful set of products is a moment for regret, and even a little nostalgia.

Disconnected

All this tumultuous change in the technology world, which brings ever-mor-stunning innovations into the shops at speed, makes some people elated. Others, however, are left bewildered.

Some will applaud the Microsoft-Nokia takeover as evidence of a ruthless market striving to make our lives more efficient and more exciting: this is capitalism‘s creative destruction at work. The companies who fail to push for increasingly futuristic products will lose out, so Nokia had only itself to blame. Bring on the smartwatch! It may look a bit peculiar, but so did the very first, brick-like mobile phones.

You Decide

  1. Do you have emotions about your mobile phone? Should you?
  2. Which other companies can you think of which people in their home nation view with patriotic pride?

Activities

  1. Design your own ideal mobile device: be as futuristic as you like.
  2. Another casualty of the mobile phone wars is Research in Motion, which makes the BlackBerry. Write an account of the RIM fall from grace.

Some People Say...

“You can tell what’s important about someone by their mobile phone.”

What do you think?

Q & A

This sort of corporate decision-making is over my head.
Maybe now. But one day you might be taking a decision about developing a new design, or about what direction to take your own company. In the meantime, everyone who chooses and uses a mobile device is part of this ongoing story about which phone company comes out on top.
OK. And do I need to work out which is the winning side?
Not necessarily. In some regions of the world, Nokia phones are still the most popular brand. In others, BlackBerry has a loyal following among users even when the headlines about the business condemn the company that makes it. Right now, it may be obvious which technology brands are considered high status, but other companies could steal their thunder.

Word Watch

Tim Cook
Steve Jobs, the famously energetic Apple CEO, who has become a legendary figure in business’ hall of heroes because of his obsession with product design, died of cancer in 2011 at the age of 56. Tim Cook is his successor as head of the company.
Capitalism
The system which now dominates most of the world: assets and the means of producing goods and providing services are privately owned and then traded for profit.
Creative destruction
Joseph Schumpeter (1883–1950), the economist and political scientist, invented this phrase to describe how a market economy ensures that innovation and success are built on the rubble of previous collapsing markets or businesses. He described it as ‘the essential fact about capitalism.’

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