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Case Study : Samsung vs Nokia

A project By :

Deepanshu Saini, 11117025, M-2

Atul Miglani, 11117018, M-1

Amit Meena ,11117011,M-1

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Contents…

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Introduction Innovations have always been lifelines to business, helping the

companies not only to make themselves leaders in their fields but also to

keep the flag of leadership flying high. New ideas succeed to attract the

consumers worldwide. All the major companies in the field have a well

established system of Research & Development (R&D) and they pour

their money bags heavily on this. But “innovation” alone is not important,

it’s the successive innovation, done keeping in mind the contemporary

needs of society, which holds the key. The product that flourished 10

years before, might not do well today, technology needs to be upgraded.

In this project, we will further put more stress on it by taking a real-life

example of two of the best companies of world in the cell phone

business, Nokia and Samsung.

Samsung beat Nokia to the top position in the global handset market in

the first quarter of 2012, research firms Strategy Analytics and IHS

iSuppli confirmed earlier this year. The Korean company shipped 93.5

million handsets in the first quarter, up from 69 million units a year

earlier, for a 25 percent share of the market. In contrast, Nokia's handset

shipments were down 24 percent year-on-year to 82.7 million units,

giving it a 22.5 percent share. Shipments of its low-end feature phone

stalled in emerging markets while its high-end Lumia smartphones,

based on Microsoft's Windows Phone operating system, were unable to

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make up for a decline in Nokia's legacy Symbian business, according to

Strategy Analytics. In the first quarter of last year, Nokia had a 30.4

percent share to Samsung's 19.3 percent share. In the mobile industry, a

14-year lead is undoubtedly impressive. But Nokia’s lead has gradually

declined in the past few years for a number of very specific reasons. In

this project, we will go through the reasons which brought it behind its

rival, Samsung.

What made Nokia loose the Battle?

All of us must be wondering what happened to the 14 year pioneer suddenly. Well, it was not sudden, to say the least. Here’s what Nokia did wrong — or, alternatively, what Samsung did right — that led to one handset company’s rise over the other.

Nokia Moved Too Slowly

Nokia was a pioneer in the smartphone market, literally introducing consumers to the smartphone with its initial Symbian Series 60 devices in 2002. For the next five years, Symbian phones had little trouble maintaining a leadership position in the smartphone pack. But in 2007, Apple introduced its iPhone. With its full touchscreen and app-based

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operating system, the iPhone changed the very definition of what a smartphone should be.

Yet Nokia failed to respond to the iPhone and the shifting consumer demand that came with it. As the years passed, the Symbian platform aged, and that age really showed when compared to iOS and, later, Android. Simultaneously, the smartphone market exploded — more and more consumers opted for pocket-sized mini-computers instead of “feature” phones with tedious WAP browsers. Samsung, on the other hand, moved quickly into the smartphone market. Granted, Samsung had the advantage of working from the ground up, whereas Nokia had a relatively successful smartphone platform that it just didn’t want to give up. It’s a lot more difficult to be nimble and react to the changes in the market if you’re already a leading player.

Android Paid Off (for Samsung) and Windows Phone Hasn’t Yet (for Nokia)

Not only was Samsung speedy, it also bet on multiple platforms, including Android and Windows Phone — and it even had its own homegrown OS, Bada, just in case none of the others worked out. But in the end, Android paid off. And it paid off handsomely. Samsung chose Android at the right time, and it benefited from the maturation of that platform. Because Samsung has been the dominant player in the Android space, they’ve been able to ride the coattails of that platform.

Nokia, on the other hand, spent its time focusing on Symbian until the company’s recent partnership with Microsoft. But Nokia’s flagship Lumia Windows Phones haven’t paid off yet, as evidenced by Nokia’s Q1 earnings.It was a good partnership on paper, but it was too late — over two years after the introduction of the iPhone and Android picked up market steam.

Hurting on Both Ends

Not only did Nokia move too slowly in the smartphone market, it didn’t anticipate competition in the lower end of the market, either. Other manufacturers like HTC, Huawei and ZTE have attacked Nokia from the low-end in developing markets like China. They were also squeezed at

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the bottom by micro vendors, which individually are not very big, but when you add them up they pose a threat in the low-end of the market.

Nokia Didn’t Have the Panache

The classic Nokia brick phone — and the Snake game on it — brings back a lot of nostalgia. But that’s a problem. Consumers, especially in developing markets, associate the Nokia name with a different era of technology. And in today’s world, having the newest and shiniest device is what matters. Nokia was sort of an older brand, there wasn’t a new panache to it. Samsung, as a marketed brand, was perceived as an innovator. Nokia has a legacy baggage — they are the traditional brick, candybar phone maker. Nokia didn’t market itself as an innovator, and frankly, it hasn’t been doing much innovating anyway. At least not until it entered the Windows Phone space.

Execution Is Key

Where Samsung shines brighter than Nokia, and many other manufacturers, is execution. Samsung mirrored Apple’s gameplan by dazzling consumers with a high-end flagship line in its Galaxy S Android phones. What Apple’s done really well, it’s organizing its phones under the iPhone brand. It’s a memorable, recognizable brand that consumers wait for. Samsung has adopted a very similar approach with their flagship phone. Every year, consumers know that a new Galaxy S is coming. It helps to build up anticipation and drive consumer demand.

But Samsung also has a broad portfolio of smartphone devices, several costing less than $200 without a contract, which appeals to customers who don’t want (or can’t afford) a high-end phone like the Galaxy S or the iPhone. The company also has the advantage in its hardware manufacturing process. Unlike other manufacturers, Samsung has the built-in efficiency of being a vertical company, making their own display, processors, and so on.

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Conclusion The entire case study clearly depicts the impact of lack of innovation at

right time on the market share of Nokia, once a leader in market with no

competitor nearby. Market returns back more to the company which

adapts itself according to the market and its needs. While competing is

important, its also important to learn from your competitors, as Samsung

showed, by releasing its Galaxy S line similar to Apple’s iPhone. While

Nokia’s execution has been shoddy in recent years, it doesn’t mean it

can’t make a comeback with Windows Phone. Nokia and Microsoft are

no weaklings, they do have assets.

In the meantime, however, Nokia is going to go through some rough

patches (this week’s rough patch included).They are in this financial

bind, cutting a lot of expenditures, and really focusing on trying to

reinvent in the company. In the short term Nokia will go through trying

times.

Bibliography

Alexandra Chang, 5 Reasons Why Nokia Lost Its Handset Sales Lead

and Got Downgraded to ‘Junk’,2012

John Ribeiro, Samsung Beats Nokia in Handset Market: Research

Firms,2012,IDG News