It's the classic business dilemma: where do you go when you're number one? And in the case of Nokia, which has dominated the global mobile phone market for nearly a decade, that challenge has seemed greater than ever. Nokia's market share has never dipped below 30% since 2000, and in a market which has now reached an astonishing 1.12 billion phones sold every year this is an extraordinary achievement. Indeed, so successful has Nokia's strategy been that it has been increasing its share steadily and finally broke through
the 40% barrier during Q4 last year.
The "Nokia era" of mobile phone dominance has been mirrored by a number of other consumer technology markets in the past. Sony famously dominated the "Walkman" business throughout the 1980s, having created the original design for headset audio by bundling a portable audiocassette player with a pair of lightweight headphones. It's difficult to believe it now, when thumbnail MP3 players carry entire music collections, but that was a cool device just 20 years ago, and if you didn't own a Sony, you made sure to hide the brand. Sony managed to convert some of that loyalty to the CD format, but was gradually losing its grip and eventually missed the boat completely on digital music and today's iPod era.
The consumer technology industry is littered with famous old brands that lost their way. RCA was the de facto TV brand leader in the US for years but has long slipped into the sub 5% bracket and is now under Chinese ownership. Japan's JVC created the VHS standard and thrived during the VCR era, but was unable to build on this success and inevitably fell on hard times.
So will the same fate eventually befall Nokia? In historic terms, to dominate a market over a period of several years is not so unusual. The longer term challenge is to maintain sufficient flexibility to react to market evolution. Nokia will no doubt continue to lead in "mobile phones" for some time, but it must never take its eye off the wider technology market in case a new competitor comes along with something that may not look like a phone, but which begins to win Nokia's phone customers. The iPhone is the obvious current example of blind side evolution that could eventually change the competitive environment. Nokia must make sure that it comes up with the answer to "what will mobile phones become?", otherwise that 40% share could look very different in a few years' time.
Nokia Reaches 40% Share as 332 Million Cellphones Ship Worldwide in Q4 2007