Comment by cs702
2 days ago
2007. The presentation reads like an eerily accurate crystal-ball prediction of what actually happened in subsequent years.
Evidently, Nokia executives knew well in advance what the iPhone could do to their company.
Evidently, they knew they needed to do "something" to avoid an implosion of their mobile-phone business.
Evidently, despite their prescience and best efforts, they were unable to avoid disaster.
It's as if they were in the Titanic, and saw the dangerous iceberg well in advance, but somehow were unable to turn the steering wheel and change course.
Classic innovators dilemma.
The entire point of an organization is to systematize, standardize, and make reliable something that is working.
When that thing stops working, and the wind changes, that organization is now a giant anchor full of the wrong people doing the wrong stuff inside the wrong systems on autopilot.
My pet theory is that this is the natural lifecycle of almost all companies and the reason for that is that they underappreciate the luck involved in their first success. There are a few exceptions in the form of zombies (typically relying on a monopoly or legislative help), but there are very few repeatedly innovative companies.
There was another thread (I think on HN today) about investment strategies, and the ones that earned the most over the longest term were basically broad index funds rather than picking winners. I'd wager your point has a lot to do with why this investment strategy is best.
Doesn’t need to be a pet theory, that’s just an accurate assessment of reality.
I’m sure in Finnish business schools they spend a lot of time hand wringing over the question of why their domestic champion Nokia failed. What they should instead be focused on is why the disruptor wasn’t also cultivated domestically.
It’s nice to see that they got it even if they weren’t ultimately capable of doing anything about it.
I was an intern at BlackBerry (then RIM) Jan-Apr 2008 and it was astonishing to me how little anyone seemed to care or be taking the threat seriously. Obviously as a student I wasn’t in any of the high level war room discussions, but from what I could see it really did seem like the company was drinking its own marketing koolaid as far as the iPhone not being a relevant competitor because it was missing, like, cut and paste and encrypted email.
Remember Jim B. scoffing at how you had to plug an iPhone in every night? And how much more efficient BlackBerrys were with data?
Steve knew that the customers did. not. care. And that the carriers would build more cell stations if they had to.
Yup. I remember saying to someone at the time, BlackBerry can scream "tools not toys" all they want, but I'm pretty sure Apple will have no problem adding encrypted work email to the iPhone whenever it becomes a priority... but the effort required to reinvent BlackBerry into a friendly, approachable device that people actually want to use, on the other hand, yeah.
The comparison to the Titanic was quite fitting. I was with Nokia then, and there was an overly large administration, excessive politics, and far too many managers and meetings for anything to be done on time. If I recall correctly, we spent 1-2 weeks in meetings just to discuss replacing apache with nginx as a web proxy for a less critical service. The actual work for that change would take about 10-15 minutes.
Although they attempted to make improvements, they failed to recognize what Apple understood: ordinary people wanted to walk into a store and purchase a visually appealing phone that was easy to set up and use, everything in 20 minutes max. Nokia had an overwhelming number of models, catering to everyone from older individuals to tech enthusiasts. If you wanted to buy a new phone, you had to be prepared to spend weeks searching for the right model.
I think the presentation was enough to show they knew they were in trouble.
But it also showed they didn't actually understand the significance of what was happening.
They thought essentially "all this fancy stuff will redefine 'cool', the 'high end'". They imagined a mid-range phone with special email features could slow the iPhone - ie, they imagined phone makers dribbling out features per dollar. But the real lesson of the iPhone was "the 'phone' is going to become a general purpose computing device with multiple connections to the world and hardware features controlled by general purpose software".
Quickly and accurately understanding the competitive landscape is hard, to their credit, and not sufficient.
Even if they came up with a strong response, it would still involve innovation and execution, and probably disruptions to their go to market strategy. All things that have large chances for failure.
Also, Apple at the top of it's game from the iPhone to the iPhone 4. If they were facing a competitor that was strong, but not quite so remarkable, they'd have had more room to maneuver.
Well, there are also a lot of assumptions and complaints about the iPhone and its impact that were commonly made at the time that ultimately didn't matter:
- Has no changeable battery
- Has no physical keyboard
- Is too expensive
- Has no support for Java applications
They clearly thought that these might be potential vectors for attacking the newcomer, but none of it worked out. Rather than having to play the game that the legacy phone makers like Nokia were playing, Apple just changed the entire game, and now Nokia et al were suddenly playing at a disadvantage where their existing knowledge and experience didn't really matter.
- Can't play Flash.
- Forces devs to release their apps as open software, HTML5 apps that anyone can just install the home screen from anywhere*, no marketplace gatekeeper needed, no 70% rev share to the telcos.
* This remains true, except if you really want to you can pay 30% in year one and 15% thereafter for shelf space, mobile apps PaaS, billing/subscription management, and end user app payments support. If you don't want to, you can still just release HTML5 apps like the Xbox Cloud player from Microsoft, downloadable direct from their web site, no App Store involved. And the HTML5 locally installable PacMan game from 2007 still works.
Not supporting Flash and Java was an advantage. Having apps written in an actual performant language made sense.
RIM with their minimal OS and a bunch of Java crap on top of it, just wasn't gone cut it.
Expensive is the only good point. But the issue with expensive is that, if everybody wants it, like 10% of the population will get it, and the other 90% will want it. And then you have product everybody is trying to get.
They caused their own disaster with the Microsoft marriage. Nokia was still huge, market share and coffer wise, and had plenty of options, but killed them all for MS.
Classic big company problems.
"If we built a product like this it will cannibalize some of our existing and profitable divisions, and those existing divisions have a lot more clout internally than we do. The CEO worked his way up from those divisions. We can't make this."
Then someone else makes that product and eats your lunch anyway.
> N-Series and SEMC Walkman probably need to clearly undercut iPhone pricing to succeed in the market.
I think this is where they went wrong. They got scared of the new cool kid in school and immediately dropped all their prices, essentially marketing themselves as budget to Apples premium.
They needed to cut prices because phones could had a fully usable browser on mobile broadband with GPS that no one else did. There simply wasn’t a competitor for at least a few years, and it could even be due to the deal Apple made with ATT to make sure all iPhones came with unlimited 3G mobile broadband.
This is spot-on, and it's a remarkably common pattern when dominant players are faced with a seismic shift—even when it comes from within.
Kodak essentially invented the modern digital camera, and had a phenomenal lead going into the 90s. It was not a little side project—they hired IDEO to do vision work, design enclosures and create on-camera UIs. They poured money in, and did ship products. I'd love to know what happened internally, but externally they simply didn't move as quickly and aggressively as they needed to.
Very similar story at Polaroid—it's not like they didn't see the iceberg.
On the computing side, we have Xerox. Just couldn't figure out how to monetize any of the world-changing innovations from PARC.
Someone should really interview all these key players while they're (mostly) still alive and put together some kind of unified field theory of corporate disruption.
I worked with an ex-Kodak guy, and he related the following story to me from the 80’s or early 90’s.
Xerox was kicking their ass, they were completely owning the copier market. But it was a natural fit for Kodak, they knew imaging better than everybody, why couldn’t they get into this market? This guy was on a crack team of engineers a VP assembled to create a competing product. 9 months later, they demo a fully digital copy machine, working, ready to go, with competitive pricing and features.
But the higher ups at Kodak were incensed. They told the product needs a redesign, because Kodak was a film company, so the product needed to use film for copying. The revised product was a complete failure, and was the reason said engineer left Kodak shortly thereafter.
My take is devotion to brand identity is death during these critical inflection points. YMMV
The problem was that Kodak essentially was a film chemical production company pretending to be an imaging company. The switch to digital meant they could no longer get the fat recurring profits from selling film that they were used to. Kodak's value peaked at $31 billion in 1996 ($58 billion in 2025 dollars) while the total value of the digital camera industry today is around $8 billion (https://www.researchandmarkets.com/report/digital-camera). Even if Kodak had pulled off a masterful pivot to digital and captured the entire market, it would have been disastrous for the company and led to it shedding most of its employees.
5 replies →
This sounds like an apocryphal story. Kodak did actually make copiers in the 80s/90s, I know because my elementary school had one (early 90s, in a suburb of Rochester). It was one of the very large models that do duplex, stapling, ~100 copies per minute, etc. They just presumably weren’t good enough/cheap enough to get much market share vs. Xerox and Canon. I’m not aware of any of their copiers using film, not even sure how that would work.
Large companies struggle to cannibalize their cash cows from within. Powerful managers step up and fight against change.
I think Microsoft is a notable exception. I was impressed how they went all in on Cloud Computing (at the cost of installed software business like Windows and classic Office) and think it‘s now doing the same with AI. Maybe it‘s because they almost missed the internet revolution and arguably lost in mobile.
That's fascinating. It really seems that a lot of businesses end up hyper-optimized to deliver what they already offer, up until the point where anything that isn't a current offer is attacked by corporate antibodies. And that's when the growth they've optimized for suddenly stops.
4 replies →
Kodak also bought Ofoto in 2001. So basically they had over a decade lead on Instagram. What did they do with it? Try to drive people to print more photos, on Kodak paper. I don't think they ever really embraced digital, maybe isolated parts of the company did, but the film/print cultural inertia was just too strong.
If you aren’t already familiar, Clayton Christensen’s theories on this, on innovation and disruption, are widely praised.
https://en.wikipedia.org/wiki/Clayton_Christensen
Yeah, this is classic disruption. The amazing part is, I can almost guarantee that execs at Kodak read The Innovator's Dilemma, but it didn't help. Same goes for Nokia. Knowledge of the problem is apparently insufficient.
5 replies →
One of the problems for Kodak was that selling people digital cameras was always going to be just a fraction of the profit of selling them film.
Today, in 2025, Fujifilm makes more money from selling film (Instax instant photo film) than they do from digital, even though they "won" in digital over Kodak to some extent.
Same like 3Dfx and many others. Miracles happen too often........
The whole report shows that it was a company being run by bearcats and middle-managers who focused on sales rather than product. The detailed out exactly what was coming and why it was great and their general response is atrocious. Some of the highlights of the presentation which stood out to me (on page 12):
Your competitor just launched a superior product and your response is to 'work closely' with T-Mobile?? Are you kidding me?.
Response here was spot on and highlighted that they needed to hire a new chief UI-designer and work on prioritizing touch development -- this should have been number 1 without a question and it looks to me like they put it on the back-burner.
Anytime you're focusing on your 'response' to a competitor, you're behind in the game (by miles) and you've lost already -- especially if you're responding with 'counter-measures.' Once again - are you kidding me?
Incredibly stupid response -- you're planning to kill something the market may demand massively by...filling your product / experience with 3rd party integrations. Idiocy at its very finest.
This is a great sign of a company being run by middle-managers - secret projects with no evidence that they will push your product boundary nor satisfy consumer demand and why in the world would you keep anything here 'secret' - sheer idiocy.
Another sign of a company being run by idiots.
Wow - use partnerships (i.e. relationships / sales) to counter a superior product. These guys sure are on the ball /sarcasm.
Whenever you respond to a threat and one of your highlights is to once again 'talk' your way our of it by highlighting your competitors' weaknesses -- it's usually an indication that your organization is being run by middle-managers or absolute morons.
This whole report shows exactly why Nokia failed.