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What Can Dumb Innovation Tell Us About The Market?

Why should tech giants look back before they move forward?

24Feb

In the last few years, there has been a significant increase in technological breakthroughs delivered to the market. The progress has been so rapid, that some innovations have reshaped entire industries, and those who failed to catch up fell victim to their lack of creativity.

Before Apple and Samsung got to where they are now with their smartphones, the dominant position in the mobile world was long held by Nokia. Despite their failure to retain their leadership, and frustrating attempts to get back on track again, the Finnish company will always be the one who defined the cellular market and set up competitive standards.

Nokia's story with mobile phones started in 1987 when the company came up with their first hand-held compact devices – Mobira Cityman 900. The bulky technology weighed 800g and cost around $5,456 per phone, according to GSM Arena. However, despite the expensive price tag, Mobira Cityman 900 was selling like hot cakes, allowing Nokia to grow their competitive advantage. In the mid 90's, the phone maker decided to focus all their efforts on the telecommunications market. To do this, Nokia sold their tyre, television, power, and cable units, to ensure they had enough resources for future innovations.

1991 was the game-changing year for Nokia - the first GSM call was made by the Finnish PM, with the help of Nokia's technology. Not long after that, the company's first compact GSM Nokia 1011 was successfully launched for mass production. Several years later, as Nokia continued to grow, they launched their blockbuster Nokia 2100 series. The company initially projected delivery of only 400,000 devices, but the series was so popular that they end up selling around 20 million units.

In 1998, Nokia secured their leading position in the global market, surpassing Motorola. By the time the Nokia 6110 arrived, (the company's first phone with the legendary game of Snake pre-installed), Nokia's stocks skyrocketed by 220%, giving them a valuation of $70 billion. In the following decade, Nokia grew and innovated, with devices becoming more sophisticated in design and UX. The market competition and overall development of mobile technology was increasing at pace too. This resulted in the launch of the first-generation iPhone and bad news for Nokia.

As the iPhone's touch screen and minimalistic design were warmly received by consumers, Nokia was forced to introduce the same features in their next generation models as it was no longer them who dictated market conditions. However, even though Nokia's touch screen phones were selling 'ok', the company seemed were no longer a trend setter, but rather a 'sub-innovator'. In 2008, when the Android 1.0 OS arrived to replace Nokia's Symbian, the phone maker's shares started to nosedive. Followed by a long period of job cuts, falling sales, and share price loss - Nokia's acquisition by Microsoft and the launch of the Windows phone - was the last nail in their coffin.

As they say, whatever goes up will, inevitably, go down.

However, Nokia will be back soon and it's not going to chase smartphone makers anymore, instead, they are planning to recreate a niche, which ceased to exist a long time ago. They are bringing 'dumb' phones back, particularly, a nearly indestructible 3310 prototype. The move may give another chance to Nokia, whose remaining copyrights and patents were bought by the Finnish company HMD Global.

At the Mobile Congress 2017, HMD Global announced they will launch three types of phones, but when it came to the question of what type of OS they will run, it was clear that this is not going to be about smartphones. The company confirmed that one of the phones is going to be a nearly exact copy of Nokia 3310, which will come in various colors, and some adjustments to their weight, thickness, and features.

What does Nokia's 'back to the roots' mean for the global market?

With the increased competition, today, tech giants have no choice but to keep innovating, by adding new apps, making devices lighter and thinner, and testing their compatibility with other technologies. Consumers don't have much of a choice either. As the world is becoming extremely connected, the main purpose of a phone 'to communicate' is now extremely vague as it’s become about transferring nearly all aspects of your life and work. However, there is also another growing pattern. As a direct consequence of excessive innovation, many feel nostalgic for times where people could manage using only texts and calls. Unaware of this underserved customer segment, tech giants may be missing out on an opportunity, but Nokia may be finally going in the right direction.

The news of Nokia's relaunch came at the Mobile Congress in Barcelona, which is home to the world's most cutting- edge tech presentations. Nokia's comeback was the centre of attention, and the news may reveal an uncomfortable truth for major smartphone makers - today, they may be in the position where Nokia was when they began struggling.

Apple and their iPhones are in an active search for the next revenue generator, but considering that new iPhones come out without significant changes and minor improvements, it's unlikely that the company has found the blockbuster which can be as successful than the first generation iPhone.

As for Samsung, the company has been confidently operating in the smartphone market for years, but the constant rivalry with Apple and 'explosive battery' issues with some of their devices has put them off the leader board, at least for a short while.

Similar to Nokia's stagnation in the 00's, those who dominate in the market today and chase innovation may also be missing a warning sign - if they spend too many resources on reshaping the product line, one day, they may fall short of promise and under deliver. Currently, Apple is focused on creating new apps and improving UX. Samsung, on the other hand, is trying to adopt VR and AR so these technologies can serve more than just entertainment tools.

Nokia showed us that getting to the top of the market doesn't necessarily mean that you are going to stay there for long. Growth opportunities, however, are not always those associated with futuristic thinking, sometimes, it can be useful to look back, where seemingly expired approaches may offer some great value in the current business landscape.

It hasn't been announced when exactly Nokia is going to return with their 'dumb innovation', but for those who feel nostalgic, there are exciting times ahead.

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