September 2, 2014
By Dan Hodges
What does the story of Nokia and Apple have to do with the power of design and imagination in the luxury industry? In one word: everything.
Why? The story of Nokia and Apple is a lesson about how two companies saw the world and executed their visions.
Nokia saw its mission as making the best talking devices. Apple saw its mission as reinventing the phone through a revolutionary touch interface.
Steve Jobs’ vision was ahead of his time. He said, “What we want to do is make a leapfrog product that is way smarter than any mobile device has ever been, and super-easy to use. This is what iPhone is. OK? So, we're going to reinvent the phone.”
One company got it right and revolutionized the marketplace, while the other business ending up getting bought out and sold for a fraction of its market value.
Here is how it happened.
According to Frank Nuovo, a former vice president and chief designer at Nokia, Nokia developed an iPhone-like device in 2002. There was not much information about this product, other than it had a touchscreen and allowed its users to browse the Web, find restaurants and play games.
Two years later in 2004, the development of what became the iPhone began when Apple gathered a team of 1,000 employees to work on the highly confidential "Project Purple," including Jonathan Ive, the designer behind the iPhone.
Apple was under threat from mobile phone manufacturers. What Nokia had done to camera manufacturers was about to happen to Apple and its iPod.
The development of the iPhone was at first a defensive move and later became an offensive move.
The user interface was built around the device's multi-touch screen, including a virtual keyboard. The iPhone had Wi-Fi and could connect to many cellular networks. It was a whole new approach for mobile phones.
Why did Nokia fail to leverage its vast R&D budgets and launch its own version of the iPhone?
Nokia was a brilliant engineering and manufacturing company focused on the product and features.
No one could beat Nokia in the quality, price and features of their mobile phones.
Nokia had several fatal blind spots: its reliance on the Symbian operating system, overconfidence due to its market dominance, and a lack of focus on the consumer experience.
By contrast, Apple was desperate for a break-through product. It was facing irrelevance if it did not respond to the growing threat from the mobile phone industry.
Apple was at its own inflection point and needed to change the game to stay relevant.
The only way for Apple to win was to change the game.
Apple changed the game and was rewarded by the markets.
The iPhone was launched in 2007. Apple’s market cap was $111.90 billion in 2007 and Nokia’s market cap was $116.8 billion.
IN 2013, APPLE’S market cap was $3,198.67 billion and Nokia’s market cap was $16.16 billion.
The Nokia handset division was sold to Microsoft in 2013.
The iPhone is testament to the power of design and imagination. Think of the world without your iPhone or smartphone for a day or a week.
Jobs said it best in speaking of the iPhone: “Every once in a while, a revolutionary product comes along that changes everything.”
Dan Hodges is managing director of Consumers in Motion, a New York-based strategic consultancy offering business, marketing, and technology services. Reach him at email@example.com.