Within 5 years, the smartphone market share of Nokia has fallen from around 50% to below 5%. The company choked on its own success, believing that no one could threaten its power. And then came iPhone.
Cognitive bias or just pure ignorance? A mistake we keep repeating
15 years ago one of the most important events in modern history happened—the iPhone 3G premiere.
It was 2007. City buildings were covered with giant posters of a black-silver phone with no keyboard but a big display and installable apps. A minimalist design was already known from Apple’s iPod developed to listen to music. At that time, the market was dominated by small mobile phones—relatively cheap and easy to use thanks to a handy keyboard, with a battery that had to be charged only once a week.
People were used to pocket-size wireless phones for years. They made communication easy regardless of location and access to telephone booths. Mobile phones offered such “innovations” as short messages (SMS) and image messages (MMS). Text framed in 160 characters has gained a lot of popularity due to its low price and the simplicity of quick communication. Everyone was thrilled with the technological progress driven by companies like Nokia, LG, Motorola, or BlackBerry.
What more could you want?
I remember when 15 years ago, many of my friends were asking themselves what the point of having an iPhone is. How is it possible to enter texts with such a small touchscreen? Who will buy a phone with short battery life and high prices starting from $499? Why a phone that barely fits in a pocket? How to operate the device with just fingers, without a stylus pen or keyboard? It’s just a shiny, over-hyped gadget that has no chance of market success—thought not only me and my colleagues but apparently also many smartphone developers.
A few months after the launch of the iPhone in January 2007, Nokia was celebrating its best year holding 50% of the mobile phone market share. In 2007, shipping reached 435 million devices, while competitors such as Motorola, Samsung, Sony Ericsson, and LG lag far behind.
But the sales figures for the first two quarters of 2008 were worrying. For the first time, sales were slowly declining. Nobody expected that soon 50% market share would dwindle to only a few percent, to drop to 3% in 2021.
How could this happen? Tricky overconfidence
Managers at Nokia had known about Apple’s plans for a long time. There were many leaks about Apple’s innovations a few months before the official launch. However, Nokia was convinced that iPhone—primarily due to its high price—had no chance to appeal to mass customers. It was assumed that people appreciated basic features like calling and sending SMS. Back then, access to mobile Internet was expensive and uncommon. A focus on practical functions and rational drivers of consumer behavior turned out to be a death trap for Nokia.
People quickly started to love iPhones for their design, touchscreen, various apps, and ability to take high-quality photos. It was not another smartphone, but a small computer in a pocket. The iPhone offered something that Nokia’s mobile phones lacked: a new lifestyle. iPhone delivered positive emotions, prestige, a community of innovators, while Nokia continued to sell functions.
This tipping point, beyond which trends gain disruptive momentum, is often called the “Nokia moment.”
Conclusion: reality is non-linear
How to foresee big shifts and get ready for them in advance?
First, step outside the bubble of beliefs, avoid cognitive bias, keep the eyes open for long-term trends, analyze data objectively. We tend to selectively choose statistics and information that confirm the initial assumptions, avoiding bad news that could erode the good mood and, as a result, force us to rethink strategy and make changes.
In the world of digital services and products, disruption can happen overnight
Healthcare is no exception here. The COVID-19 pandemic accelerated many changes. As a result, patients have quickly turned toward teleservices, telemedicine, and online consultations. This is the spark for transformation that has the potential to reshuffle healthcare delivery models. Obviously, healthcare is not a telecommunications industry. But a broader paradigm shift is already visible. Healthcare facilities and systems that ignore this fact, may lose the trust of patients and get in trouble. Probably not tomorrow, but more likely in a few years. And when the transformation reaches a critical mass, it will be too late to adjust to it.
Is the healthcare market facing the “Nokia moment” soon? Maybe yes, maybe not. Nevertheless, it is better to manage risk than to be managed by risk.
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