Nokia and RIM Show How Not to Run a Mobile Company

At the beginning of 2007, there were two mobile companies that dominated the industry: Research in Motion, which owned the enterprise/business sector in the US with a total market share 20%; and Nokia, which controlled the "smart" phone and feature phone side worldwide with 48% global market share. 

While RIM was mostly successful in the U.S. and Canada (being a Waterloo, Ontario-based company), and Nokia was prevalent throughout the rest of the world, these two companies controlled over 2/3 of the mobile industry. Other players at the time included Motorola, Sony-Ericsson, and Palm, each claiming their share of the remaining third of the industry pie.

All of that changed in January of that year, when Apple Computer, Inc. announced a brand new mobile platform, the iPhone. It was rather startling for many in the industry that a company like Apple, with no experience in the telecommunications market, would try to shoulder its way into a seemingly crowded industry. Yet the iPhone, due to its forward-thinking software and its revolutionary, touch screen design, forced the industry giants to scramble in order to stay above water, something they were unaccustomed to.

RIMM 5-year stock chart

Today, both RIM and Nokia, formerly mobile powerhouses, find themselves hemorrhaging red ink as they try to find a way back into the inner circle of an industry they controlled at one point. Both companies have had to lay off employees, both have played executive musical chairs, both are seeing sales slump, and both have lost billions in value in the ensuing years.

It is often said that hindsight is 20/20, and foresight is a gift. That being said, it seems that a culture problem underlies the struggles faced by both of these tech behemoths, as they seem to think that they can overcome market changes by riding them out. Unfortunately, the revolution in the mobile world is not a fad, and by sticking with its enterprise-centric model, RIM is risking losing the vast majority of available business, and by jumping feet-first into an untested mobile operating system, Nokia is taking a huge gamble that Windows Phone 7 will be as well-received as it needs to be in order to boost Nokia's lagging sales.

What's for certain is that unless the cultures of tech companies are willing to evolve and change with the consumer climate, companies will continue to pop up and fall down, victim to the ever-changing whims of an evolving society. RIM and Nokia have rough days both behind and ahead of them, but if they learn from past mistakes and learn to evolve, they stand a chance of becoming competitors once again.