The Declining Fortunes of Sony and Nokia by Ajay Bhalla, CASS Business School

Commenting on the declining fortunes of technology giants Sony and Nokia, Ajay Bhalla, Professor of Global Innovation Management at Cass Business School, said:

“Struggling Sony and Nokia, both regarded as eternal, made dire announcements this week which beg the question: What is the payback from allocating substantial resources to innovative projects?  Both firms have poured billions of dollars into R&D and churned out new products at a much faster rate than their competitors. While Sony introduced ground breaking products from Walkman to Playstation, Nokia introduced touch screen phones long before iPhone made its humble market entry in 2007.”

“The obvious answer to the payback question is that firms who allocate substantial resources to innovation can boost their performance many times over. So why have both Sony and Nokia failed to capitalize on their investments?  Why do they have no ‘star’ products left in their portfolio?  Is it the way their R&D is organised?  Is it that both firms competed in multiple product categories and lost focus, both internally and externally as they experienced unprecedented growth? Or is it that both turned their attention towards fast growing emerging markets, and in the process lost focus in building a next generation firm?”

“Nokia measured its success in market share in countries such as India where it was for long an undisputed leader, and could afford to ignore Apple, which had focused on US and selected European countries. Today it is losing its bread and butter in both emerging and developed markets as consumers shift to Android or iOS devices. Sony, on the other hand, has seen its suppliers such as Samsung emerging as its top competitors in key segments such as television. Both the giants are now awake but the Ice Age melt down may have already begun.”

Cass research for business

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