FIELD SERVEY REPORT ON

The Mobile Industry (Nokia Vs Samsung)

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SUBJECT: - Marketing Management

MBA-IT (2nd SEM)

Under the supervision of Dr.M D KAKADE Submitted By: Ashutosh Pandey (06) Priyanka Goel(16)

Institute of Management and Entrepreneurship Development

28th February 2013 CERTIFICATE This is to certify that, the work embodied in the field survey report entitled, Mobile Industry has been, carried out by Ashutosh Pandey & Priyanka Goel under our supervision for reports on for the degree of Master of Business Administration.

(Dr. M D KAKADE) Program Director

DECLARATION

We Ashutosh Pandey & Priyanka Goel confirm that this work submitted for assessment is my original work and is, expressed in my own words. Any uses made within it of the works of other authors in any form (e.g. ideas, equations, figures, text, tables) are, properly acknowledged at the point of their use. A full list of the references employed has been included. We also declare that this project report has not been submitted anywhere in any form for the partial fulfillment of the award of degree. We understand that our project report may be, made electronically to the public.

Signature of the Student Ashutosh Pandey (06) Priyanka Goel(16)

ACKNOWLEDGEMENT

We are thankful to Dr.Sachin S Verneker Director, IMED, Pune for providing all the necessary requirements and for his moral support for this dissertation work as well during the course of MBA. I am also thankful to, Program Director IMED, Pune for his honest dedication towards our education and career and for being with us in various levels of academic pursuits. In this report, I was greatly assisted, inspired by my mentor and supervisor without them, the completion of this project was almost impossible. With great reverence, I acknowledge them for providing me an environment to involve as an independent researcher. Their constant encouragement and affection gave me courage to tackle the failure days, which is inevitable in a researchers life. Our primary thanks goes to Dr. M D KAKADE for his deep commitment & guidance. We are also grateful to Dr Kirti Gupta and all faculties in for their support and motivation throughout my project work. It is my pleasure to thank all the people who helped to turn this project a success. I am also very thankful to ALL CLASSMATE and my colleagues for their support.

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INDEX
S.NO. CONTENT 1. Executive Summary 2. Introduction 2.1. Problem Statement 2.2. Methodology 2.3. Scope and Delimitation 3. 2.4. Structure of the Report The Smartphone Industry 3.1. Description of Smartphone vendors 3.1.1. Nokia 3.1.2. Samsung 3.2. The Integrated Portfolio 3.2.1. The Market Portfolio 4. 3.2.2. The Technology Portfolio The companies innovation processes 4.1. Nokias innovation processes 4.1.1. Nokias internal innovation processes 4.1.2. Nokias use of open innovation 4.1.3. Assessment of Nokias innovation processes 4.2 Samsungs innovation processes 4.2.1. Samsungs internal innovation process 4.2.2. Samsungs use of open innovation 5. 4.2.3. Assessment of Samsungs innovation processes Conclusion and Further Research 34-35 5.1.Conclusion 6. 5.2.Suggestions for Further Research Bibliography 6.1. Books 6.2. Articles/slides 7. 8. 9. 6.3. Internet sources Appendix A A short description of OS suppliers Questionnaire regarding mobile phone usage 37-38 39-45 46-50 36 19-33 11-18 PAGE NO. 4 5-10

Questionnaire for Mobile Manufacturers

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10. 11.

Remarks

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1. EXECUTIVE SUMMARY
This report is about the former industry leader within the Smartphone industry, Nokia against the current industry leaders, Samsung. Open innovation is a necessity for the participants within the Smartphone industry since many technologies need to be mastered. But the focus is not only on open innovation since the report also assesses other strategies within customer focus, marketing strategy and their own R&D strategy. These parts have a direct or indirect effect on the companies use of open innovation. Secondary sources are used to evaluate how the companies innovate. Slowinskis Want-Find-Get-Manage approach for managing open innovation is used to assess Nokias innovation strategies which are compared to its two main competitors innovation strategies. The model shows where Nokia might have failed and it is primarily within the want/goal part. The market and technology leader, Apple know what they want and how to reach those goals. Their strategies have created the most efficient money generating machine within the Smartphone industry. Nokia want to serve a lot of segments and they also wanted to have their own OS, the Symbian, which was inadequate. Nokia primarily focus on cost, but they also want to provide proper hardware, good design and serve all segments, which includes the feature phone- and the emerging markets. They are the ones who use the most open innovation tools and have also spent the most on R&D. Nokias situation has, however, improved after they started to cooperate with Microsoft and abandoned their own OSs. They created the new Lumia-line together which has made the two companies a new serious contender within the Smartphone industry. It is assessed that Nokia have several opportunities to improve their situation. Nokia have rejected potentially good ideas since the managers could not assess the ideas properly or were too focused on cost. It is advised that they start to focus on value first and focus on cost when value has been proven. It is also advised that they leave the feature phone market since it is a low profit area with tough competition. Nokia should focus their R&D and their use of open innovation within the Smartphone market. They should then make a super Smartphone line which is the most profitable area. The super Smartphone strategy has some specific requirements and the Lumialine has already breached some of those requirements. Their narrower focus can improve Nokias R&D figures and their use of open innovation. Suggestions for further improvement of their use of open innovation are although not within the scope of this thesis since the goal analysis is the main analysis area. Nokias open innovation opportunities have been mentioned in the further research.
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2. INTRODUCTION
Nokia have enjoyed being the market leader within mobile phone industry for a long time. The long period of industry leadership is impressive when considering how volatile the mobile phone industry is. However, during the last decade a new product emerged, the Smartphone,1 which eventually shook Nokias world. Nokia were able to dominate the Smartphone industry at first and enjoyed large market shares. But their situation changed as new competitors from the Internet service- and personal computing industries became a part of the Smartphone industry. These new competitors had been industry leaders within their former industry and they had different core competencies and strategies, compared to the traditional mobile phone companies. Nokia, nonetheless, felt ready for the new Smartphone challenge as they were proud of their ability to change.3 Nokia continued to dominate the Smartphone industry when Apple entered the industry in 2007 and later in 2008 when Google entered. But the different competencies and strategies made it difficult for Nokia to maintain their position and they were losing market shares every year. They were finally passed by Apple and Samsung, a competitor who uses Googles Android, in the second quarter of 2011. This is a critical situation for Nokia as the Smartphone is the most lucrative product compared to the traditional mobile phone market, the feature phone. The very volatile market and the need for different core competencies are good arguments for using open innovation. Open innovation is about having an open approach towards ideas and technologies to improve and speed up the R&D processes. Open innovation will be explained further in the theory section. Nokia have although practiced open innovation since the mobile industry, according to Nokia, have: escalating R&D expenditures, ever shorter product life cycles, rising entry barriers, increasing needs for global economies of scale and, particularly in technology-intensive industries, the growing importance of global standards. Nokia thought that they were ready for the new challenges and were aware of the opportunities that open innovation gave. But Nokia still lost their market shares within the Smartphone industry after a good start and this leads to the following problem statement.

2.1. PROBLEM STATEMENT

The optimal use of open innovation should lead to faster speed to market, cheaper and more efficient R&D. Something has although gone wrong for Nokia since they have abandoned their own software solutions due to slow development and their R&D expenses are higher than their competitors. This leads to the following problem statement: Can Nokia optimize their use of open innovation to regain the industry leadership within the Smartphone market? In order to explore Nokias use of open innovation within the Smartphone industry, I have developed the following research questions: Where are Nokia placed in the integrated portfolio compared to the industry leader, Samsung? Which innovation processes do the industry leaders use? Why did Nokia lose their market shares within the Smartphone industry when they use open innovation?

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2.2. METHODOLOGY

This is a practical oriented report rather than a theoretical report. There is not much theory and only few theories have been included. The report includes two models, which are the The Integrated Portfolio and the Want-Find-Get-Manage-model. The integrated portfolio gives a current position of the competitors through the market portfolio and a long term position through the technological portfolio. The model will be used to find the industry leader and the two followers. Their position will also affect how the followers should act to gain on the industry leader. The other model is called the Want-Find-Get-Manage model which is about how to optimize the use of open innovation. The model will be further described in the theory section. The model was an eye-opener since it is able to categorize the different stages of open innovation and it clarifies where Nokia can have failed. It has been a struggle to find alternative models for how to optimize the use of open innovation. There exist a lot of texts about why to adapt open innovation, but not many about managing open innovation. However, the thesis is not going to be an assignment about why Nokia and the companies should use open innovation since they all use open innovation to some degree. The report primarily uses secondary sources since contacting the three companies would have required a lot of basic knowledge. A user survey was also an opportunity within the technology portfolio as respondents could assess the different parts of each companys Smartphones. The survey would assess the companies best Smartphone models. Apple has started this best Smartphone5 competition and Samsung have followed by introducing the Samsung Galaxy S-line. The user survey could give satisfying results for the iPhone 5 and Samsung Galaxy II, as those two have plenty of users. But there would only be very few respondents for Nokias new Smartphone and such a survey would not have given reliable results for all three models. The secondary sources used for this thesis are primarily articles and blogs from the Smartphone world. The secondary sources are potential victims for bias and this has been the case for the Smartphone industry. The different newspapers, bloggers or homepages have in many cases a favourite amongst the different hardware or the software suppliers. Many of these sources almost have a religious approach to how they assess the different Smartphone solutions. There are lots of Fan-droids (Android fans) or Apple-holics out there as some prefer the more free approach which Android offers, while others prefer Apples ease of use. There are currently not many Nokia- or Microsoft fans out there, but this might change after the introduction of Nokias new and improved product line. The bias has created several problems during the thesis
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period. When the integrated portfolio was written, it was possible to find different technological winners through different homepages. Apple were winners in most of the homepages, while Samsung also were a winner once in a while. It was not possible to find Nokia as winner, but a lot of homepages agreed that Nokia had come closer to the two industry leaders with the introduction of their newest Smartphone, Lumia 800. Potential bias was checked by searching the authors background whenever certain words or sentences were too positively or negatively loaded. By seeing the authors other texts or background, I usually got an answer about his or her religion and knew that it might be biased information. The bias problem was solved by having multiple sources about the biased information to find a more sophisticated view of the situation. One of the main sources for this thesis is the Nokia book: Winning across global markets: How Nokia creates strategic advantage in a fast-changing world . This was a book written as Nokia were losing their Smartphone market shares, but the book was still very optimistic and described Nokia positively. The whole book only has three sentences in the end of the book where Nokia acknowledged that Apple was a serious threat. The book is clearly written for Nokia since it only mentions Nokia in positive terms. However, the bias was apparent since Nokia had gone through and are still fighting a crisis period where things become more obvious. The book is relevant for this thesis as it mention a lot about Nokias internal processes and their use of open innovation.

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2.3. SCOPE AND DELIMITATION

The report will primarily focus on Smartphone vendors, which include hardware manufacturers and developers, since Nokia is the main story. It will also include the two industry leaders, Apple and Samsung, as they will be the ones for Nokia to capture. The software part is, however, the main differentiator within the Smartphone market and it is not possible to exclude the software part totally. The intention was originally to include software and hardware competitors, but the thesis would have been too chaotic and the analysis would have been too superficial if both parts were included equally. Some companies are more interesting than other and this has also characterized the Smartphone market. It has been easy to find articles and reports about Apples success and Nokias former success. A lot of these articles are although often superficial as they conclude that the companies have success, but they usually do not reflect about how they got into that position. But it has been a challenge to find information about Samsungs success on the Smartphone market and their innovation processes. A lot of time has been spent on searching for information that was available for Apple and Nokia, but the same information was not available for Samsung. Samsung have a lot of other business areas and finding the right search term has been a challenge. After many hours of wasted search, I had to draw a line. This means that the written parts about Apple and Nokia are more detailed while the parts about Samsung are less detailed. I found some market research reports about the Smartphone industry and one of them was made by Research and Market. However, their electronic report cost 3,495, which most of the Smartphone reports cost. Access to the report would have been a time saver, but information about the Smartphone industry is very valuable. This may also mean that the gathered information is sometimes superficial, but without access to the industry reports the collected sources will have to do. The market portfolio was written in October 2011 and the market shares are for the second quarter of 2011. This chapter has not changed even though newer markets shares have come up. The two next quarters are also distorted by customers waiting for the next iPhone, creating low figures in the third quarter for Apple, while Apples sales figures exploded in the next quarter. The rest of the thesis will use the newest, available sources.

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2.4. STRUCTURE OF THE REPORT

The introduction is about how Nokia are user of open innovation and still managed to lose market shares within the Smartphone market. The problems statement is about whether Nokia can optimize their use of open innovation to regain their lost Smartphone market shares? The starting point includes the integrated portfolio, which give a picture of where the competitors are today and where they are headed. The next part is about the open innovation theories which first describes the general open innovation theories and then include the Want-Find-Get-Manage model. The model is used as a detection tool for where Nokia have failed. Following that is a description of the two industry leaders innovation processes, which includes both internal innovation processes and their use of open innovation tools, to compare them to Nokia innovation processes. The comparison of their innovation processes will possibly show where Nokia failed. This leads to recommendations for how Nokia can overcome these problems to improve their market shares. The last part is the conclusion and further research. The conclusion will answer the three research question and the problem statement to sum up the findings. The further research will come with suggestions within this topic, Nokia and open innovation.
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3. THE SMARTPHONE INDUSTRY

The Smartphone industry is characterized by having quite a diverse set of players. There are hardware developers, software developers, apps developers, manufacturers, companies who only license their patents, carriers, old players, newcomers and many others. Some companies are active within most areas while others only focus on a single or few areas. As mentioned in the delimitation, the thesis will primarily focus on the Smartphone vendors. A short description of the operating systems (OS) providers can be seen in appendix A. The next section will be a short description of the three chosen Smartphone vendors in the Smartphone industry.

3.1. DESCRIPTION OF SMARTPHONE 4VENDORS

The first company to be described is the main company in this thesis, Nokia, and will be followed by the two industry leaders, Apple and Samsung.

3.1.1. NOKIA HISTORY AND BACKGROUND: Nokia are one of the traditional players and they were the industry leader in the total mobile phone industry. Nokia started as a company in 1865 and have been a forestry -, a rubber-, a cable, an electronics- and a mobile phone company during its lifetime. Nokia began to experiment with telecom equipment during the 60s, but the first many years were not successful. Their mobile phone business became a success when present chairman of the board, Jorma Ollila, started as CEO in January 1992. Nokia sold a lot of business divisions and began to focus on mobile phones. Nokia and Ericsson were pioneers within GSM and when the European countries chose GSM as standard, the two companies got a good start within the mobile phone industry. Ollila has been a huge contributor for Nokias overall success since Nokia went from $3.5 billion in revenues by 1992 to $54.3 billion when he retired as CEO in 2006. The number of employees also more than doubled during that period, since Nokia went from having 27,000 to 68,000 employees. Nokia were well aware of the convergence between the Internet and mobile phones. In 1998 they joined up with Ericsson, Motorola and Psion to develop Symbian, since they realized that the future competition would be within software. Nokia would rather compete within the hardware part, which is one of Nokias main forces and wanted to neutralize the software
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competition by developing a common software base. In 2002, Nokia began to focus even more on the Smartphone business and invested intensely because of pressure from Microsoft. Nokia got a good start within the Smartphones market, but their success did not last as their dominance was shrinking. In 2010, Samsung and Sony Ericsson were the last to leave Symbian in favour of Android. Nokia reacted by hiring the former head of Microsofts business division, Stephen Elop, as their new CEO by September 2010. Elop quickly realized that Nokia could not deliver the same experience as Apple or Android and he knew that something radical had to happen. By February 11th 2011 Stephen Elop announced that Nokia were going to cooperate with their former competitor, Microsoft to adopt Windows Phone 7.5 (WP7.5) and that their own Smartphone OSs, Symbian and Meego, would be phased out.

BUSINESS MODEL: Nokia differentiate themselves by being a manufacturer of the Smartphones compared to the new Smartphone competitors. Nokia claim that manufacturing is one of their main competences and this will be further described in the section about their innovation processes. Nokia have prioritized cost since they are aware of decreasing prices during a products life cycle. This means that they primarily earn their money by selling their own produced Smartphone with Microsofts OS installed. NUMBER OF EMPLOYEES: Nokia had over 132,000 employees by mid 2011, and Nokia had manufacturing employees. By 2010 Nokia had 17,200 R&D employees, but Nokia have fired several R&D employees after they started the collaboration with Microsoft to make their R&D department more efficient.

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3.1.2. SAMSUNG

HISTORY AND BACKGROUND: Samsung are also one of the traditional players within the mobile phone industry and they released their first mobile phone in 1988. Samsung are one of Nokias main competitors and the two companies compete in both the Smartphone market and the feature phone market. In 2010 Samsung sold 281.1 million mobile phones compared to Nokias 461.3 million, making Samsung the second largest player within the whole mobile phone industry the total mobile phone sales. Samsung did, however, not get the best start within the Smartphone market as they only shipped 5.5 million Smartphones in 2009 which added up to a market share of 3.2%. One of the reasons was that Samsung did not have the sufficient OS to become a success within the Smartphone industry. Samsung were, nonetheless, able to change their strategy and have become one of the main players of the Smartphone industry by introducing Smartphones that used Android and maintain their hardware advantages. Samsung gained a lot of market share by introducing the Samsung Galaxy S-line in June 2010, which is their main contender against Apples iPhone. BUSINESS MODEL: Samsung earn their money by selling mobile phones, but also by selling spare parts. Samsung are, as one of the traditional players like Nokia, quite interested in scale. They become specialist within certain parts and their goal is to sell those parts to as many as possible. Samsung have a complex relationship to Apple since they are fierce competitors fighting for the industry leadership in the Smartphone industry. But Samsung are also one of Apples key suppliers of flash memory, displays and processors. Apple have become the single largest customer for Samsung as 4 % of Samsungs revenue in 2010 originated from Apple. Samsung use several Smartphone OSs, but their main OS is Android which will be elaborated in Samsungs innovation processes.

NUMBER OF EMPLOYEES: Samsung Electronics had over 190,000 employees by July 2011, but it is uncertain how many worked within the mobile phone business part since Samsung Electronics has several business areas. They have an unrevealed number of employees within the manufacturing, but Samsung have assessed that they had about 8,500 employees involved in mobile phones R&D.
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3.2. THE INTEGRATED PORTFOLIO

The integrated portfolio, which consists of the market portfolio and the technological portfolio, will compare Nokia against its two main competitors; Apple and Samsung. The market portfolio is the current position of the competitors strength within the market. The technological portfolio gives a long-term competitive position for each of the competitors. The two portfolios put together create the integrated portfolio and all three figures, including the three competitors. 3.2.1. THE MARKET PORTFOLIO: The market portfolio consists of the market attractiveness, which will be the same for all competitors even when the different segments have different attractiveness. The competitive market strength will be assessed for each of the Smartphone vendors. The competitive strength will evaluate the competitors market- and profit share. Profitability is usually considered to be correlated to the market share and therefore the emphasis is usually on market share. The correlation between market share and profits within this industry is non-existing and the profits will also be included. COMPETITIVE STRENGTH HORIZONTAL AXIS Nokia were by far the biggest player on the Smartphone market just some years ago. Nokia had approximately half of the Smartphone market in 2008, but the market shares fell to 39% in 2009. Their decreasing market shares continued during 2011 and Nokia were passed by Apple and Samsung in the second quarter of 2011. Nokia had 15.2 % of the Smartphone market shares in the second quarter of 2011 and they were the third largest competitor within the Smartphone market. Nokia had well over 50 % of the total profits in the second quarter of 2007 within the mobile industry, but Nokia actually lost money in the second quarter of 2011. Nokia have the lowest score in the second quarter of 2011 between the three hardware producers when it comes to market share and profits share. Nokia are although close to the two others competitors when it comes to market share, indicating a high score on the horizontal axis of the market portfolio, but still well beneath the two industry leaders since they had no profits. Apple had 18.5 % of the smartphone market shares in the second quarter of 2011. Their sales increase rose by 141.7 % compared to the same quarter 2010. Apple became the market leader of the smartphone market in the second quarter of 2011. The difference between the competitors becomes more obvious when it comes to profits: Apple only had 5.6 % of the total mobile phone market share in the second quarter of 2011, but Apples share of total profits were
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66.3 %.Apple were able to dominate that quarter with the older iPhone 4 model, which is impressive since the smartphone industry is evolving fast. Apple have the highest score when it comes to market share and profits compared to its competitors which give Apple the highest score on the horizontal axis.

Samsung have experienced a lot of growth during the last couple of years. They only had 5 % of the Smartphone market share in the second quarter of 2010 while they had 17.5 % of the market share in the second quarter of 2011. Samsung grew by 519 % when it comes to number of sold Smartphones. One of the main reasons for their Smartphone success was strong sales from the Samsung Galaxy S2. Samsung have, to some degree adapted, Apples one super Smartphone model per year, as the first Samsung Galaxy S was introduced in June 2010, while Galaxy S2 was introduced in June 2011. The Smartphones are also adapted for carriers different requests. Both Nokia and Samsung have not been able to capitalize the Smartphone market as well as Apple. Samsung were, nonetheless, able to capture 15 % of the total profits, but this number also includes profits from other Smartphones and their feature phones. Samsung have a high score when it comes to market share and profits since their market share and profits are between Apple and Nokia. This also means that Samsung lies between Apple and Nokia on the horizontal axis of the market portfolio.

3.2.2. THE TECHNOLOGY PORTFOLIO: The technology portfolio consists of technology attractiveness and resource strength of each of the companies. The technology attractiveness, the vertical axis, will be an assessment of the external factors, such as acceptance, potential for advancement and application scope. This will be the same for all three companies since this will be an assessment of the companies super Smartphone. The resource strength of each company, the horizontal axis, will be an assessment of the internal factor, e.g. their level of technology, their potentials and the strength of their patent.

TECHNOLOGY ATTRACTIVENESS VERTICAL AXIS Acceptance: As more mobile phone users are switching to Smartphones this indicates that Smartphones are generally accepted by the broader masses.
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Technology life cycle (TLC): The attractiveness of the technology can be estimated by the patent situation. But the measurement of the patent situation requires a complete statistical survey of all patent applications within the technological field of the industry, which is almost impossible due to the massive numbers of patents and applications within the mobile phone industry. There will instead be an assessment of the overall patent situation within the Smartphone industry. A patent war rages within the Smartphone market and it is a battle to have the most important patents. There has been an explosion in patent lawsuits since 2010. Android experienced 37 patent disputes within a year, and Google are the one that many of the big players are going for. This indicates that the technology is attractive for the individual players. When a patent war ends companies usually prefers to cross license rather than losing money in the courts, and this indicates the Smartphone industry is still attractive.

Potential for advancement : Apple introduced a radical improvement of the Smartphone in 2007 and the iPhone as the dominant design indicates that the time of radical product innovation is over. This means that the Smartphone industry is within the period of incremental product innovation. There will be a continuing battle to have the best software and have the optimal screen resolution, touch screen, camera and other hardware parts. It is predicted that some of the main competition areas for hardware parts will be within processors, connection to the Internet (4G) and cloud computing. Dual core processors have been introduced by almost all companies and the next battle within processors is about quad core processor. Quad core processors do need much better battery solutions and this has created reluctance amongst the vendors. The emergence of 4G will give cloud computing and Internet surfing better circumstances. The users of Smartphones have been constrained by the carriers when it comes to Internet usage and speed. 4G will solve the demand for more data and improve the experience of cloud computing. Cloud computing enables customers to see full length movies in HQ and listen to music without taking hard disk space from the Smartphones. The right cloud computing strategy is important since shifting from one cloud service provider to another is complicated for the users. This can make a customer stay at their current cloud service provider longer and make the customer stay longer at the same Smartphone vendor.

Place on vertical axis: The 4G, better processors and cloud computing indicates that the Smartphone market has not reached its full potential yet. More opportunities will emerge when 4G and cloud computing becomes a fully integrated part of the Smartphones. The patent war also
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indicates that the technology is still attractive. It is assessed that the Smartphone technology is within the growth stage, but moving towards the mature stage since many of the new incremental improvements have been invented and are about to be implemented.

Resource strength: The first part within this section will be an external assessment between the three competitors super Smartphones as the super Smartphone account for the most of their Smartphone revenues. Apple were, as mentioned earlier, the one who started the super Smartphone competition. Apples iPhone 4S is by far their largest Smartphone revenue contributor and Samsung Galaxy S2 is Samsungs biggest profit contributor. Nokias newest Smartphone and their current flagship, Lumia 800, will be compared to find out who has the brightest future of the three companies. Table 1 is reviews made by The Verge who have assessed the three models as following: TABLE 1: REVIEW OF THE TWO SMARTPHONE Specs / Model Design Display Cameras Reception/Call quality Performance Software Battery Life Ecosystem(apps) Sum Nokia Lumia 800 Samsung Galaxy S2 9 9 9 8 7 8 8 7 8 8 7 6 62 9 7 8 8 64

As mentioned in the methodology part, it was possible to find different winners. Nokia Lumia have a high score in this review compared to other reviews, but almost all reviewers think that Nokia have gone into the right direction by introducing the Lumia-line. The Verge was chosen since this was one of the few reviews with several criteria and with assessments of each part. Other reviews did not use the same criteria and it was not possible to compare several reviews. Other reviews were simpler, since they assessed that the iPhone 4S won over Galaxy S2 and Lumia 800 within a certain part. The Verges reviews are also unweighted comparisons which do not give a correct picture of their technological position as e.g. software is the most important part. It was not possible to find a homepage which had reviews with several criteria evaluated and the same criteria weighted. This will be mentioned as a part within the further research. The following will be a review of the vendors abilities within hardware partly through
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Table 1; by evaluating their patent situation and what their potentials are. After each competitors evaluation there will be an assessment of the three companies place on the horizontal axis of the technological portfolio.

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4. THE COMPANIES INNOVATION PROCESSES

4.1. NOKIAS INNOVATION PROCESSES

4.1.1. NOKIAS INTERNAL INNOVATION PROCESSES Innovation strategy and their goal: Nokia are not always the first company to come up with a new innovation, but they try to be at the market at the right time. Nokia do not have 4G or dual core installed on their Smartphones. Nokia have been set back by the cooperation with Microsoft since WP7.5 does not support dual core yet. Nokia are known for their hardware and design capabilities since they make excellent screens, cameras and other hardware parts. Some would even argue that they are as good as Apple when it comes to the hardware and design parts. The reviews in the technological portfolio confirm the design part, but they are lacking within some of the hardware parts. Nokia focus a lot on cost and Nokia consider cost as one of their primary reasons for their success. Chairman Ollila once stated: Nokias leadership is about cost, cost and cost. Nokia argue that they prepare themselves for prices erosion since they are aware of declining prices during a products life time. Their cost advantages enable Nokia to enjoy when people buy more expensive products during good times and during bad times where customers might trade down. Nokia can enjoy cost advantages since they focus on modularity. This means that many of their phones are 60-80 % alike while the rest of the phone is for local adaptations and to differentiate the phones for the different segments. This enables economies of scale within R&D, production and sourcing. Nokia have several factories placed all over the world to be able to respond to local demand fluctuation, and let the local factories specialize in the local adaptations. Nokia are planning to keep the manufacturing part for a while since they still are more efficient than possible suppliers. The manufacturing part might be outsourced if possible manufacturing suppliers become more efficient than Nokia. Nokia have a long term- and a short term R&D department. The long term R&D is done by Nokia Research Center (NRC) which in 2010 had 400 researchers employed all over the world. NRCs primary work area is trying to predict mobility in 3-7 years and to disrupt the current technologies. NRC are also supporting the short term R&D so the units can master the new technologies. NRCs purpose is to improve Nokias IPR situation, which is an important mission. Nokia have invested $60 billion in R&D during the last two decades which have given Nokia about 11,000 patents and most of these patents are very important for the mobile industry. Nokias investments in R&D rose by a fivefold during the 90s and Nokia seemed to be proud of
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spending more on R&D than Apple.168 Short-term R&D is done by Nokia Units and their mission is to implement the innovations as smooth as possible into Nokias organization. The risks from a new technology have been reduced through NRCs work and Nokia Units will try to scale up the new technology to gain cost efficiencies. Number of models: Nokia had plans to launch 40 new mobile phones in 2011 and 10-12 of those would be new Smartphone models. Their plan was to release two Smartphones for the low end, 4-5 to the middle end and 3-4 for the high end. This is a much different approach than Apples one Smartphone introduction per year for the high end. Nokias multiple model introductions could potentially make their own products compete against each other. One reason for Nokias many introductions is that they do not consider mobile phones as a rich man toy. Nokia believe in their slogan which says: Connecting people and it is about making mobile phones available to everybody. Nokia want to serve all segments in the industrialized- and the emerging countries as well. The focus on emerging markets has grown the last couple of years since Nokia want to exploit their cost advantages. In 2009 they were able to sell a mobile phone for $30 to the emerging countries. The emerging countries are increasing their parts of the worlds total GDP and Nokia are interested in selling to these countries from start. Design and market research: Cost is not their only strength since Nokia are known for their hardware and design capabilities. Nokia want to produce products that people want and love to use. Nokia had a large design team which employed 340 designers, psychologists, researchers, anthropologists and technology specialists. They were placed all over the world, e.g. in Finland, England, China, USA etc. and they tried to spot the next consumer trend. Nokias vision is to be: ... recognized as the most consumer-focused, customer-centric organization on the planet. Nokia try to achieve this by conducting huge researches, e.g. by a survey which included 74,000 respondents from 26 countries, to figure out what the customers needs are. In this research, it was concluded that consumers only spend the phone for calling 20 % of the time, and that the consumers are using the Smartphone for texting, taking pictures, recording videos, watching TV, play games, surfing, emailing, navigating, scheduling etc. NOKIA EXTRAS Nokias software problems: Nokia knew that software was the differentiating part since they claimed that 75-80 % of the value was created through software. Nokia had spent over a decade to develop and improve Symbian, when Nokia chose to shut it down in February 2011. It was important for Nokia to have their own Smartphone OS since having their own software
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would secure their independence. Symbian was considered as an excellent platform for the phone part, but the ease of use and program for applications were terrible compared to the iOS and the Android. The user experience is important since it is the interaction with the customer. It is argued, that Symbian failed because of mismanagement by Nokias executives. Nokia did not have the right software engineers employed for the different parts. There were competitive teams amongst the software department, but nobody was actually focusing on user experience and to improve the software. Nokias main focus was on hardware and the management did not take the software development seriously. However, just before Elop was hired, the Symbian OS was almost becoming a proper OS and it had become easier for 3rd party developers to make apps for Symbian. One developer assessed that Symbian was about 80 % correct and were close to the last 20 %. Nokia also tried to develop Meego with Intel as an alternative to Symbian which will be mentioned in inter-firm collaboration later in this section.

Critique of Nokias focus on cost: One of the reasons for failing within the Smartphone market might be because of Nokias ranking between cost and innovation according to a former employee. Nokia had several good ideas from talented employees, but Nokias primary focus was on economies of scale. Nokia claimed that a possible technology did not have to become a blockbuster, but Nokia were in reality only interested in products that could sell to tens of millions. Nokia have shut some promising products down since they thought it could not become a blockbuster. Nokia had also grown too big and were not able to encourage their employees to be creative and in some cases discouraged them. Nokias managers were also not able to evaluate the employees ideas well enough and trashed good ideas. Another problem was that employees were hired with the wrong competencies and that affected the user experience. Nokia, for example, did not have enough employees who focused on usability and ease of use. There are several comments from former employees available about Nokia who claim that costs are Nokias ultimate goal. These are comments from former employees and there is a huge possibility for bias, but their comments could be a possible explanation for Nokias lacking R&D results. 4.1.2. NOKIAS USE OF OPEN INNOVATION Nokia have a long history of using open innovation since Nokia is a small country multinational. Nokia do not have the sufficient access to talents, ideas or capital through their home country. Nokia were already cooperating with universities in the 1960s, and later in the 90s Nokia were cooperating with universities, research institutes and other telecom and mobile
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companies. Nokia are proud of their use of open innovation and claim that they are more open compared to their competitors. Nokia know that one company does not have all the good ideas themselves and that a lot of ideas are placed outside the company, e.g. at customers, competitors etc. University collaboration: Nokia are cooperating with about 100 universities all over the world, including universities from USA, Western Europe, China, India and Africa to ensure that Nokia capture local trends. They are working closely with two Finnish universities within user experience, mobile security, power management, computing architecture, cognitive radio, sensing and context, media representation, social media, mixed reality solutions and 3D platforms. But the cooperation with the universities does not always give positive results. A company has to go through a lot of complex negotiation with the university to make sure that the investments give positive results. User driven innovation: Nokia are cooperating with end users by engaging them through Nokia Beta labs. When Nokia have made new user applications, Nokia beta test them to get reactions from the users. Nokia also have Nokia Pilots where users are implemented in the \ development process. It is a program where users can send in their ideas and come up with possible improvements. Nokia will consider implementing these suggestions to improve their products. Venture capital: Nokia have a venture company, called Nokias Growth Partners (NGP), and they are searching for companies in the growth stages. NGP managed a portfolio of interesting mobile companies worth of $250 million in 2010 and also managed other investments worth of $100 million. NGP have offices in Silicon Valley, Finland, China and India. NGP usually invest around $5-15 million and are searching for companies that can turn into a $100 million company. The companies have to be placed in USA, Europe or Asia; have commercially available products or services; have growing revenues in growing markets and have the experience of being a supplier for a major industry participant. The companies should be supported by Nokia so they can become a global leader within their field. Acquisitions: Nokia have acquired several companies and the focus has primarily been within Internet service companies and software companies during the last couple of years. Since December 1997 Nokia have acquired 43 companies which include several network, multimedia and service companies. The most expensive acquisition is Navteq which they bought for $8.1
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billion. Navteq is a mapping service and it has been mentioned as one of the reasons that Nokia chose WP7.5 instead of Android since Google offers the free Google Maps. Interfirm collaboration: Nokia have cooperated with several companies, and one of the more intensive collaboration areas is within the Smartphone OS part. Nokia had spent over a decade to develop and improve the Symbian project, but they also looked for alternatives. One of them was the Meego project, where Nokia cooperated with Intel. The two mixed their two former OSs, which were Maemo (another Nokia OS project) and Moblin (Intel) to create Meego. However, the two had problems from start since they had different chips for their Smartphone solutions. The first edition of Meego should have been done and installed on a Smartphone during 2010, but the first Nokia Smartphone with Meego installed was delayed and introduced in 2011. It was announced that Nokias two OS solutions would be abandoned within a couple of years when they announced their cooperation with Microsoft in February 2011. Intel were embarrassed by Nokia when Nokia left Meego and Intel also left the Meego project in September 2011 to join Samsung to create Tizen. One of Nokias newer inter-firm collaboration is the cooperation between Nokia and Microsoft which was announced by February 2011. Nokia were considering both Android and WP7.5, but Nokia chose WP7.5 since Microsoft had fewer hardware partners and Nokia had better opportunities to get more attention. Microsoft would deliver the software while Nokia would provide the hardware. Nokia also received $1 billion for promoting WP7.5, but they will pay licenses for every Smartphone sold with WP7.5 installed. Microsoft will also pay licenses for using Nokias patent portfolio. Their goal was to innovate with greater speed to give their customers better products. This was not the first collaboration agreement between Nokia and Microsoft since they also had cooperated in May 2009, May 2010 and August 2010 within different areas. When the newest cooperation was announced there were lots of negative reactions and many said that two losers do not make a winner. Some thought that this was the beginning of the end for Nokia as a company. However, few also believed that the cooperation could be good for both parties and especially for Nokia, since they did not have the right software engineers employed. Those instead asked why it took Nokia so long to realize that their own OS solutions were inadequate. Others questioned why Nokia only chose Microsoft as a sole OS supplier when they should have done like Samsung and have several OS suppliers. Up to a thousand employees from Nokias offices in Oulu and Tampere left their offices in protest when the announcement was made. The cooperation has turned out to be a surprise since Nokia and Microsoft were able to release their first Smartphone in mid November 2011. The cooperation has given Nokia and Microsoft a comeback within the Smartphone industry, which was unlikely before the launch of Lumia 800. Nokias cooperation with Microsoft is open innovation at best
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since Nokia have become a proper competitor once again after the introduction of the Lumialine. Nokia had tried to make their own software for over a decade, but with limited success, while the new cooperation gave much faster and better results. Nokia and Microsoft only have 50,000 apps which can be observed. Their apps number is much lower than the two competitors who almost have half a million and improving that number is a necessity. Nokia have struggled with rumors about Microsoft wanting to buy Nokia. Even Danske Bank have speculated whether Microsoft would buy Nokia in the first half of 2012. These speculations seem to be fiction since Microsoft always have been a software company and mixing Microsofts management into Nokias organization could turn out bad. One of the positive aspects would be that Microsoft would acquire Nokias very valuable mobile phone patents. Nokias CEO Stephen Elop, a former Microsoft executive for two years, has been accused of being a trojan horse. And the fact that Stephen Elop still has 130,000 shares in Microsoft, worth $3.18 million, is extra fuel for the many conspiracy thinkers. It may be an unthinkable situation for now, but Nokia still have to consider them as serious threats since the rumors are continuing. Nokia have suppliers for their components, e.g. about half a dozen chipset suppliers. The collaboration with their suppliers is managed by Nokias Units, the ones who also manage the short term R&D. It is difficult for companies to become a supplier for Nokia since they have high requirements. It usually results in a long term relationship when a company becomes a supplier for Nokia. Nokias Smartphone crisis has also had consequences for Nokias suppliers and the strength of Nokias crisis has been a surprise for the suppliers. Nokias suppliers have been struggling to find new customers since the two industry leaders, Samsung and Apple, have chosen other suppliers, e.g. chips suppliers. Texas instrument, who once was a market leader within applications chips, had a market share of 34.5 % in the first quarter of 2010, but a year later they only had 19.2 % because of Nokias crisis. These suppliers are trying to find new customers among the ones who have lower Smartphone market shares and companies in other industries. Joint ventures: Nokia are active within joint venture and Nokia try to find a local partner with local knowledge when entering a new market. Nokia did this when they entered China in the 90s. They also started a joint venture with Siemens called the Nokia-Siemens-Network, NSN. Nokia realized that they could not invest in the emerging network type LTE (Long-Term Evolution and one of the candidates for 4G today) by themselves and had to partner up with another company. They joined forces in 2005 and started the production in 2007. By 2008 NSN has grown into a huge business since they had over 60,000 employees and had customers in over 150 countries. Nokia and Siemens had troubles in the beginning since the two companies have
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different organizations. Siemens organizational structure is split up country wise while Nokias business units are responsible for all country units that refer to that business unit. But both companies wanted NSN to succeed and have managed to keep it alive. Nokia and Siemens have, however, tried to sell NSN or find a third partner in 2011 since NSN was a money losing business. By September 2011 both companies had to provide 500 million in capital to keep NSN alive. The joint venture will officially end in 2013. Spin-outs: Nokia have tried a different type of spin out when Nokia had to close their Danish division. 1,000 former employees were encouraged to start their own company and 40 of them were able to start their own business. Nokia helped them by giving them money and allowing them to stay in Nokias building as long as Nokia rented that building. The Danish manager wonders if this could be an option during good times. 4.1.3. ASSESSMENT OF NOKIAS INNOVATION PROCESSES Want: Nokia have the same overall goal as Samsung since Nokia want to be a cost leader. Their focus on cost will be one of the main topics in the discussion chapter. Another goal is to provide good design and good hardware. To reach their goals, Nokia use a long list of open innovation tools, which includes cooperation with over 100 universities all over the world; joint ventures; including customers; have suppliers; acquiring a lot of companies and by having a venture capital company. For a decade, Nokia also wanted to provide their OSs, but in the beginning of 2011 they realized that they could not provide this part as well. They finally gave up their own software part and began to cooperate with Microsoft. Find: Nokia were for many years the market leader and technology leader within the mobile phone industry which eased the processes of finding the best partners. However, times have changed and Nokia do not enjoy these titles any longer. This has complicated their find processes since Nokia have to compete against Apple and Samsung who are currently placed higher than Nokia within the integrated portfolio. Nokias situation may force them to cut some of their suppliers which do not make this phase easier. Potential suppliers will prefer to cooperate with Apple and Samsung to ensure future revenues. There were not that many OS providers for the OS part so the find part within the OSs was quite simple. There were only two OS providers, Microsoft and Google, who were large enough to serve Nokia. Get: When Nokia decided to find an OS supplier, the two biggest OS suppliers, Google and Microsoft, were fighting to become Nokias OS suppliers. Android was supporting Nokias
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former Symbian strategy to neutralize the OS competition between Smartphone vendors, but Nokia still did not prefer Android. A huge onetime payment and cross licensing have helped Nokia to choose Microsoft against Google. Manage: Nokia do a lot of open innovation and the many open innovation partners must require a lot of management from Nokia. Nokia say for example that cooperating with a university requires a lot of preparation to ensure, that a company gets usable output. How much work does it require to cooperate with over 100 universities all over the world? When Nokia began to cooperate with Microsoft it required a lot of management. Employees were transferred to implement WP7.5 as fast as possible while a lot of people were fired since Nokia stopped the development of Symbian and Meego. The cooperation seemed to have rough conditions: How would a Finnish organization cooperate with an American organization? The two companies are huge in each of their area, potentially leading to frictions between the two companies. However, Nokia and Microsoft were able to introduce their first common Smartphone in November 2011 which was a huge surprise for many. An even bigger surprise was that the Lumia 800 was a well functioning, competitive Smartphone, which Nokia had tried to achieve for years by themselves. It has been estimated that Nokia have sold about 1 million Lumia 800 Smartphones from when they introduced it until ultimo 2011. It is a decent start, but still far from 30 million iPhones, which Apple sold in the last quarter of 2011. The integration between Nokias hardware and Microsoft OS seem to be a success and there is not much information about frictions between Nokia and Microsoft during the first collaboration period. Nokia and Microsoft have collaborated before and that may have eased up the managing phase. A serious aspect is the continuing rumors about Microsoft wanting to buy Nokia. The two other mayor OS players within the Smartphone industry, Apple and Google, are also selling Smartphones which may start a new trend and force Microsoft to buy Nokia. Google was also only a software developer once and this could be a serious situation for Nokia. When assessing Nokias innovation processes it becomes apparent that Nokia want to do a lot and be a part of several areas. They want to produce Smartphones and feature phones in every price category which are adapted to local trends. This is completely different than Apples approach who only introduces one Smartphone per year. Nokia are the ones who use the most open innovation tools compared to the other two competitors, who have a very narrow focus within open innovation tools. Nokia have felt that they were forced to use open innovation since Finland did not have enough talents or ideas. They use all three types of open innovation which was described in the theory part. Nokia use external knowledge exploration by acquiring knowledge/technologies; they use external knowledge exploitation by licensing out and use
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external knowledge retention since they are a part of learning networks to enhance their knowledge base. The following figure shows what Nokias innovation processes look like: FIGURE: NOKIAS INNOVATION PROCESS

Figure shows that Nokia use a lot of open innovation tools and that they take responsibility for the integration part which is marked by the grey area. From this figure it would almost seem that they are the industry leaders since they use so many open innovation tools. However, this is not the case and Nokia are currently not benefiting from the $60 billion investments in R&D and their extensive use of open innovation.

4.2. SAMSUNGS INNOVATION PROCESSES

4.2.1. SAMSUNGS INTERNAL INNOVATION PROCESS

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Innovation strategy and their goal: Samsung are known to make a lot of incremental improvement on others radical innovations. Samsung receive a lot of patents and they were number two in US when it came to granted patents. Samsungs overall strategy is to be a fast follower when the radical design has proven to be a success. Samsung are particularly interested in business areas that are small, but fast growing. The new industries have to be capital intensive and they prepare for the new industry by doing research within the new technology to increase their knowledge. When the timing is right, Samsung invest a lot of money in production facilities to gain cost advantages from start. They want to become a key supplier to as many as possible to lower their manufacturing cost. Their strategy usually pays off since Samsung become a success within the new industry. This has also been the case for the Smartphone industry where Samsung currently are one of the industry leaders and are providing Apple with several chips to get higher volume. Samsung are one of the leading suppliers of flash memory for the Smartphones which means that Samsung will not experience shortage supplies of chips and flash memory as some of the competitors might experience. Samsung are also manufacturing their own Smartphones and their manufacturing advantages have enabled them to fight competitors in several price segments. Samsung are more focused than Apple to have the newest technology installed which has already been mentioned. Samsung came up with a long list when Apple introduced the iPhone 4S which showed that the Samsung Galaxy S2 was technologically superior against the iPhone 4S. Samsung claimed that they had the superior Smartphone. Number of models: The exact number of mobile phone introductions from Samsung is not known, but they have a lot of introductions per year since they have phones within the Smartphone and feature phone market for every segment. Samsung have had the same Smartphone strategy as Nokia, since Samsung have several models for the low, middle and high end of the market. Samsung are also able to provide much of the same entertainment package as Apple, since they produce tablets, laptops and many other electronic products. Samsung are fighting both Apple and Nokia in several price and product categories. Design and market research: Samsung have been accused of copying the iPhones design and have also been sued by Apple for infringements. Samsung have acted as a fast follower within this part which is confirmed when looking at pictures of the iPhone and comparing it to a Samsung Galaxy S2. The Samsung Galaxy S2 is just bigger than the iPhone. Samsung have also copied some of Apples other accessories since they copied a USB adaptor, a power adaptor and the boxes for some other products are almost alike.A US judge has although rejected the accusations since she does not think that Apple has suffered irreparably - Apple
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reacted by appealing this decision. There is no available information about whether Samsung conducts market research.

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4.2.2. SAMSUNGS USE OF OPEN INNOVATION Interfirm collaboration: Samsung are accused of not being users of open innovation, but Samsung are quite active in one area since they cooperate with several Smartphone OS providers. This has also always been their software approach, since they already in 2002 were users of Symbian, Microsoft and the Palm operating system. Their current OS approach includes Android, WP7.5, their own OS, Bada and they have just started a new cooperation with Intel to develop Tizen. Samsung have Android for the high end of the Smartphone market while Bada are for the lower segments. Samsung integrated Android late since they, like other Smartphone competitors, had missed the first Android opportunity. Android has become a very important factor for Samsungs success. It is estimated that 15.4 million out of 19.9 million Samsung Smartphone sales in the second quarter of 2011 were phones with Android installed,which means that Android accounted for 77 % of Samsungs Smartphone sales. Samsung and Google have the second largest pool of apps since they have about 400,000 apps which can be observed. This partly explains why Samsung have sales close to Apple since apps are an important part for a Smartphones success. Google have not been entirely satisfied with the hardware manufacturers integration of Android since the manufacturers have delayed the Android updates with several months. The integration delay has been mentioned as one of the reasons that Google have acquired Motorola Mobility to ensure that the latest version of Android is installed faster. Ensuring better integration between software and hardware has also been mentioned as a reason. Samsungs newest cooperation, Tizen OS, with Intel and Linux is a replacement of Meego, which Nokia and Intel had abandoned in 2011. But Samsungs involvement is unsure since they already have invested a lot in Android, WP7.5 and their own Bada. Tizen could be another alternative to Googles Android as Samsung seem to prefer several OS alternatives after Googles acquisition of Motorola Mobility. Samsung fear that Google will prioritize Motorola higher than their other hardware manufacturers. It will be hard work for Samsung and Intel to make Tizen work, since the two companies have very different cultures. It will also be a challenge for them to attract developers as a lot of developers are disappointed after the failures of Maemo (Nokia), Moblin (Intel) and Meego (Nokia/Intel). Meego will be described further in Nokias open innovation part. Tizen is predicted to have a slim chance for success. Licensing: Samsung have also been forced to pay licenses to e.g. Apple which was mentioned in the technological portfolio.
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4.2.3. ASSESSMENT OF SAMSUNGS INNOVATION PROCESSES Want: Samsungs primary focus is to lower their manufacturing cost as much as possible. This is best exemplified by their complex relationship with Apple. Samsung also search for inspiration from Apple to find a quick shortcut within the design part. They are apparently not the ones with the radical innovations, but are a quick follower who comes up with a lot of incremental improvements. Their E is to have an open approach towards Smartphone OSs and let others do the innovation within this field. They are not interested in having one OS provider, but prefer to have multiple OS providers to ensure that they do not get too dependent on one OS supplier. Google is, nonetheless, by far their largest OS provider since they accounted for 77 % of their Smartphone sales in the second quarter of 2011. Find/get: Their primary use of open innovation, Smartphone OS cooperation, does not require a thorough review within the find/get phases since Samsung is open towards every available OS. This has been their OS strategy for a long time and will also be their OS strategy for the future. However, Googles acquisition of Motorola Mobility has required some changes within the management parts. Manage: Samsung have become quite unsure whether Google have some hidden intensions or not. Google claimed that they bought Motorola Mobility to protect their hardware manufacturers by buying Motorolas patents. This has been questioned since Google could have bought Motorolas patents instead of buying the whole company. Googles cooperation history tells that a company cannot always trust Google since they had a seat within Apples board before the launch of Android. Apple were very disappointed with Google when they introduced Android since they were close partners. Samsung have reacted by intensifying their cooperation with Microsoft and begun a new cooperation with Intel to make a new OS, Tizen. But it is a tricky situation: Many of the Smartphone manufacturers would turn to Microsoft if Google went solo and Google would really like avoid this. Their primary Smartphone revenue source is ads revenue generated through Androids browsers which is described in appendix A. Samsung would also have difficulties to replace 77 % of their market shares with another OS. Google will probably keep providing Android for free, but they will try to install Android updates faster on their own Smartphones and ensure that the software and hardware integration improves. When assessing Apples and Samsungs path to success it becomes apparent that the two have chosen entirely different paths. Apple are a newcomer compared to the two other competitors and they are not interested in manufacturing. Samsung are one of the traditional players within the
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Smartphone industry and their main focus is lowering manufacturing cost. Samsung also try to find inspiration from Apples design and having several Smartphone OS suppliers. With a limited knowledge about Samsungs innovation processes it would appear that Samsung have a proprietary innovation approach. They also use external knowledge exploration since they acquire OS technologies. Samsung have although realized that they need to open more up by increasing their cooperation with partners and acquire more companies. Samsung have, to some degree, been a part of the closed innovation paradigm when assessing their overall innovation strategies. Samsung do not have the best experience with other open innovations tools other than software cooperation. They tried to acquire a PC maker in the 1990s, but the integration was a huge failure. Samsung are although aware of the necessity to get access to external knowledge through sales channels and customers. The review of Samsungs innovation processes ends up in the following figure: FIGURE: SAMSUNGS INNOVATION PROCESSES

Figure shows that Samsung are cooperating with several OS providers, but that the integration is suffering. Samsung do not take full responsibility for the integration and this explains the lacking grey area in the integration part. Google have become aware of this and have bought Motorola Mobility and their strategy might be to provoke the other hardware manufacturers to take more responsible for the integration. Samsung have gotten a lot of success without a perfect integration of the two parts, but could they get even more success, if the two parts were better integrated? Suggestions for improving Samsungs use of open innovation: Samsung do know that there are more open innovation opportunities since they want to use more tools. They only use interfirm collaboration within Smartphone OS. A suggestion could be to use open innovation
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within the design area even though they received a high score in the reviews. They could find design partners and create their own design instead of being inspired by others design. A complete review of their open innovation opportunities is not within the scope of this thesis since they have a lot of other open innovation possibilities.

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5. CONCLUSION AND FURTHER RESEARCH

5.1. CONCLUSION The conclusion will first answer the three research questions and then answer the problem statement to sum up the thesis findings. Where are Nokia placed in the integrated portfolio compared to the two industry leaders, Apple and Samsung? Nokia were, in the Smartphone market portfolio, well behind of Samsung and Apple in the second quarter of 2011. Now a days Nokias Market declining the progress due to the other Market Leaders like Apple & Samsung. Can Nokia optimize their use of open innovation to regain the industry leadership within the Smartphone market? Nokia use a lot of open innovation tools but its not very well received comparatively to Samsung and others.

5.2. SUGGESTIONS FOR FURTHER RESEARCH The further research within open innovation and Nokia could include a user survey for the technological portfolio. The current technological comparison is an unweighted comparison of the different Smartphone parts. This does not give a true position of the three companies technological position as some of the parts weigh more than other parts. The software part, for example, is the most important part within the Smartphone and this is not shown through the current reviews. There were not enough Lumia owners to conduct such a survey, but the sales of Lumia 800 are increasing and this could make such a survey possible since more Lumia users will emerge. The first part of the survey would either be an assessment of the three most important parts within the Smartphone. Another user survey about the most important factors for a Smartphones success could also be interesting. There are a lot of factors that affect the customers when they buy a
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Smartphone, e.g. same tablet brand, apps, software, cloud computing, hardware parts etc. and the ranking between those could be interesting and useful information. The further research could also include which tools Nokia should use compared to the integrated portfolio and in which stage the technology is placed within the technology lifecycle (TLC). This was the original intention with the thesis, but Nokias goal/Want part became the main analysis area. The tool section would be a more extensive assessment of Nokias FindGet-Manage parts as the Want part has been assessed thoroughly. The following questions could be potential research questions: What open innovation tools are most appropriate compared to the current TLC stage of the Smartphones and how can Nokia use those tools optimally to reach the industry leaders? What risks are there by using the different tools and how can a company minimize those threats? How can Nokia minimize the possible acquisition risks if they want to be an independent company?

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6. BIBLIOGRAPHY
6.1. BOOKS Tidd, Joe and J. R. Bessant. Managing Innovation: Integrating Technological, Market, and Organizational Change. 4. ed. ed. Hoboken, NJ: Wiley, 2009.

6.2. ARTICLES/SLIDES Arild, Moen. "Corporate News: Nokia Cuts 3,500 Manufacturing Jobs." Wall Street Journal LA English, 30/9-2011 (accessed 3/12-2011). Caulfield, Brian. "For the Last Time: There Won't be A 4G iPhone this Year." Forbes.Com(18/5, 2011): 29-29. Ernst, Holger and Jan Henrik Soll. "An Integrated Portfolio Approach to Support MarketOriented RD Planning." International Journal of Technology Management 26, no. 56(2003): 540. Haupt, Reinhard, Martin Kloyer, and Marcus Lange. "Patent Indicators for the Technology Life Cycle Development." Research Policy - LA English 36, no. 3 (30/42007): 387. Huston, Larry and Nabil Sakkab. "Implementing

6.3. INTERNET SOURCES Afnan. "Galaxy S2 Vs iPhone 4S Vs Lumia 800 Vs Lumia 900 [Comparison Chart]." (10/1-2012: 25/1-2012, http://technomondo.com/2012/01/10/galaxy-s2-vs-iphone-4svslumia-800-vs-lumia-900-comparison-chart/ (accessed 25/1-2012).

Ahonen, Tomi. "Final 2009 Mobile Phone Market Numbers as all have Reported: We have Big News." (1/4-2010, http://communitiesdominate.blogs.com/brands/2010/03/final-2009-mobile-phonemarketnumbers-as-all-have-reported-we-have-big-news.html(accessed 2/2-2012).

Apple. "Identifying iPhone Models." (7/11-2011: 1/122011,http://support.apple.com/kb/ht3939 (accessed 1/12-2011). Bajarin, Tim. "Apple's Strategic Advantage." (5/32011),http://technologypundits.com/2011/03/apples-strategic-advantage/ (accessed 10/10-2011).

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7. APPENDIX A A SHORT DESCRIPTION OF OS SUPPLIERS

7.1. GOOGLE Google have their background from the Internet industry and became a part of the Smartphone market when they acquired Android in 2005. They acquired Android because of the talent mass that it possessed. In 2008 the first Smartphone with Android OS installed was sold. The Android system is a free OS for Smartphone manufacturers and this have made Google a very tough competitor for the other software developers since Googles business model for the Smartphone market is so different. Google entered the Smartphone industry because mobile Internet usage is predicted to pass desktop Internet usage within five years, and 96 % of their revenues were generated by online advertises in 2010. Googles search engine is included in every Smartphone that has the Android system installed. Google had 91.4 % of the mobile search market in the beginning of 2011, and their Smartphone strategy has been a success for now. As an extra source of Smartphone revenue Google charge 30 % of the transaction fee for every sold app on Android market place. Android became attractive for the hardware producers with a weak software base and Android gave them the opportunity to become large players within the Smartphone industry. Android have enjoyed great success and they have the largest market share within the OS market. Android had 43.4 % of the Smartphone OS market in the second quarter of 2011. HTC, Samsung, LG, Sony Ericsson, Ophone and many other hardware producers are using Android as their primary software solution. Google also tried to sell their own Smartphone, Google Nexus, but it failed because of carriers resistance. Googles role within the Smartphone market changed on August 15th 2011, when Google announced that they had bought Motorola Mobility for $12.5 billion. Google said that it was not to become a hardware developer, but mainly wished to get access to Motorola Mobilitys patents to protect their hardware partners who had been litigated for using Android.

7.2. MICROSOFT

Nokias new partner and software provider is not a new contender within the Smartphone market. Microsoft was the second largest Smartphone OS provider in 2007 and had 13 % of the OS market, which they got by licensing their software to Asian handset makers like Samsung
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and HTC. Their success did not last, as Microsoft had to stop the development of their former Smartphone OS in December 2008. Their software solution was inferior compared to the free Android OS and Apples iOS. In October 2010 Microsoft introduced their new OS contender for the Smartphone market, Windows Phone 7. WP7 is, like Android, used by several hardware developers and was introduced on HTC surround; Samsung Focus. Microsoft have become Nokias Smartphone OS provider, but their software solution has not been well received by the market. It has been a challenge for Microsoft to license WP7 to the Smartphone vendors against the free Android OS. Microsoft are losing market shares as they only had 1.6 % of the Smartphone OS market in the second quarter of 2011. The cooperation with Nokia might solve the problem for Microsoft - Gartner predicts that WP7.5 will be the second largest OS in 2015.

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QUESTIONNAIRE REGARDING MOBILE PHONE USAGE

Name or initials: Gender: Age: Education: Profession: Nationality: Special needs (e.g. eyeglasses, hearing aid, speech impairment, any other physical or cognitivechallenges): If you received this questionnaire via an interest organization, which one: Do you agree to publish above mentioned personal data ? Yes No Do you agree to publish first name, age and special need? Yes No (Your profile information will be held confidential unless agreed otherwise.) _________________________________________________________________ Do you own a mobile phone? YES NO Which model/make? Nokia
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 Samsung Other When did you acquire your first mobile phone? During Schooling During College During Job Which one is the most common service provider with your mobile phone? Airtel Vodafone Tata indicon Other

Do you use one or more mobile devices? One Two More

If so, are the usage needs same throughout the day freetime vs workusage?

Which tasks do you find most: Useful Easy to use challenging/demanding/difficult irrelevant

Where do you get information about: manual

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new mobile phone models new applications/services

Who supports you when getting familiar with the phone usage (friend, service desk, salesperson,

What aspects do you value in your everyday mobile phone usage (ease of use, battery life,Personal Information Management, alarm clock etc) ?

What are the elements that you miss from your mobile phone? (simplicity, bigger fonts??)

Which elements do you find totally useless for your personal usage (Bluetooth, connectivity withyour PC?)

Do you feel that the current offering is up-to-date with your personal needs?

Could you imagine your life without a mobile phone?

Do you have any special wishes/regards to the mobile phone manufacturers or serviceproviders?

SOME INTERPRETATION OPT BY THE DIRECT CUSTOMER SURVEY IS AS FOLLOWS :

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QUESTIONNAIRE FOR MOBILE MANUFACTURERS

Objective: To gather information on available accessibility options on mobile handsets for use by persons with disabilities, elderly and illiterate persons in India. Target audience: mobile handset manufacturers Questionnaire Name of contact: .. Mobile manufacturer brand: .... Whether national or international:
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Years of existence in market: .. Number of models available in the market at present: . ISO Certification: Yes No Expected

1. Do you have information on what percentage of your handsets have been sold to persons with disabilities? (Specify numbers) (a) In India _____________________________ (b) In other countries _____________________ (c) Dont know

2. Do you have any special product lines exclusively for persons with disabilities? (Please specify the handset model(s). You can attach separate sheet for this information) (a) In India _________________________________________________________________ (b) In other countries _________________________________________________________ (c) Dont know

3. What basic accessibility features do you have on your handsets? (please tick all that is applicable)

Large icons and display Colour contrast options Adjustable Font size Large buttons Hands free capability
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Adjustable volume control Built in screen reader High resolution camera Other (please mention) .................

4. What channels do you generally use to communicate with customers for advertisements and information dissemination? (please tick all that is applicable) SMS Calls MMS Website Flash messages Voice Menu Service (VMS) Visual Menu Service Print advertisement Radio TV Other (please mention) 5. How do customers contact customer care in your company? Call SMS E-mail Store visit Other (please specify) ..
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6. Do you have a tie-up with any service provider to bundle your products with any services? Yes No

If yes, are any of these targeted towards persons with disabilities? Provide details ..

7. Do you use any of the following platforms on your Devices (in case of Multiple choices, please mention approximate percentage) Windows Mobile 6.5 or earlier Windows phone 7 Symbian S60 Symbian S40 Symbian S80 Symbian ^3 Android Any other OS

8. Does the platform used in the mobile device have any of the following capabilities? Application installation capabilities Multithreading / Multi Tasking (Technical) Capabilities Accessibility API Text To Speech (TTS) Speech Recognition Face Recognition
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Optical Character Recognition (OCR) Peer to peer video sharing

9. Which of the following hardware is used with your devices? (please tick all that is applicable) Wired Headset with 3.5mm Jack Wireless (Bluetooth) Headset External / QWERTY / Portable Keyboard Any Pointing Device Projection Device (internal or external) Refreshable braille display Geo Positioning System

10. Are any of the following applications available, (whether by way of a third party application or part of your own application) for your devices? Screen reader Screen magnifier DAISY book reader Text to Speech (TTS) Speech to text (speech recognition) / voice command Word processing
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Spreadsheet management Internet browsers PDF Reader E-mail client Any talking application Push to talk Any other applications

11. Have you ever conducted any survey to gather information about the accessibility needs of customers with disabilities? If yes, please give details of key findings. ..

12. Do you have any immediate plans of incorporating accessibility features as a default option with your devices? Yes No

If yes, give details

13. Would your company be interested to know more about solutions, services and sustainable business models to address the market of persons with special needs? Yes No Cant say

Thank you for taking part in this survey. Your inputs are most valuable to understand the state of access to mobile telephony for persons with disabilities, elderly and illiterate persons in India and internationally.

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Contact person: Email: ashutosh.bioinformatics@gmail.com

Remark :

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