Reasons Why iPhone Beats Nokia: A Disruption Analysis

Running Head: INNOVATION & TECHNOLOGY 0
Innovation and Technology
Student Details
3/16/2019

Innovation & Technology 1
Clayton Christensen describes the theory of how disruption occurs. His theory of disruption
showed that how disruptive challengers can beat the long-term incumbents.It is well known
fact that iPhone challenged the market of incumbent Nokia. This report focuses on the
reasons of why incumbent Nokia is being beaten by the challenger iPhone. In 2007,
Christensen was interviewed on iPhone and according to him as compared to the Nokia,
iPhone is a sustaining technology but according to the predictions of his theory, Apple cannot
succeed with iPhone and thus innovation of Apple is not truly disruptive (Rogers, 2019). But
it is known to everyone that iPhone did not fit the theory. Then come into existence the
business model theory of disruption which has two sides: value proposition and value
network. Value proposition relocates the value provided by the incumbent however value
network creates a barrier to imitation by the incumbent (Rogers, 2016). Based on the business
model theory of disruption, following are the reasons that a challenger, iPhone beats an
incumbent:
1. Customer Experience: Both Nokia and Apple are leveraging technology to create
captivating customer experiences. Initially, Nokia’s success increased because it
reframed its business model around the customer experience. Nokia made significant
customization and functionality in its mobile phones as per the need and to provide
better experience to the customers. Customization in the personally designed cases
enabled the customers to see mobile phones as fashion accessory. Nokia’s 1100 were
considered as the most popular phone till 2006 and were stood ahead in customer
satisfaction scores. But in 2007, the introduction of iPhone by Apple changed
everything. Apple’s iPhone offered its customers a remarkable user experience
(Mobile Opportunity, 2007). Apple introduced touchscreen phones which eliminated
the keys and menus. Also, Apple provided the feature of screen rotation depending
upon how it was held. Along with these features, iPhone provided features of internet

Innovation & Technology 2
access, iTunes, access to the music library, and connection with AppStore. These
features are provided in sophisticated design, spontaneous, and smooth customer
experience. These innovative ideas built in the iPhones provided enhanced services to
the customers and made the experience easy as well as enjoyable. Nokia failed to
compete with the bombshellprovided by Apple’s iPhone. Customer satisfaction
survey of 2010 reflected this and was found that the disruptive technology of Apple
shocked the ground of Nokia. For example: at the time of coming up with the design
for the first iMac, the designers focused on using the carrying handle so that it could
be easy to carry it and also the technique adopted by the company assisted to connect
with the device easily. But on the other hand Nokia was not able to fulfil the needs of
the customers and does not focused on any innovative technique to boost the
experience of the customers (Mobile Opportunity, 2007)
2. Business Model: Business model of Nokia revolved around selling of mobile devices.
Key advantage of Nokia was its ability to design its own operating system. But the
today’s smartphones are less about the specific devices and more about ecosystems
that is today’s smartphones are combination of operating systems, hardware, and
applications and this is where Nokia had lost out as its ecosystems are side lined by
Apple’s iPhone. This business model of Apple attracted most of the investors,
developers, and customers. Three major mistakes made by Nokia were as it failed to
determine the competitive challenge developed by Apple, Nokia failed to continue
and reckless its operating system, and did not evolve its business model from selling
mobile devices (Itif, 2015). For example: It has been observed that one of the
principles considered by the Apple in terms of operating system is to be focused
towards the unique ideas. This simply states that company focused on research and
development and spends a large amount but on the other hand Nokia was not able to