Nokia's reluctance to embrace the Silicon Valley looks to have backfired

Commonly referred to as the most successful European company of the 1990's

, Finnish mobile phone giant Nokia has had it tough recently. Their share price has tumbled a massive 49% since January 07 whilst they dropped a whopping 30 places to number 43 in the much respected Millward Brown Optimor rankings of global brands in just 12 months. And top it off, their market share has been ravaged by the iPhone.

Not pretty reading is it. So what is behind this fall of grace?

The long answer could be their failure to understand changing markets, demographics and tastes whilst also becoming complacent towards producing new and innovative products.

The short answer however could simply be put down to their choice of Headquarter location.

Whilst competitors like Apple, Blackberry and Sony all occupy office space in the Silicon Valley over in California, Nokia have always stayed out on a limb so to speak and chosen to keep their operations in the city of Espoo where it all began for them in 1865.

You have to applaud their sense of loyalty as building a multinational in a relatively small European country like Finland is a great achievement. But their voluntary segregation from The Valley' looks to have cost them dear.

Mobile phones are now no longer seen as just a tool to make calls and send texts with consumers expect more. We expect them to let us update our Facebook status, check our work emails, download the latest number 1 single or find us the nearest branch of Sainsburys via Google Maps.

By having headquarters that are over 7000 miles away from all the up and coming web companies and social media powerhouses, Nokia haven't been able to immerse themselves in the tech chit chat, sharing of expertise and brainstorming sessions that their competitors benefit from each and every day.

So while Blackberry announce their intention to release their own rival to the iPad and Sony Ericsson produce ever more exciting interactive handsets, Nokia are stuck in the middle of the market with no clear strategy on where to turn to next.

Lesson of the day? Ensure your business doesn't get left behind and choose to rent office space that is right at the centre of your industry's heartland. Otherwise you could end up with No Signal' just like Nokia.

Nokia's reluctance to embrace the Silicon Valley looks to have backfired

By: James Finch

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