Managerial Economics 13th Edition by James McGuigan,Charles Moyer,Frederick Harris

Exercise 7

Web-Based Satellite Phones Displace Motorola's Mobile Phone 21
Motorola's Iridium, a go-anywhere mobile phone system that transmitted and received signals beamed down from 66 satellites, was called "the eighth wonder of the world" by Motorola CEO Chris Galvin. However, at $1,500 for a handset the size of a brick, consumers balked. Few business travelers concluded they needed the security and reliability offered in remote corners of the globe such as Kathmandu or Lagos. As a result, Motorola's 25 percent historical market share in mobile phones declined steadily to 13 percent in 2001, and Motorola stock fell 16 percent from 1997 to 2001, during a period when the S P 500 was up 76 percent. For the business customer, RIM's Blackberry was satellite communication-based, much smaller and lighter, almost as secure, and much more mobile. For the mass market, Nokia began designing web-enabled phones that could connect to local area networks and eventually the Internet. Apple iPhones and Samsung Android phones then ushered in a new era of smart phones.
Smart phones from Apple and Samsung today have imposed upon Nokia competitive pressure once associated with Motorola. What would you advise Nokia to do in light of the success of the iPhone with all its thousands of applications from independent software providers