MOBILE MARKETS AND INDUSTY SUCCESS FACTORS IN FINLAND

Research Seminar on Telecommunications Business II, T-109.551, 22 March 2005

Sauli Kamppari, M.Sc.
Helsinki University of Technology
P.O. Box 3000, FIN-02015 HUT, FINLAND

Abstract ringtones downloading that has grown to a multi billion

business 2. Today countries like Korea are getting a lot
The success of the Finnish mobile industry has been of publicity on various mobile multi-access, Internet, fast
explained referring to various theories and factors. Due multimedia and financial services in their markets (SK
to rapid development of the markets and the mobile Telecom 2005), and e.g. Finnish Prime Minister
industry the factors that have been considered important Vanhanen (Nikulainen 2005) has raised a concern on the
in the past are not necessarily important for the future current modest level of innovations in Finnish operator
success. Especially the role of national factors seem to service development.
have changed. E.g. the leading home markets for the
mobile services used to be a key success factor for the
Finnish mobile cluster but during recent years the leading
1.2 Successful mobile industry
market position has been lost. This paper presents the Finland's mobile industry has been very successful
Finnish mobile industry success factors and how they internationally and it plays a big economic role
have evolved. nationally in Finland. The international success is lead by
the mobile device market leader Nokia with estimated
Keywords markets share of 31% of the sold mobile device units in
2004 (Gartner Dataquest 2005). The important national
Mobile industry, success factors, markets, Finland, economic role of the mobile industry is prominent in the
Nokia foreign trade exports where in 2004 16.2% come from
'Manufacture of radio television and communication
1. Introduction equipment and apparatus' (Finnish customs 2005) which
is dominated by the mobile industry products.
1.1 Leading mobile service markets
1.3 Researching national success factors
Finland has lost the leading position in mobile
subscription penetration and the role as a pioneer in Considering the Finland's mobile industry success
service development. and the big economic impacts it is natural that the
Finland had a clear lead in the subscription phenomena and the success factors have been studied a
penetration at the end of 1990s but the situation has lot and various explanations for the success have been
changed during the last years. Table 1 shows the given, as will be described later in this paper. Several of
development of subscription penetration in leading the identified success factors have a national origin. In
mobile service countries and in some interesting different phases different circumstances in the Finnish
reference countries. environment have been conducive to the success. An
interesting research question is how the national success
Table 1. Mobile subscription penetrations (ITU 2004) 1 factors for the Finnish mobile cluster have evolved. In
Position Penetration this paper the national success factors means distinctive
factors in Finland that have greatly contributed the
Country 1999 2003 1999 2003 mobile industry competitiveness.
In order to answer the research question several
Finland 1 11 55% 90% aspects shall be properly researched. The objective of
Sweden 4 12 39% 89% this paper is to introduce some of the key aspects and
serve as a reference for discussions and further research.
Japan 7 32 37% 68% The following chapters introduce the identified success
Korea 10 29 30% 69% factors from the past, a framework to discuss them, the
Finland competitiveness in general, the present Finland
United States 14 42 25% 54% mobile service markets characteristics as a home market
Taiwan 17 1 22% 111% for the mobile industry, and finally the present mobile
industry challenges and opportunities.
Finland also used to be a pioneer in experimenting
uses of mobile phones (The Economist 1999). Examples
range from the cola drink buying application that 2 Ringtone business took off rapidly after 1997 when
generated a lot of publicity but little revenue, to Nokia introduced Smart Messaging technology and a
Finnish programmer Vesa-Matti Paananen from
1 1999 penetrations calculated based on the GAGR Yomi Group developed the world's first commercial
figures in ITU (2004) and population growths in ring tone composer and downloader (Frere-Jones
OECD (2004) and CIA (2004). 2005).
2. Finnish mobile industry success
2.1 NMT and the growing mass markets
Before the NMT era the public mobile service and
the mobile industry markets were relatively small
everywhere. The service and mobile devices were
expensive, the coverage was bad and the usage was
limited in vehicles.
For the Finnish mobile industry the first major
opportunity was to enter the rapidly growing mass
markets nationally.
Palmberg (2003, pp. 167-189) has described the
development of Finnish mobile industry and especially
the important role of Finnish PTT as a competent
customer for the success of Nokia in NMT. Nokia in
turn as a leading company has played the key role in the
development of the whole mobile industry in Finland.
According to Palmberg the competent and demanding
customers, the national PTT and the local fixed
telephone operators, supported the national
telecommunications industry first in the national success
with fixed networks and later in the international success
with mobile networks and devices. First the decentralized
and competing fixed network operators contributed to the
1) capability build-up of telecommunications network
element development by demanding advanced network
features and flexibility for the different technical
specifications. The mobile telecommunications
development capability was based on experience with the
NMT predecessor ARP3 technology which was a national
network specified by PTT. Later the powerful PTT
participated in the creation of the early markets for
NMT mobile industry in the 2) specification of the NMT
standard, 3) allocating the radio frequencies for the
mobile phone service, 4) collaborating in various
scientific and engineering communities and 5) placing
early orders decreasing the uncertainty and financial
risks.
Palmberg mentions as other national factors for
Nokia success also 6) government support in the form of
bigger R&D budgets for PTT, efficient organisations of
resources in various forms of the 7) joint ventures4,
collaborations, networks of subcontractors5 and 8)
Nokia reorganisations6, and 9) good technology choices
especially in digital switching systems. Edquist (2003, pp
21-32) complements the list of success factors by
pointing out that the rapid market growth, thanks to 10)
high quality service and low tariffs, created equipment
manufacturers early benefits from economies of scale.
Also two important demand side factors can be
identified for the NMT success. First, 11) PTT and the
ARP users were familiar with the mobile phone concept
which made the NMT adoption easy. Second, NMT
provided telephone service opportunity to the 12) big
number of summer cottages which didn't have fixed
3 Auto Radio Puhelin (ARP) translated in english car
radio phone.
4 Especially the joint ventures Telefenno with state
owned Televa, and Mobira with Salora.
5 E.g. with companies like LK-Products.
6 Integrating the Telefenno and Mobira in Nokia.
telephone lines.
It can be debated and should be researched further
whether these factors include all of the important factors
and how to evaluate the relative importance.
2.2 GSM and the globalisation of the
business
The emergence of GSM was coincided with new
players and major role changes. In many nations
regulatory function was separated from the mobile
service and the mobile service was opened for
competition.
For the Finnish mobile industry the major opportunity
was to enter the emerging global mass markets.
The national factors at the creation of the GSM
specifications played a less significant role in GSM than
in NMT due to various reasons. First, GSM as a
European initiative instead of a Nordic initiative
involved many new countries each with their own
interests. Second, the new role of the former state owned
PTT monopolies did not any more have the role of
supporting the local equipment manufacturers. Third, the
specification work included new groups like the new
private network operators and the international
equipment manufacturers.
Like before for the NMT also for the GSM several of
the national success factors were path dependent. Many
of them originated from the NMT. Nokia had 1)
exceptionally good competencies in the new
technological areas (Palmberg & Martikainen 2005).
Also 2) PTT's existing mobile subscribers and base
station sites made the deployment of the GSM service
relatively easy.
Two 3) coalitions where Nokia and PTT were
members also contributed the success. First, the Nordic
alliance7 won the CEPT's initial technology competition
which helped the alliance achieve an early technological
lead position (Hommen and Manninen, p. 92). Second,
while Motorola initially held more than half of the
essential GSM patents the MoU and ETSI drove IPR
policies towards the principle of non-exclusive licensing
for members (Hommen and Manninen, pp. 96-100). The
final bilateral cross-licensing policy of IPRs turned out to
be favourable to Nordic manufacturers not only by
removing a potential business obstacle but also by being
a barrier to completely new entrants with empty patent
portfolios.
The national success was also based on 4) good
Nokia strategy. While Nokia has been claimed (Palmberg
2003, p. 181) to have lacked the vision for NMT, for
GSM it had an early and clear vision of the mobile voice
potential and focus to exploit the opportunity (Palmberg
& Martikainen 2005). The weight of Nokia strategy
among other success factors seems strong considering the
markets share and profitability development during the
1990s.
3. Finland's competitiveness
Finland's economic competitiveness has been
7 Sweden's Telewerket, Finnish, Danish and Norwegian
PTTs, Ericsson, Nokia and Elab.
evaluated in many international studies. How well do
those studies reveal mobile industry success factor areas?
Below is a summary of results and ranking criteria in
some recent international comparisons of national
competitiveness.
3.1 European Union
According to the Lisbon European Council in 2000 a
EU strategic goal of next decade is 'to become the most
competitive and dynamic knowledge-based economy in
the world' (European Parliament 2000). By the EU
Commission the competitiveness has been reviewed
regularly under three publications:
• Enterprise Policy Scoreboard,
• Innovation Scoreboard and
• European Competitiveness Report
The purpose of the publications are slightly different
but the evaluation criteria are partly overlapping.
The Enterprise Policy Scoreboard (EU Commission
2004a), ranks Finland second after Sweden. According
to the scoreboard Finland doesn't have any special
weakness areas and the strength areas are Human
Resources, Innovation and ICT.
The Enterprise Policy Scoreboard monitors the
business environment in nine areas:
• Access to Finance
• The Regulatory and Administrative
Environment
• Taxation
• Open and Well-functioning Markets
• Entrepreneurship
• Human Resources
• Innovation and Knowledge Diffusion
• ICT
• Sustainable Development
The Innovation Scoreboard (EU Commission 2004b)
ranks again Finland second and Sweden first. When the
reference countries U.S. and Japan are included, U.S.
takes the first position and Japan is the forth just behind
Sweden and Finland. The Innovation Scoreboard
combines 20 different indicators in a summary
innovation index and it has also examined the innovation
differences between industry sectors. The indicators are
grouped under areas of
• Human resources
• Knowledge creation
• Transmission and applicability of knowledge
• Innovation finance, output and markets
In the innovation performance per sector Finland
leads in the Electrical and Optical Equipment sector
which includes also the mobile industry products.
Sweden is fourth in this sector behind Belgium and
Netherlands.
The European Competitiveness Report has had
annually different general themes related to standards of
living and unemployment.
3.2 IMD
In the IMD's World Competitiveness Yearbook (IMD
2005) Finland is ranked to 8th position. Other nations
with advanced mobile services or technology sectors
USA, Sweden, Japan and Korea had rankings of 1, 11,
23, 35 respectively. The competitiveness of 60 nations is
ranked based on how a nation’s environment creates and
sustains the competitiveness of enterprises. The ranking
criteria is grouped into four competitiveness areas
• Economic Performance
• Government Efficiency
• Business Efficiency
• Infrastructure
3.3 WEF
The World Economic Forum (WEF) reports the
national competitiveness comparisons in two reports:
• Global Competitiveness Report and
• Global Information Technology Report
In the Global Competitiveness Report 2004-2005
ranking (WEF 2004) Finland was first, USA second,
Sweden third. The ranking is composed of indexes in the
areas of
• technology
• public institutions index
• macroeconomic environment
WEF ranks Finland third in the Global Information
Technology Report 2004-2005 (WEF 2005) . The
ranking is based on ICT related areas of
• Market, Political and Regulatory, and
Infrastructure environments
• Individual, Business and Government
readiness
• Individual, Business and Government usage
3.4 Evaluation of the international studies
Finland has ranked well in many international
economic competitiveness comparisons. Different
criteria has been used in different comparisons. Typically
the criteria and results are very general and serve the
purpose of evaluating the mobile industry
competitiveness more in identifying potential problem
areas than in identifying real competitiveness factors.
4. Success factor frameworks
Several different theories and frameworks have been
referred to in explaining the national competitiveness in
general and the Finnish mobile industry success in
particular. How well do those frameworks reveal mobile
industry success factor areas?
Following short descriptions introduce the most
often referred frameworks8 . Despite the big influence of
Nokia as a single firm on the Finnish mobile industry
success the firm level competitive strategy theories and
frameworks have been excluded here.
After descriptions a new synthesized framework for
8 Because a more thorough description is beyond the
scope of this paper the reader who is unfamiliar with
the concepts is recommended to read the referrred
documents or some of the many summaries that are
easy to find from the Internet.
the Finnish mobile industry success factors is presented.
4.1 Porter's diamond
Probably the most often referred framework for
explaining the national competitiveness comes is the
Porter's diamond model (Porter 1990). In order to
understand why firms based in particular nations achieve
international success in distinct industries Porter divided
the factors in four categories.
1. Factor9 conditions. The advanced and specialized
factors of production like skilled labour, capital
markets and good infrastructure provide the
industry with high value adding resources.
2. Demand conditions. Demanding markets enables
the industry to better understand the needs and
desires of the customers.
3. Related and supporting industries. Locating close
to related and supporting industries improve the
knowledge sharing and economic efficiency in
transactions and resource pooling.
4. Firm strategy, structure and rivalry. National
preferences in capital markets, career choices,
management style and competition suit certain
industries well.
Two additional factor categories Chance and
Government can alter conditions in the ‘diamond’ in
different ways in different nations.
5. Chance. Chance events in innovation,
technological discontinuities, shifts in markets can
have a major impact on competitiveness.
6. Government. The government may play as a
catalyst or inhibitor by influencing the four
factors, either positively or negatively.
Finally all the factors combine into a dynamic system
that reinforce each other (see Figure 1).
Firm strategy,
Chance structure and
rivalry
Factor Demand
conditions conditions
Related and
supporting Government
industries
Figure 1. Porter's diamond
4.1.2 Market dynamics framework
Palmberg's (2003, pp. 167-189) theoretical
framework is innovation focused and based strongly on
Dahmén 1989 (cited in Palmberg 2003, p. 168) tradition
and Carlsson and Eliasson (2001) concepts of coupling
of the supply of innovations and their selection and
diffusion in the market. Also Edquist's (2003, 21-32)
approach is innovation focused and rather similar to
Palmberg's approach. In the Sectoral Systems of
9 The word factor in Porter's book refers in general
level to inputs used for production and is different to
the meaning used in this paper.
Innovation framework the main elements are
organisations and institutions, the relationships between
them and the functions they are involved in. Also the
concepts of creative destruction, innovative entrepreneur,
evolutionary approach, non-linear development are
distinctive for this loose discipline. The innovation
success factors can be categorized (Carlsson and
Eliasson 2001) as follows.
1. Cognitive dimension, The technical capabilities
set the boundaries for possible innovations. The
boundaries can be expanded by adding new
capabilities, by co-evolution of various elements
or by understanding the needs better.
2. Organisational and institutional dimension. This
defines the problem solving network of actors in
the scientific and engineering communities.
3. Economic dimension. Early selection and
diffusion of innovations depend on the
capabilities of the economic dimension.
The framework is outlined in Figure 2.
Technological system Competence bloc
Ideas Innovations
Selection of winners
Idea generation
Release of
resources Rejection of losers
Cognitive dimension
Organizational and
Economic dimension
institutional dimension
Figure 2. Industry innovation dynamics
4.1.3 Resource based view frameworks
The resource-based view of the firm sustained
competitiveness is according to Salmi et al (2001) based
very much on writings by Penrose (1959), Barney (1991)
and Peteraf (1993) and Salmi et al (2001) suggest that
the resource-base view applies for the regions as well. In
this view resources are the source of sustainable
competitiveness, i.e. they form a success factor category
if the resources are
• Valuable,
• Rare,
• Inimitable and
• Non-substitutable
4.2 Synthesized framework
From the introduced existing theoretical frameworks
none is tailored for the mobile industry environment. The
Porter's diamond framework seems to offer a good
foundation for a tailored framework but it lacks emphasis
on areas that would help understanding the Finnish
mobile industry success factors in chapter 2. A target for
a framework is to have a set of categories which are
collectively exhaustive and mutually exclusive (Carlile
and Christensen, 2004) and help to identify the key
items. With this target in mind a new framework was
created.. The categories of the new framework have been
renamed from the Porter's framework in order emphasise
the mobile industry items and to distinct later which
framework is referred to.
1. Resources. The definition of this criteria builds on
the Porter's Factor conditions category. In order to
complement the category with factors that were
identified as important in chapter 2 also Resource Based
View framework success factor category criteria is
added. This is a big modification to the original Porter's
model where the category was for external inputs only10.
Following factors from chapter 2 belongs to this
category:
• NMT 1) capability build-up of
telecommunications network element
development
• GSM 1) exceptionally good competencies in
the new technological areas
2. Demand. The definition of this criteria builds on
the Porter's Demand conditions category. The uncertainty
will grow in many ways in future (see chapter 5) and it
can be reasoned that the evolutionary approach with
venturing and diffusion capability of the markets can
contribute in early success of innovations. So, as a new
view point in the category the Economic dimension from
the Market Dynamics Framework is added. Following
factors from chapter 2 belongs to this category:
• NMT 5) placing early orders
• NMT 10) high quality service and low tariffs
• NMT 11) PTT and ARP users were familiar
with the mobile phone concept
• NMT 12) big number of summer cottages
which didn't have fixed telephone lines
• GSM 2) PTT's existing mobile subscribers and
base station sites
3. Clusters. The definition of this criteria builds on
the Porter's Related and supporting industries category.
Collaboration and coalitions that drive the interests of the
national players have also been important and so the
Organisational and institutional dimension from the
Market Dynamics Framework is added. Following
factors from chapter 2 belongs to this category:
• NMT 4) collaborating in various scientific and
engineering communities
• NMT 7) joint ventures, collaborations,
networks of subcontractors
• GSM 3) coalitions where Nokia and PTT were
members
4. Firm strategy. The definition of this criteria builds
on the Porter's Firm strategy, structure and rivalry
category. In case of an industry where one single firm
dominates it is natural to put special emphasis on the
firm strategies. Following factors from chapter 2 belongs
to this category:
• NMT 8) Nokia reorganisations
• NMT 9) good technology choices especially
in digital switching systems
• GSM 4) good Nokia strategy
5. Institutions. The definition of this criteria builds on
the Porter's Government category. A special emphasis of
this category is on the fact that certain actions can be
10 An other Porter's diamond framework area category
for the resource based view items would have been
either the Firm strategy, structure and rivalry, or the
Clusters category.
fundamental to the creation of new business
opportunities. The actions are performed in the
Organizational and institutional dimension in the Market
Dynamics Framework. Following factors from chapter 2
belongs to this category:
• NMT 2) specification of the NMT standard
• NMT 3) allocating the radio frequencies
• NMT 6) government support in the form of
bigger R&D budgets
The Chance category from the Porter's framework has
not been taken into account here because we haven't
identified national factors belonging to that category.
The impacts of the success factors are summarized in
Table 2.
Table 2. Mobile industry national success factors
Category NMT GSM
Resources Strong Strong
Demand Strong 11
Clusters Strong Strong
Firm strategy 12
Strong
Institutions Strong
5. Markets characteristics
Some key characteristics from the Finnish mobile
cluster value network and the Demand category are
described below.
5.1 The value network
The Finnish value network actors and the relative
sizes of their revenues has been described graphically as
in Figure 3 (Leppävuori 2002). The circle sizes represent
the revenues in 2001 level. The purpose of the Figure 3
here is to introduce the actors and justify the focus on
Nokia in this paper. Nokia represents a major share of
the big Terminal manufacturers and Network
manufacturers revenues. Figure 3 does not show the
linkages that are important from the success factors point
of view. The proper figure for that purpose is for further
study.
11 Even GSM 2) PTT's existing mobile subscribers and
base station sites are are mentioned in this category
the impact was not as significant for the GSM success
as the NMT success factors were for the NMT
success.
12 Even NMT 8) Nokia reorganisations, and NMT 9)
good technological choices are mentioned in this
category the strategy was not focused as later with
GSM and the technological choices were to a certain
extend serendipitous.
 Terminal 5
retailers 4.5
4
3.5

Export
Terminal
manufacturers
Domestic
end users
Service
Operators
Network
operators
Network
manufacturers
Portals
Major value adding linkage
Application
Minor value adding linkage
Platform
developers
Organisational linkage
developers
Figure 3. Value network of the Finnish mobile cluster13
(Leppävuori 2002)
5.2 Service operator market characteristics
The total amount of subscribers at the end of 2004
was circa 4 980 00014 representing 95% penetration.
Figure 4 depicts the amount of subscribers of the biggest
service operators. TeliaSonera Finland and Elisa have
their own networks, DNA Finland belongs to the Finnet
group and provides the service in Finnet Verkot network,
Saunalahti uses TeliaSonera's and Radiolinja's networks
and ACN Communications Finland used TeliaSonera's
network but in early 2005 the ACN subscribers were
agreed to be migrated to TeliaSonera (TeliaSonera
2005a).
ACN 200000
Saunalahti 419350
DNA 683000
TeliaSonera 2297000
Elisa 1383500
Figure 4. Service operator subscribers, December 2004.
Portability of mobile phone subscriber numbers
became possible in July 2003 (Suomen Numerot
Numpac Oy 2005). Porting has been active and the
amount of numbers ported in 2004 represents 24% of the
total amount of mobile subscribers. In 2004 one service
operator, Saunalahti, gaining almost 280 000 (Saunalahti
2005) subscribers while an other, DNA Finland, losing
80 000 subscribers (Finnet 2004 and 2005).
13 The term cluster here does not refer to the Cluster as
it is defined in the synthesized framework.
14 Based on biggest service operator subscriber
estimates (Alkio 2005) and preliminary figures from
the company year end reports (TeliaSonera 2005a),
(Elisa 2005a), (Finnet 2005) and (Saunalahti 2005a).
Millions
3
2.5
2
1.5
1
0.5
0
03 03 03 03 03 04 04 04 04 04 04 04 04 04 04 04 04
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
August 2003 - December 2004
Figure 5. Finland mobile subscribers14,15 and ported
numbers (Suomen Numerot Numpac Oy 2005b)
In a European comparison (Nupponen 2004) of
mobile call tariffs in March 2004 Finland was ranked
third cheapest with the minute charges from 0.15€ to
0.16€. Since that time the tariffs have dropped
significantly. Mobile service operators DNA (2005),
Elisa (2005b), TeliaSonera (2005b) and Saunalahti
(2005b) were all offering subscriptions at 0.069€/min in
March 2005.
The rivalry seems to be strong which according to the
Porter's framework (1990) leads to demanding conditions
that are often good for the national competitiveness.
However, it has been claimed16 that the operators
concentrate on low tariff levels instead of developing
new services, which is not good from the Demand
category point of view. The claims are in line with the
TeliaSonera announcement that in Finland measures will
be taken to reduce development costs (TeliaSonera
2005a). On the other hand new innovative service pilots
like Finnish Mobile TV (2005) and Visual Radio (Nokia
2005) have recently been launched in Finland so it may
be premature to draw strong conclusions here.
In Finland TeliaSonera and Elisa have opened 3G
networks. A third 3G service provider is Saunalahti
which offers 3G services in TeliaSonera's network. Also
Tele2 has a licence but the required 3G network
investments in Finland look unlikely (Cellular-news
2005, cited Dow Jones).
Nokia is confident about the 3G growth and states
(Beresford-Wylie 2005):
We expect to see the widespread
commercialization of 3G/WCDMA networks
during the year, with more than 100 3G
networks opened by the end of 2005. Nokia is
also projecting a sharp rise in 3G subscribers,
to 70 million by the end of 2005, up from 16
million last year.
Considering the fact that the Finnish 3G coverage is
very limited (TeliaSonera 2005) the impact on the
Demand category is modest.
Finnish mobile service markets have certain
distinctive features that may have an impact on the
15 the mobile subscriber numbers from August 2003 to
November 2003 have been extrapolated.
16 E.g. by the Finnish Prime Minister Vanhanen
(Nikulainen 2005). The reason for the concentration
on tariffs has been debated (Poropudas 2005) by the
operators and regulatory authorities without an
obvious plan for a remedy.
mobile industry competitiveness and should be studied Table 3 Evolution of the business environment
further but they are beyond the scope of this paper.
Those features are e.g. the forbidding of the handset and NMT GSM Future
subscription sales bundling, Nokia handset high market Business Business Growth Replacement
share and the very low prepaid subscription penetration. Opportunity entry and extension
Market Fixed Growing Open scopes
5.2. Mobile industry opportunities and definition scope scope
challenges ahead
Operator National Several Global and
For the equipment manufacturers the NMT customers national heterogeneous
opportunity was fundamental in nature, i.e. to get into the
Value system Vertical Vertical Horizontal
business. At the same time it was rather simple. The
subsystems
scope of the equipment and subscriber services were well
understood, the roles in the value system were stable. Suppliers National Mixed International
The GSM opportunity was also fundamental in nature, subsystems
i.e. in order to grow and stay in the business but it was
already much more complex by having more alternatives Considering the synthesized framework several
in equipment and subscriber services, and the roles of the preliminary assessments can be made for the future.
players become more dynamic. In future various mobile
industry opportunities and challenges exists in the areas 1. Resources. The mobile industry will continue to
of markets, value systems and technologies. be technologically challenging a but the weight of
In future the traditional rapid market growth by the national dimension in the Resources category
subscriber numbers can not continue for a very long time will be less than in the past.
and the growth must be found from replacing the 2. Demand. The smaller share of home markets and
equipment and extending to new not well identified areas the passive role of the operators will diminish the
without just a single prominent market opportunity. In national impact in the Demand category.
the access side it may lay in 3G, new local area radio
technologies, new wide area radio technologies, 3. Clusters. Globalisation of the supplier chain
unlicensed spectrum radio technologies or in the means that the national Clusters category can not
intelligent management of several of these. In the be very crucial in future.
services side the market opportunities may lay in VoIP, 4. Firm Strategy. The growing complexity of the
music, TV, telematics, just to mention some. In the business environment suggests that the Firm
mobile devices side it may lay in new experiences or Strategy will continue to be a key category for
applications facilitated by integrating new functions and success.
features. To make the picture even more fragmented, the
opportunities will vary among the geographical markets. 5. Institutions. The national means to impact on
Due to all of these, the mobile industry will most creating new business opportunities will be
probably see many market flops. The sooner the bad smaller than before.
candidates can be rejected the better.
The mobile industry value system may change due to 6. Conclusions
horizontal layering of the technology, new vertical
functions in the subscriber services and revolutionary As the objective of this paper is to introduce some of
changes in service provision. All of these pose the key aspects and serve as a reference for discussions
opportunities and threats for the traditional big mobile and further research, the following conclusions are
industry players. They are threats will materialize if they tentative.
don't adapt to the changes. New technology layer 1. National competitiveness reports measure areas
manufacturers may capture high value adding links in the that have not been very important for the mobile
value system. New vertical functions may capture the industry specific competitiveness.
brand and initiative of the mobile device development. 2. Porter's diamond model for national
Revolutionary changes like bypassing traditional competitiveness is a good starting point for the
operators in large scale may lead to a change in dominant national success factor framework for mobile
infrastructure architecture and be an advantage for the industry sector. Adding certain emphasis areas
IT technology. improves the explanatory power of the
The changes have taken place also in the supplier framework.
side. More and more of the subsystems as well as 3. An evolution can be identified in the Finnish
research and development comes from other countries mobile industry success factors. The framework
(Torikka 2005). This will inevitably decrease the role of categories most crucial for the success has
the Cluster category. changed and will probably continue changing.
The evolution of the business environment is 4. The national role for the mobile industry success
summarized in Table 3. is diminishing.

The mobile industry success factor evolution analysis

summary based on the synthesized framework and key
changes in the environment is presented in Table 4.
 Table 4. Evolution summary
Framework NMT GSM Future
category
Resources Strong Strong
Demand Strong
Clusters Strong Strong
Firm strategy Strong Strong
Institutions Strong
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