Innovation Strategies in Digital Convergence: Nokia and the Digital Home

Abstract

This chapter examines the innovation strategy of one of the major telecom companies—Nokia—in its efforts to develop a sustainable position in the emerging digital home market. The analysis of Nokia’s innovation strategy in the digital domain is based on Abernathy and Clark’s (1985) classification which differentiates between different types of innovations, depending on their impact on the firm’s competitive position. The case study finds that Nokia follows a niche creation strategy, relying on its existing technological competencies in areas such as handset design and open device architecture, while building new market competencies developed either in house, or through collaboration with industry partners. The chapter provides an in depth view into the strategic actions of a large firm which attempts to build a sustainable competitive advantage in an emerging market by taking advantage of the opportunities arising from the convergence of digital home technologies.