Nokia's response: make more candy-bar phones. Its dominant position -- the company at one time controlled two-thirds of the handset market -- meant it could afford to sell identical phones around the world, rather than customizing them for specific markets. Its reluctance to move into flip-phones early cost the company the U.S. market, a place where it hasn't had a major presence for more than a decade. Nokia's inability to make custom phones for the U.S. market didn't win itself many allies among the local carriers, further accelerating its market share declines here. Nokia's "my way or the highway" approach with its handsets didn't sit well with the carriers, who were entertaining more nimble players like Motorola. Nokia instead receded into a niche brand with a few loyal fans. The company set up its own shops in major cities such as New York, selling its phones directly to consumers without a contract, which meant a high non-subsidized price that only a small set of hard-core devotees were willing to pay.

It failed to recognize the threat of the iPhone: Apple's original iPhone shook up the market and changed the expectations of what people could do with a smartphone. Only, that didn't register immediately with everyone in the industry, many of whom were comfortable with older, clunkier platforms such as Windows Mobile, Palm OS, and Nokia's own Symbian. Nokia was particularly blind to the threat of the iPhone. The company was still the undisputed leader in smartphones, something its executives would regularly tout when asked about the iPhone. Nokia had its own application store, but it was a pale imitation of what developers could do with iOS. At that point it was clear Nokia had lost a lot of the buzz that sustained its brand. Its still-strong position was a legacy of its past strength, and as a result, it began to see its market share slowly deteriorate.