Nokia 2006 Annual Report Download - page 40

Competition
Mobile Devices
Mobile device market participants compete mainly on the basis of the breadth and depth of their
product portfolios, design, price, operational and manufacturing efficiency, technical performance,
distribution, product features, quality, customer support and brand.
The markets for our products and solutions are intensely competitive. The competition continues to
be intense from both our traditional competitors in the mobile communications industry as well as a
number of new competitors. Some of these competitors have used, and we expect will continue to
use, more aggressive pricing strategies, different design approaches and alternative technologies. In
addition, some competitors have chosen to focus on building products based on commercially
available components, which may enable them to introduce these products faster and with lower
levels of research and development spending than Nokia.
Historically, our principal competitors in mobile devices have been other mobile device companies
such as BenQSiemens, LG, Motorola, Samsung and Sony Ericsson. Mobile network operators also offer
mobile phones under their own brand, which may result in increasing competition from nonbranded
mobile device manufacturers.
However, we face new competition, particularly in our Multimedia and Enterprise Solutions business
groups, where we compete with Internetbased products and services, consumer electronics
manufacturers and business device and solution providers. Our historical competitors are now also
expanding into the enterprise and multimedia areas. Further, as the industry now includes increasing
numbers of participants that provide specific hardware and software layers within products and
solutions, we compete at the level of these layers rather than solely at the level of complete
products and solutions. Examples of such layers include operating system and user interface
software, chipsets, and application software. As a result of these developments, we face new
competitors such as, but not limited to, Apple, Canon, Dell, HP, Microsoft, Palm, Research in Motion
and Sony.
The industry is increasingly complex and challenging, and vendors need to master many elements in
order to succeed. This is driving a continuing trend towards consolidation among industry
participants. However, it is difficult to predict how the competitive landscape of the mobile device
industry will develop in the future, as the parameters of competition are less firmly established than
in mature, lowgrowth industries where the competitive landscape does not change greatly from
year to year.
See ‘‘Item 3.D Risk Factors—Competition in our industry is intense. Our failure to maintain or
improve our market position and respond successfully to changes in the competitive landscape may
have a material adverse impact on our business and results of operations.’’
Infrastructure
In the network infrastructure business, our principal competitors include LucentAlcatel, Ericsson,
Huawei, Motorola, NEC, Nortel, Siemens (until the formation of Nokia Siemens Networks) and ZTE. In
2006, the competitive environment began to change with the announcements of the merger of
Alcatel and Lucent and the new company Nokia Siemens Networks. If realized, this significant
consolidation will result in a market led by three global players followed by a number of smaller
regional network infrastructure providers.
Consolidation has in part been driven by intense competition in the 2G and the 3G network
infrastructure markets. In 2G, competition is driven by price, solutions that are able to offer low total
cost of ownership, and the vendor’s ability to rollout mobile networks in highgrowth markets. In
3G, vendors compete on the basis of price and track record of network implementations, as well as
in terms of which new technologies they plan to introduce and when.
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