Nokia 2009 Annual Report Download - page 42

manufacturing facilities form an integrated global production network, giving us flexibility to adjust
our production volumes to fluctuations in market demand in different regions.
Each of our plants employs stateoftheart technology and is highly automated. In 2009, we made
significant capital investments in our plant in Chennai to expand its production capabilities.
Our mobile device manufacturing and logistics—which we consider to be a core competence and
competitive advantage—are complex, require advanced and costly equipment and typically require
outsourcing to third parties. Outsourcing has typically been utilized to adjust our production to
seasonal demand fluctuations. During 2009, we had sufficient production to handle inhouse the
manufacturing volume of mobile device engines, which include the hardware and software that
enable the basic operation of a mobile device, and as a result, we outsourced less than 1% of our
manufacturing volume. This compared to 2008, during which outsourcing covered approximately 17%
of our manufacturing volume of mobile device engines.
Overall, we aim to manage our inventories to ensure that production meets demand for our products,
while minimizing inventorycarrying costs. The inventory level we maintain is a function of a number
of factors, including estimates of demand for each product category, product price levels, the
availability of raw materials, supplychain integration with suppliers and the rate of technological
change. From time to time, our inventory levels may differ from actual requirements.
Design and user experience
At Devices & Services, we endeavor to take a human approach to designing mobile devices, services
and software. Using the customer feedback, information on consumer usage patterns and other
consumer data collected by us, we are focusing on creating designs that consumers will want and
love to use. This ethos is central to our design work and brand.
At the heart of our design approach is people—we are focusing our efforts on designing products and
services and their combinations that are delightful and exciting to use. Our approach is to design the
whole experience from the packaging to the product, to the icons and the whole digital interface. We
understand that through thorough research, understanding of consumer trends, local studies, rapid
prototyping of styles, shapes and interactions we would have key tools needed to create a portfolio
of products and services and their combinations that are relevant to billions of people.
Based in China, Europe and the United States, our multidisciplinary design team comprising more
than 300 people includes psychologists, researchers, anthropologists, user experience experts and
technology specialists representing over 30 different nationalities.
Research and Development
Devices & Services’ research and development (R&D) expenses amounted to EUR 3.0 billion in 2009. At
the end of the year, Devices & Services employed 17 196 people in R&D.
Nokia’s portfolio of mobile devices, services and their combinations is centered around mobile
phones, smartphones and mobile computers. Reflecting this approach to market, we have dedicated
R&D teams addressing our short to mediumterm needs in these areas. This setup ensures that the
teams have visibility of and accountability for the creation process from start to finish. It is also
designed to support a better consumer experience as well as better time to market and R&D
productivity. Horizontal teams address common elements across the portfolio, such as application and
service frameworks, quality and delivery, and architecture and technology development. We have a
strong Devices & Services R&D presence in Beijing in China; Copenhagen in Denmark; Greater Helsinki,
Salo, Tampere and Oulu in Finland; Ulm in Germany; Bangalore in India; London and Farnborough in
the United Kingdom; and San Diego in the United States.
Longerterm, more exploratory technology development comes under the scope of Nokia Research
Center, a global network of research centers and laboratories Nokia maintains, in many cases in
collaboration with outside partners. Nokia Research Center looks beyond the development of current
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