Nokia 2012 Annual Report Download - page 27

Our sales and profitability are dependent on the development of the mobile and
communications industry, including location-based and other services industries, in numerous
diverse markets, as well as on general economic conditions globally and regionally.
Our sales and profitability are dependent on the development of the mobile and fixed communications
industry in numerous diverse markets in terms of the number of new mobile subscribers, the number of
existing subscribers who upgrade or replace their existing mobile devices and the number of active users
of applications and services on our devices. In certain low penetration markets, in order to support a
continued increase in mobile subscribers, we continue to be dependent on our own and mobile network
operators’ and distributors’ ability to increase the sales volumes of lower cost mobile devices and on
mobile network operators to offer affordable tariffs and tailored mobile network solutions designed for a
low total cost of ownership. In highly penetrated markets, we are more dependent on our own and mobile
network operators’ ability to successfully introduce value-added products, such as smartphones that drive
the upgrade and replacement of devices, as well as ownership of multiple devices. We are also
dependent on developers’ interest and success in creating value-added applications and other content in
our products to achieve differentiation and additional consumer demand.
Our location-based and other services business is dependent on the development of a wide variety of
products that use its data, the availability and functionality of such products and the rate at which
consumers and businesses purchase those products. Nokia Siemens Networks is dependent on the
pace of investments made by mobile network operators and service providers in network infrastructure
and related services. If we and the other market participants are not successful in our attempts to
increase subscriber numbers, stimulate increased usage or drive upgrade and replacement sales of
mobile devices and develop and increase demand for value-added services, or if mobile network
operators and service providers invest in the related infrastructure and services less than anticipated,
our business and results of operations could be materially adversely affected.
As we are a global company with sales in most countries of the world, our sales and profitability are
dependent on general economic conditions globally and regionally. The traditional mobile
communications industry has matured to varying degrees in different markets and, consequently, the
industry is more vulnerable than before to the negative impacts of deteriorations in global economic
conditions. Although the global economy continued to recover and grow in 2012 the growth was slower
than in 2011 and in 2010. In 2012, the global economic growth was adversely impacted by the
European debt crisis as well as the uncertainty around the implementation and timing of the fiscal
consolidation in the United States, casting doubt on the sustainability of the recovery in the various
markets where we do business. Indeed, the concerns regarding the ongoing European debt crisis
discussed below, whether real or perceived, could result in a recession, prolonged economic slowdown
or otherwise negatively affect the general health and stability of the economies in certain regions where
we do business. The overall economic uncertainty is making it difficult to estimate for business
planning purposes the impact and timing of changes in economic conditions in the various markets
where we do business. In 2012, we also witnessed political unrest in various regions where we do
business, which adversely affected our sales in those markets.
Uncertainty or deterioration in global economic conditions or a recurrence or escalation of political
unrest may result in our current and potential customers and consumers postponing or reducing
spending on our products. In addition, mobile network operators may reduce the device subsidies that
they offer to the consumers or attempt to extend the periods of contracts that obligate the consumer to
use a certain device and postpone or reduce investment in their network infrastructure and related
services. The demand for digital map information and other location-based content by automotive and
mobile device manufacturers may decline in relation to any further contraction of sales in the
automotive and consumer electronics industry. In addition, any further deterioration in the global or
regional economic conditions may:
• Limit the availability of credit or raise the interest rates related to credit which may have a
negative impact on the financial condition, and in particular on the purchasing ability, of some
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