Content. New technologies will enable service development network upgrades and capacity investments. Network infrastructure market developments

(1)

Sari Baldauf

President

Nokia Networks

Towards the new

paradigm of mobility

- impacts on the

telecoms infrastructure

business

Content

• New technologies will enable service development

network upgrades and capacity investments

• Network infrastructure market developments

• Nokia’s position in the infrastructure business

• Our business model

(2)

A new paradigm of mobility

Let’s have a look what’s

already possible

(3)

Tune2Radio interactive service concept possible

today

• Personalized listing of radio shows

• Interaction with the radio station

• Voice calls generated as a result of other services

• Information related to the current broadcast

• Personalized listings of news, entertainment, travel items traffic info

• Advertising

Tune2Radio

Tune2Radio - Impact on average monthly ARPU

What's on? Advertising Capital dating TalkBack Now Playing NewsWire Store EUR 0.0 0.2 0.4 0.6 0.8

I/-02 II/-02 I/-03 II/-03 I/-04 II/-04

The ARPU from GPRS users grows from 0.5 EUR in 2002 to 1.9 EUR in 2004 with this same split among revenue streams.

(4)

What does it require from the network ?

Platform to host T2R service

•Solaris 8 or Linux hardware

•mySQL database

•Nokia messaging gateway

•Nokia WAP gateway

•Billing system Bespoke service creation

•Quality GPRS network infra

•branding

•content

•integration with existing infrastructure Tune2Radio Deployment

Infrastructure

market

(5)

Nokia-addressed technologies grow faster than

mobile infrastructure markets overall

Note: Includes base stations and mobile core only

•Total market growth is flat to slightly positive for 2002. In longer term clearly positive

•Growth of the Nokia addressed market is significantly higher, both in near and longer term

Nokia, Nov 2001 0 5 10 15 20 25 2000 2001 2002 0% ~10% €Billion 30 Other standards WCDMA GSM

Addressable market growth

Nokia, Nov 2001

Note: Includes base stations and mobile core only

0 5 10 15 20 2000 2001 2002 €Billion APAC (incl. China) Americas EMEA

• Fastest in the Americas

• In Europe the growth is shifting to 3G networks

(6)

WCDMA will build on the global growth

of GSM, creating a 3G mobile world

Global Economies of Scale Will Drive Roll Out and Delivery, Enabling Low-cost Mass Market Services

Since January 2001 GSM is 78% of all new subscriptions

GSM TDMA CDMA Others

Source: EMC Database -20 0 20 40 60 80 100 120 140 160

Jan.01 Feb.01 Mar.01 Apr.01 May.01 Jun.01 Jul.01 Aug.01 Sep.01

Millions

Oct.01

GSM/EDGE is becoming the dominant

technology in the Americas

GSM countries in 1998: Canada Chile French Caribbean Paraguay United States Venezuela GSM countries end 2001:

Antigua & Barbuda Argentina Bolivia Brazil Canada Chile El Salvador French Caribbean Guatemala Jamaica Mexico Paraguay Peru Suriname Trinidad & Tobago United States Venezuela

(7)

Economies of Scale Will Drive 3G Evolution

Mobile Subscriber Percentages by 2006

GSM/EDGE/WCDMA

cdmaONE/CDMA2000

Source: Nokia

Over 85% of digital subscribers will be GSM/EDGE/WCDMA by end 2006

AMERICAS GSM/EDGE WCDMA 23% AMERICAS cdmaOne CDMA2000 10% APAC cdmaOne CDMA2000 4% _APAC GSM/EDGE WCDMA 29%

Europe, Middle East, Africa GSM/EDGE

WCDMA 34%

Nokia’s position in the

infrastructure business

(8)

Nokia Networks current sales

The split will change in the coming years due to

our strengthening presence in the United States

~50%

~40%

>10%

APAC

Europe/Africa

Americas

• TDMA operators’ migration to

GSM/EDGE will increase Nokia’s

accessible market

• AT&T Wireless Services, Cingular

and Telemar are Nokia’s major

customers

• Our market share in mobile

infrastructure business in the

Americas will grow significantly

(9)

• WCDMA will be implemented not only in the

current GSM countries but also in Japan and

Korea

• Nokia has already scored its first

infrastructure system deal in Japan and we

are a significant supplier to J-Phone

• Further development of 3G architectures

will create new business opportunities in

horizontal sales

• We are well on track to reach our WCDMA

35% market share target

Our addressable market – 3G WCDMA

Strong GSM position will lead to a strong

position in next-generation technologies

Nokia

~ 30%

GSM

Measured by base stations and mobile core deliveries (12 months) Measured by potential subscribers in commercially launched networks Nokia, Nov 2001

Nokia

35%

Nokia

~ 35%

GPRS

Measured by estimated RAN & core equipment for next two years – mid-term target 35% market share

Nokia

> 30%

(10)

Ericsson Ericsson

The competitive landscape is changing

No. of GPRS Deals No. of WCDMA Deals 60 30 50 10 20 30 10 5 25

Nokia

Nortel Nortel Lucent Lucent 35 15 40 20 Motorola Siemens & NEC Alcatel

•The size of the circles reflects market share in ALL mobile technologies

(based on published contract values for 18 months to end of August 2001)

•Nokia expects restructuring of the industry to continue

(11)

Growth

Profitability

Profitability EfficiencyEfficiencyEfficiency

Our focus areas

Growth and strong market share are important

• volume benefits cost-efficiency and ability to invest in the future

• leveraging the opportunities of the market horizontalization

Profitability

Profitability EfficiencyEfficiency

Growth

(12)

Our focus areas

• Profitable 3G business requires a new business model: our ways of operating is undergoing a major change

• Strong customer and technology focus Growth Growth Efficiency Efficiency

Profitability

Our focus areas

Continuous efficiency improvement is our key target, several changes done or ongoing

Growth Growth

Profitability

(13)

Competitive Strategy

Product LeadershipProductProduct

Leadership

Customer relationshipCustomerCustomer

relationship

relationship OperationalOperationalOperationalExcellenceExcellenceExcellence

Competitive Strategy

• Shaper of network architecture - All IP

- leadership in the Mobile domain

• End-to-end solutions, incl. terminals

• Best time to market

• Cost-efficient, value adding solutions

• Industy leading technology platforms

• Flexibility to adopt new technologies

• Networked R&D - strong own R & D

- Nokia focus on new key competence areas

- good R&D partners Customer

relationship Customer

relationship OperationalExcellence Operational Excellence

Product

Leadership

Product

Leadership

(14)

Competitive Strategy

We have moved from country and regionally orientated organizations to global customer based structure

better understanding of customer’s business strategy and needs

better business visibility strong account teams that can support customers more efficiently Product Leadership Product Leadership Operational Excellence Operational Excellence

Customer

relationship

Customer

relationship

Competitive Strategy

• Manufacturing: Nokia Networks focuses on core technologies in its own manufacturing, approx. 60% of manufacturing outsourced

• Efficient working capital

management: Special actions on receivables and inventory management

• Optimised resources and competence development • Leveraging e-business opportunities Product Leadership Product Leadership Customer relationship Customer relationship

Operational

Excellence

Operational

Excellence

(15)

4 000 6 000 8 000 10 000 Revenues, millions of Euros 15 000 16 000 17 000 18 000 19 000 20 000 21 000 22 000 23 000 24 000 25 000 Personnel

Net Sales & Personnel

12 month trailing net sales

Personnel

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

1999 2000 2001

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

connected to Nokia delivered

switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G –

Nokia is well on its way to reach its

35%

market share

target

(16)

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

connected to Nokia delivered

switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G –

Nokia is well on its way to reach its

35%

market share

target

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

subscribers connected to Nokia

delivered switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G –

Nokia is well on its way to reach its

35%

market share

target

(17)

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

connected to Nokia delivered

switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G –

Nokia is well on its way to reach its

35%

market share

target

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

connected to Nokia delivered

switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G –

Nokia is well on its way to reach its

35%

market share

target

(18)

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

connected to Nokia delivered

switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G –

Nokia is well on its way to reach its

35%

market share

target

What do these figures tell?

In 2006 approximately

85%

of all networks will be based

on GSM/EDGE/WCDMA

Over

100 000 000

subscribers connected to Nokia

delivered switches

35%

market share in launched GPRS networks

– strong core network player

Nokia will deliver approximately

100 000

3G WCDMA

carriers in 2002

Nokia has

>30%

market share in 3G

Nokia is well on its way to reach its

35%

market share

target

(19)

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