Nokia 2006 Annual Report Download - page 34

such as WiMAX. The main products offered by Radio Networks are base stations, base station
controllers and cellular transmission equipment. As data speeds evolve, these products are
increasingly used for data traffic in addition to traditional wireless voice traffic.
Core Networks develops core network solutions for mobile and fixed operators. The main products
are switches and different kinds of network servers. Nokia’s circuitswitched network solutions are
aimed at helping operators to reduce the cost of providing voice minutes to subscribers. Nokia’s new
packetswitched core network solutions bring new functionality to the networks and are designed to
enable operators to more efficiently offer advanced services such as Voice over IP, or VoIP calls, video
sharing, Unlicensed Mobile Access, or UMA, Presence, and other IPbased services. Many of Nokia’s
core network products can be used in both fixed and mobile networks.
Services offers operators a broad range of services, from network planning, implementation,
managed services and operations outsourcing, to network optimization, care, consulting and systems
integration. Our managed services business, where we run all or part of an operator’s network, has
become an increasingly important part of our services business. By improving and automating
operators’ processes, our tools and services are designed to assist them in achieving a higher quality
of service with lower operating and capital expenditures.
Networks Customer and Market Operations deals with operator customers and is responsible for sales
and marketing as well as for overall customer relationships. The Networks business group, which has
organized its customer business teams on a regional basis, works in close cooperation with other
Nokia businesses in addressing operator customers. Each of our active operator customers is
supported by a dedicated Nokia account team. In addition, we have customer executive teams with
Nokia Group Executive Board members as the customer executives for the largest global operators.
Delivery Operations is responsible for the sourcing, manufacturing and distribution of network
products, in addition to network delivery and services.
Nokia Siemens Networks
In June 2006, Nokia and Siemens AG (‘‘Siemens’’) announced plans to form Nokia Siemens Networks
that will combine Nokia’s networks business and Siemens’ carrierrelated operations for fixed and
mobile networks in a new company owned approximately 50% by each of Nokia and Siemens and
consolidated by Nokia. The new company is expected to have a worldclass fixedmobile convergence
capability, a complementary global base of customers, a deep presence in both developed and
emerging markets, and one of the industry’s largest and most experienced service organizations.
Based on the 2005 calendar year, the combined company had EUR 15.8 billion in pro forma annual
revenues and is expected to start operations with approximately 60 000 employees. Cost synergies
are estimated at approximately EUR 1.5 billion annually by 2010 and are expected to come primarily
from the elimination of overlapping functions, consolidation and better utilization of sales and
marketing organizations, reduction of overhead costs, sourcing benefits, and greater efficiencies in
R&D. Headcount reductions of approximately 1015% are expected over the next four years, but only
after Nokia Siemens Networks has begun operations and the appropriate consultations are
completed according to applicable labor law requirements.
Nokia Siemens Networks’ operational headquarters will be in Espoo, Finland, where two of the new
company’s six business units are based, and the company will have a regional presence in Munich,
Germany where the other four business units are based. The business units are: Radio Access,
Broadband Access, Service Core and Applications, IP Networking and Transport, Operating Support
Systems, and Services. Nokia Siemens Networks’ Customer and Market Operations will supervise the
new company’s regional teams; manage the overall customer relationship; take responsibility for all
services projects and the company’s services portfolio; manage sales of solutions and the creation of
new solutions; and manage the company’s image, branding and positioning. Nokia Siemens
Networks will have a close alliance with Nokia’s mobile device business with respect to product and
service offerings as well as customer interface, in which the companies will, for example, execute a
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