Nokia 2007 Annual Report Download - page 15

extent, our cost advantage may be eroded, which could materially adversely affect our competitive
position, business and our results of operations, particularly our profitability.
Competition in our industry is intense. Our failure to maintain or improve our market position
or respond successfully to changes in the competitive landscape may have a material adverse
effect on our business and results of operations.
The markets for our products, services and solutions are intensely competitive. Industry participants
compete with each other mainly on the basis of the breadth and depth of their product, service and
solutions portfolio, design, price, operational and manufacturing efficiency, technical performance,
distribution, quality, customer support and brand. The competition continues to be intense from both
our traditional competitors in the mobile and fixed communications industry as well as a number of
new competitors. Some of our 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 expenditures than Nokia. Additionally, because mobile network operators
are increasingly offering mobile devices under their own brand, we face increasing competition from
nonbranded mobile device manufacturers. Due to the intensity of the competition overall, the
competitive landscape in our industry or in specific industry segments can change very rapidly.
As a result of developments in our industry, including convergence of mobile device technology with
the Internet, we also face new competition from companies in related industries, such as Internet
based products and services, consumer electronics manufacturers, network operators and business
device and solution providers, some of which have more scale and experience and a stronger market
presence in certain segments such as Internet services. In addition, new companies, primarily
consumer electronics manufacturers, are entering the mobile device business. The competitive
environment, including the competitive means, of these new converged market segments differ from
the more established segments within our industry. Some of the new market segments that we
target are still in early stages of development and it may be difficult to predict the main competitors
and competitive environment in these market segments. Further, as the industry now includes
increasing numbers of participants that provide specific hardware and software layers within
products, services and solutions, we also face competition at the level of these layers rather than
solely at the level of complete products, services and solutions. In some of these layers, we may have
more limited experience and scale than our competitors. If we cannot respond successfully to these
competitive developments, our business and results of operations may be materially adversely
affected.
Consolidation among the industry participants, including further concentration of the market on fewer
industry participants, could potentially result in stronger competitors that are better able to compete
as endtoend suppliers as well as competitors who are more specialized in particular areas.
Moreover, the increased concentration among the mobile network operators, particularly in North
America where sales of mobile devices to operators represent the major percentage of our sales, is
resulting in fewer customers whose purchase preferences may differ from our current product
portfolio. In addition to mergers, the consolidation among the industry participants may take place in
form of various types of joint ventures, partnerships and other cooperation targeted to obtain
potential economies of scale, such as increased bargaining power and price visibility. These
developments could have a material adverse effect on our business and results of operations.
See “Item 4.B Business Overview—Mobile Devices—Competition—Devices” and “—Nokia Siemens
Networks—Competition” for a more detailed discussion of competition in our industry.
We must develop or otherwise acquire complex, evolving technologies to use in our business.
If we fail to develop or otherwise acquire these complex technologies as required by the
market, with full rights needed to use in our business, or to protect them, or to successfully
commercialize such technologies as new advanced products, services and solutions that meet
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