Nokia 2008 Annual Report Download - page 50

intense price competition and the market was flat in euro terms in 2008 compared to 2007. In
addition the financial and economic turmoil that emerged during the latter part of 2008 further
intensified the difficulties in the market leading to forecasts of a retraction of the market in 2009.
In addition, consolidation among network operators has increased the need for scale, which is
continuing on a regional basis, and placed pressure on vendors in 2008. The increasing demand for
data communication has heightened the need for a broader business scope, with companies trying to
differentiate themselves through innovations such as reduced energy consumption.
In the fastestgrowing part of our business, services, which include managed services (outsourcing),
consulting, systems integration and hosting, vendors are judged upon their ability to identify and
solve customer problems rather than their ability to supply equipment at a competitive price.
Competition comes from both established and nontraditional companies, including Ericsson and IBM.
In businesses such as radio networks, the 2G (GSM) segment is facing intense price competition in
emerging countries, where operators need to make large investments in networks but generally
receive low revenues per customer. In mature markets, there has been a slowdown in operator
investments. Within the 3G segment, leading vendors are competing based on factors including
technology innovation, such as lower energy consumption equipment, and less complex network
architectures.
The fixed line market continues to be characterized by intense price pressure, both in terms of
equipment price erosion due to heavy competition, especially from Asian vendors, and from declining
tariffs, which are expected to continue to fall. Decreasing fixed line revenues combined with rising
voice and data network traffic are expected to force network operators to invest in new business
opportunities and continue their network evolution to converged IP/Ethernet and wavelength
division multiplexingbased transport architectures. The global trend of subscribers moving to mobile
communications from fixed communications is expected to continue, especially with the growth in
the number of mobile subscribers in markets where it is not economically feasible to build a fixed
network.
Seasonality—Devices & Services, NAVTEQ and Nokia Siemens Networks
For information on the seasonality of Devices & Services, NAVTEQ and Nokia Siemens Networks, see
Item 5A. “Operating Results—Overview—Certain Other Factors—Seasonality.”
Sales in sanctioned countries—Devices & Services, NAVTEQ and Nokia Siemens Networks
We are a global company and have sales in most countries of the world. We sold mobile devices and
services through Devices & Services and network equipment through Nokia Siemens Networks to
customers in Iran, Sudan and Syria in 2008. NAVTEQ did not have any sales to customers in these
countries from the completion of our acquisition of NAVTEQ on July 10, 2008 to December 31, 2008.
Our aggregate sales to customers in these countries in 2008 accounted for approximately 1.6% of
Nokia’s total net sales, or EUR 791 million. Iran, Sudan and Syria are subject to US economic sanctions
that are primarily designed to implement US foreign policy and the US government has designated
these countries as “state sponsors of terrorism.”
Government Regulation—Devices & Services, NAVTEQ and Nokia Siemens Networks
Our business is subject to direct and indirect regulation in each of the countries in which we, the
companies with which we work or our customers do business. As a result, changes in or uncertainties
related to various types of regulations applicable to current or new technologies, products, services or
solutions could affect our business adversely. Moreover, the implementation of technological or legal
requirements could impact our products, services and solutions, manufacturing or distribution
processes, and could affect the timing of product, services and solution introductions, the cost of our
production, products, services or solutions, as well as their commercial success. Also, our business is
subject to the impacts of changes in trade policies or regulation favoring the local industry
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