Nokia 2009 Annual Report Download - page 25

each party of various resources, including technology, research and development efforts, and
personnel. Our ability to collaborate and partner successfully is increasingly important to the success
of our converged mobile devices and the Internet and other services we incorporate into our devices.
Although the objective of the collaborative and partnering arrangements is a mutually beneficial
outcome for each party, our ability to introduce new products and services and their combinations
that meet our and our customers’ and consumers’ quality, safety, security and other standards
successfully and on schedule could be hampered if, for example, any of the following risks were to
materialize: we fail to engage the right partners or we are unable to collaborate and partner
effectively to reach the targets set for the collaboration; the arrangements with the parties we work
with do not develop as expected; the technologies provided by the parties we work with are not
sufficiently protected or infringe third parties’ intellectual property rights in a way that we cannot
foresee or prevent; the technologies, products or services supplied by the parties we work with do
not meet the required quality, safety, security and other standards or customer needs; our own
quality controls fail; or the financial condition of our collaborative partners deteriorates which may
result in underperformance by the collaborative partners or insolvency or closure of the business of
such partners. Any further deterioration of the global economic conditions may decrease the number
of collaborative partners and limit the ability of the remaining collaborative partners to invest in their
technologies, products and services. Our increasing reliance on collaborative partnering for Nokia
branded or cobranded products and services and their combinations may result in more variable
quality due to our more limited control which may have a negative effect on our reputation and
erode the value of the Nokia brand. Any of these events could materially adversely affect our sales
and results of operations.
Our sales and results of operations could be materially adversely affected if we fail to
efficiently manage our manufacturing, service creation and delivery as well as logistics
without interruption or make timely and appropriate adjustments, or fail to ensure that our
products and services meet our and our customers’ and consumers’ requirements and are
delivered on time and in sufficient volumes.
Our product manufacturing, service creation and delivery as well as logistics are complex, require
advanced and costly equipment and include outsourcing to third parties. These operations are
continuously modified in an effort to improve efficiency and flexibility of our manufacturing, service
creation and delivery as well as logistics and to produce, create and distribute continuously changing
volumes. We may experience difficulties in adapting our supply to meet the changing demand for our
products, both ramping up and down production at our facilities as needed on a timely basis;
maintaining an optimal inventory level; adopting new manufacturing processes; finding the most
timely way to develop the best technical solutions for new products; managing the increasingly
complex manufacturing process for our highend products, particularly the software for those
products; or achieving manufacturing efficiency and flexibility, whether we manufacture our products
and create our services ourselves or outsource to third parties. We may also face challenges in
retooling our manufacturing processes to accommodate the production of devices in smaller lot sizes
to customize devices to the specifications of certain mobile networks operators or to comply with
regional technical standards. Further, we may experience challenges in having our services fully
operational at the time they are made available to customers and consumers, including issues related
to localization of the services to numerous markets and to the integration of our services with, for
example, billing systems of network operators.
We may also experience challenges caused by third parties or other external difficulties in connection
with our efforts to modify our operations to improve the efficiency and flexibility of our
manufacturing, service creation and delivery as well as logistics, including, but not limited to, strikes,
purchasing boycotts, public harm to the Nokia brand and claims for compensation resulting from our
decisions on where to locate our manufacturing facilities and business. Such difficulties may have a
material adverse effect on our business and results of operations and may result from, among other
things, delays in adjusting or upgrading production at our facilities, delays in expanding production
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