Nokia 2010 Annual Report Download - page 28

on our own and mobile network operators’ and distributors’ ability to increase the sales volumes of
lower cost mobile devices and on mobile network operators to offer affordable tariffs and tailored
mobile network solutions designed for a low total cost of ownership. In highly penetrated markets,
we are more dependent on our own and mobile network operators’ ability to successfully introduce
valueadded products, such as smartphones that drive the upgrade and replacement of devices, as
well as ownership of multiple devices. We are also dependent on developers’ interest and success in
creating valueadded applications and other content in our products to achieve differentiation and
additional consumer demand. NAVTEQ is dependent on the development of a wide variety of products
that use its data, the availability and functionality of such products and the rate at which consumers
and businesses purchase those products. Nokia Siemens Networks is dependent on the pace of
investments made by mobile network operators and service providers in network infrastructure and
related services. If we and the other market participants are not successful in our attempts to
increase subscriber numbers, stimulate increased usage or drive upgrade and replacement sales of
mobile devices and develop and increase demand for valueadded services, or if mobile network
operators and service providers invest in the related infrastructure and services less than anticipated,
our business and results of operations could be materially adversely affected.
As we are a global company with sales in most countries of the world, our sales and profitability are
dependent on general economic conditions globally and regionally. The traditional mobile
communications industry has matured to varying degrees in different markets and, consequently, the
industry is more vulnerable than before to the negative impacts of deteriorations in global economic
conditions. Although the overall economic environment improved during 2010, in comparison to
2009, there still can be no assurances that a sustainable global recovery is underway or about the
impact and timing of any such recovery in the various market where we do business. Continued
uncertainty or deterioration in global economic conditions may result in our current and potential
customers and consumers postponing or reducing spending on our products. In addition, mobile
network operators may reduce the device subsidies that they offer to the consumers or attempt to
extend the periods of contracts that obligate the consumer to use a certain device and postpone or
reduce investment in their network infrastructure and related services. The demand for digital map
information and other locationbased content by automotive and mobile device manufacturers may
decline in relation to any further contraction of sales in the automotive and consumer electronics
industry.
In addition, any further deterioration in the global or regional economic conditions may:
• Limit the availability of credit or raise the interest rates related to credit which may have a
negative impact on the financial condition, and in particular on the purchasing ability, of some
of our distributors, independent retailers and network operator customers and may also result
in requests for extended payment terms, credit losses, insolvencies, limited ability to respond
to demand or diminished sales channels available to us.
• Cause financial difficulties for our suppliers and collaborative partners which may result in their
failure to perform as planned and, consequently, in delays in the delivery of our products.
• Increase volatility in exchange rates which may increase the costs of our products that we may
not be able to pass on to our customers and result in significant competitive benefit to certain
of our competitors that incur a material part of their costs in other currencies than we do;
hamper our pricing; and increase our hedging costs and limit our ability to hedge our
exchange rate exposure.
• Result in inefficiencies due to our deteriorated ability to appropriately forecast developments
in our industry and plan our operations accordingly, delayed or insufficient investments in new
market segments and failure to adjust our costs appropriately.
• Cause reductions in the future valuations of our investments and assets and result in
impairment charges related to goodwill or other assets due to any significant
underperformance relative to historical or projected future results by us or any part of our
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