Nokia 2012 Annual Report Download - page 29

could have a material adverse effect on our financial condition and results of operations and/or our
ability to access affordable financing on terms satisfactory to us. For a more detailed discussion of our
liquidity and capital resources, see Item 5B. “Liquidity and Capital Resources” and Note 34 of our
consolidated financial statements included in Item 18 of this annual report.
Our ability to maintain and leverage our traditional strengths in the mobile products market
may be impaired if we are unable to retain the loyalty of our mobile operator and distributor
customers and consumers as a result of the implementation of our strategies or other factors.
We have a number of competitive strengths that have historically contributed significantly to our sales
and profitability. These include our scale, our differentiating brand, our world-class manufacturing and
logistics system, the industry’s largest distribution network and our strong relationships with our mobile
operator and distributor customers. Going forward, these strengths are critical core competencies that
we bring to the partnership with Microsoft and the implementation of our Windows Phone smartphone
strategy. Our ability to maintain and leverage these strengths also continues to be important to our
competitiveness in the feature phone market. Competing smartphone platforms and vendors have
captured increased market share while our position has suffered, leading for instance to a reduction of
our bargaining power and our influence with operators and distributors to make decisions that are
favorable to us. Our loss of market share has also eroded our perceived strength in the smartphone
market by consumers, which may lead consumers to prefer other brands.
As discussed above, the Microsoft partnership and the adoption of Windows Phone as our primary
smartphone platform are subject to certain risks and uncertainties. Several of those risks and
uncertainties relate to whether our mobile operator and distributor customers and consumers will be
satisfied with our current strategy and partnership with Microsoft going forward. If those risks
materialize and mobile operator and distributor customers and consumers as a consequence reduce
their support and purchases of our mobile products, this would reduce our market share and net sales
and in turn may erode our scale, brand, manufacturing and logistics, distribution and customer
relations. The erosion of those strengths would impair our competitiveness in the mobile products
market and our ability to execute successfully our strategy and to realize fully the expected benefits of
the Microsoft partnership.
Also, as result of market developments, competitors’ actions or other factors within or out of our
control, we may not be able to maintain these competitive strengths that we have benefited from
historically. It is also possible that such strengths or some of them become less relevant in the future or
are replaced by other types of strengths required for future success in the mobile products market.
If any of the companies we partner and collaborate with, including Microsoft, were to fail to
perform as planned or if we fail to achieve the collaboration or partnering arrangements needed
to succeed, we may not be able to bring our mobile products or location-based or other
services to market successfully or in a timely way.
We are increasingly collaborating and partnering with third parties to develop technologies and
products for our mobile devices. Additionally, we have outsourced various functions to third parties and
are relying on them to provide certain services to us. For instance, in early 2013 we announced plans
to streamline our IT organization including the transfer of certain activities and employees to
HCL Technologies and TATA Consultancy Services. These arrangements involve the commitment by
each party of various resources, including technology, research and development efforts, services and
personnel. Today, mobile products are developed in an ecosystem of multiple partnerships with
different industry participants where our ability to collaborate successfully with the right partners is
critical to our success in creating and delivering mobile products that are preferred by our customers
and consumers. Although the objective of the collaborative and partnering arrangements is a mutually
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