NOK » Topics » Competition-Nokia Siemens Networks

This excerpt taken from the NOK 20-F filed Mar 20, 2008.
Competition—Nokia Siemens Networks
 
In 2007, the competitive environment changed significantly in the market for mobile and fixed networks infrastructure and related services with the emergence of the merged Alcatel-Lucent and the formation of Nokia Siemens Networks. As a result, together with Ericsson and Huawei, there are now four major global players leading the network infrastructure market that offer a portfolio covering both equipment and services.
 
Our principal competitors in network infrastructure include Alcatel-Lucent, Cisco, Ericsson, Huawei, Motorola, NEC, Nortel and ZTE. In services, competition is from both traditional as well as non-traditional telecommunications players such as Accenture, HP and IBM. HP is active in the service delivery platform market and IBM is active, for example, in the billing and data center businesses. In addition to these companies, there are many other companies such as Fujitsu, Juniper, Samsung and Tellabs, which have a narrower scope in terms of served regions and business areas.
 
Conditions in the market for mobile and fixed networks infrastructure and related services remain challenging. Despite strong volume growth globally in infrastructure equipment in 2007, volume growth was significantly offset by equipment price erosion, a maturing of industry technology and intense price competition. In addition, consolidation among network operators has increased the need for scale, which is continuing on a regional basis. 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


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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 accelerate, especially with the sharp growth in the number of mobile subscribers in markets where it is not economically feasible to build a fixed network.
 
See “Item 3.D Risk Factors—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 following sections describe matters related to both Nokia’s devices business and Nokia Siemens Networks.
 
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