Nokia in North America

Transcription

1 Nokia in North America Tim Eckersley Senior Vice President Customer and Market Operations Nokia

2 Wireless Industry Growth Expected To Slow Slowdown Driven By Saturation And Declining ARPUs Subscriber and revenue growth expected to slow to ~2-4% annual growth... # subs (M) Revenue # Subs Industry subscriber and revenue growth E 2007E 2008E CAGR CAGR % 2.4% 14.7% 3.7% 2009E 2010E Revenue ($B) Driven by high saturation in core segments and declining ARPUs Carriers consolidating to derive scale benefits Top 4 carriers increased share from 71% to 83% from Industry recently performing well along key dimensions, with strong churn and data revenue growth Carriers and non-traditional competitors pushing industry slowly towards convergence National Retailers Have ~16% of wireless market...majority of their sales are prepaid products with 41% CAGR Source: IDC U.S. Wireless Consumer Forecast; Strategy Analytics Wireless Operator Performance Benchmarking, March 2006; Bear Stearns U.S. Wireless Market, April Nokia

3 USA Market Subscription Growth Forecast (M) Subscribers Subscriber Growth 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% E 2007E 0% Source: Nokia estimates Nokia Subscriptions Growth

4 USA Market Replacement Volume Forecast (M) Volume Replacement Growth 40% 35% 30% 25% 20% 15% 10% 5% E 2007E 0% Source: Nokia estimates Nokia Volume Growth

5 Replacement rates are strong and with higher ASP Upgrade & replacement sales increasingly dominate volume sales and result in sales of higher value handsets with advanced features and style (in millions) USA Replacement Volume Forecast Volume 2006E 2007E Total renewal rate 2008E 2009E 2010E 2011E 2012E 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Price bracket (%) 56% Handset prices by buyer type, US Marketg 0 Upgraders 50 First 100 Replacement time Other 42% <$50 $50 74 $75 99 $ $ >$200 Source: Nokia Market Analysis Nokia

6 Significant 3G Device Growth in US Market 200 <10% WCDMA Market Volume (m) DO GSM CDMA iden E 2007E TDMA Nokia Source: Nokia estimates

7 Convergence Drives Carrier Strategies Convergence Wireless Internet TV Experiences Multi-radio devices Enabling infrastructur e Voice Messaging Unified Core Video Internet We are uniquely qualified to deliver three screen services Educating consumers is a top priority Nokia

8 Distribution landscape Operators have continued to dominate the distribution landscape 100% 80% 60% 40% 20% 0% Operator Controlled vs. Influenced Distribution Channels Q403 Q204 Q404 Q205 Q405 Q206 Carrier Controlled Carrier Influenced Source: Telephia 2Q06 Device Report MVNO entry has not led to significant disruptions in retail distribution National retail continues to have the most success in prepaid Independent retailers shrink in footprint as Operators partner with exclusive agents and national retail Nokia

9 Carriers Rely On Multiple Channels To Reach Customers Channel Size Trend Q4 03-Q % 90% 80% 70% 60% 50% Other Non. excl dealers Kiosk Other Online Customer Service National Retail (1) E-store 40% 30% 20% 10% COR + Exclusive agent 0% Q Q Q Q Q Q Source: Telephia US Device report Q Nokia

10 Working with Carriers to maximize National Retail Carrier National Retailer Nokia Nokia phones proposed Carrier Selection Carrier portfolio Carrier NRO / NAM filter Slotted Nokia phones NRO filter Nokia phones at Retail Develop fact based value proposition Link products to actual retail segments Win-win business caseincremental volumes to retailer and carrier Leveraging Nokia s strengths and insights along all portions of the value chain to deliver incremental sales in Retail channels and create win-win situations Nokia

11 Leveraging Share of Voice is Critical in North America Carrier vs. Manufacturer Media Spend (M$) $900 $800 $700 $600 $605 $641 $615 $742 $646 $704 $636 $855 $763 $840 Millions $500 $400 $300 $200 $100 $0 $81 $69 $28 $36 $24 $37 $28 $40 $24 $30 Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2'05 Q3'05 Q4'05 Q1'05 Q2'06 Total Carrier Spend Total Manufacturer Spend Nokia Source: Telephia Q2 06 Ad Insights

12 USA Business model remains largely the same Handset subsidies Operator influenced distribution Current market changes are unlikely to change fundamental industry forces Retail commissions Device locking Nokia

13 Total Channel Management Capability USA Market Cingular Verizon Wireless T-Mobile USA Sprint- Nextel Dynamic interaction between channels Increasing penetration and replacement market alters business drivers From product sell-in to total channel understanding Core Retail Carrier Online E-Store B2B MVNO Dealer Agents Radio Shack Best Buy Walmart Convergence CONSUMER SEGMENTATION Nokia

14 Committed to Winning in North America Investing in New Technologies Joint Portfolio Creation NA Dedicated R&D Shared Portfolio Vision Nokia

15 Nokia