Nokia
Content
Nokia has played a pioneering role in the growth of cellular technology in India, starting with the first-ever cellular call a decade ago, made on a Nokia mobile phone over a Nokia-deployed network. Nokia started its India operations in 1995, and presently operates out of offices in New Delhi, Mumbai, Kolkata, Jaipur, Lucknow, Chennai, Bangalore, Pune and Ahmedabad. The Indian operations comprise of the handsets business; R&D facilities in Bangalore and Mumbai; a manufacturing plant in Chennai and a Design Studio in Bangalore. Over the years, the company has grown manifold with its manpower strength increasing from 450 people in the year 2004 to over 15000 employees in March 2008 (including Nokia Siemens Networks). Today, India holds the distinction of being the second largest market for the company globally.
History of Nokia:
1. Nokia’s first century (1865-1967) 2. The Journey into Telecommunications (1968-1991) 3. Focusing on Telecommunications (1992-1999)
1. Nokia’s first century (1865-1967): Nokia's history starts in 1865, when engineer Fredrik Idestam established a wood-pulp mill in southern Finland and started manufacturing paper. Due to the European industrialization and the growing consumption of paper and cardboard Nokia soon became successful. In 1895 Fredrik Idestam handed over the reins of the company to his son-in-law Gustaf Fogelholm. Nokia's products were exported first to Russia and then to the UK and France. The Nokia factory attracted a large workforce and a small community grew up around it. A community called Nokia still exists on the riverbank of Emäkoski in southern Finland.
The Nokia Community attracts other Companies. The hydroelectricity (from the river Emäkoski) which the wood-pulp mill used also attracted the Finnish Rubber Works to establish a factory in Nokia. In the 1920s, the Rubber Works started to use Nokia as their brand name. In addition to footwear (galoshes) and tyres, the company later went on to manufacture rubber bands, industrial parts and raincoats.
Expanding into Electronics After World War II the Finnish Rubber Works bought the majority of the Finnish Cable Works shares. The Finnish Cable Works was a company that had grown quickly due to the increasing need for power transmission and telegraph and telephone networks. Gradually the ownership of the Rubber Works and the Cable Works companies consolidated. In 1967 the companies were merged to form the Nokia Group (link to Nokia company logos).
The Finnish Cable Works had manufactured cables for telegraph and telephone networks and in the 1960 they establishmed the Cable Works´Electronics department. At this time the seeds of Nokia's global success in telecommunications were planted. In 1967, when the Nokia Group was formed, Electronics generated three percent of the Group's net sales and provided work for 460 people.
2. The Journey into Telecommunications (1968-1991): Nokia´s Cable Work's Electronics department started to conduct research into semiconductor technology in the 1960´s. This was the beginning of Nokia‘s journey into telecommunications.
In the early 1970s, the majority of telephone exchanges were electromechanical analog switches. Nokia began developing the digital switch (Nokia DX 200) which became a success. Nokia DX 200, which was equipped with high-level computer language and Intel microprocessors
gradually evolved into the multifaceted platform that is still the basis for Nokia's network infrastructure today. At the same time, new legislation allowed the Finnish telecommunications authorities to set up a mobile network for car phones that was connected to the public network. The result was Nordic Mobile Telephony (NMT). Opening in 1981, NMT was the world's first multinational cellular network. During the following decade, NMT was introduced in many other countries and launched the rapid expansion of the mobile phone industry. At the end of the 1980s a common standard for digital mobile telephony was developed. This standard is known as GSM (Global System for Mobile Communications). In 1991 Nokia made agreements to supply GSM networks to nine European countries and by August 1997 Nokia had supplied GSM systems to 59 operators in 31 countries. New Products During the 1980s, Nokia's operations rapidly expanded to new business sectors and products. The strategy was to expand rapidly on all fronts. In 1988, Nokia was a large television manufacturer and the largest information technology company in the Nordic Countries.
3. Focusing on Telecommunications (1992-1999): During the deep recession in Finland at the beginning of the 1990s, the telecommunications and mobile phones divisions were the supporting pillars of the Nokia. Despite the depth of the recession, Nokia came to its feet quickly as the company started streamlining its businesses. In May 1992 Nokia made the strategic decision to divest its non-core operations and focus on telecommunications. The company's 2100 series phone was an incredible success. In 1994, the goal was to sell 500,000 units. Nokia
sold 20 million. It has been rumored that a group of businessmen tried to offer Nokia to the swedish telecom company Ericsson during the recession (1990´s)! Today, Nokia is a world leader in digital technologies, including mobile phones, telecommunications networks, wireless data solutions and multimedia terminals.
Nokia Inside:
Devices business Nokia has established itself as the market and brand leader in the mobile devices market in India. The company has built a diverse product portfolio to meet the needs of different consumer segments and therefore offers devices across five categories i.e. Entry, Live, Connect, Explore and Achieve. These include products that cater to first time subscribers to advanced business devices and high performance multimedia devices for imaging, music and gaming. Nokia has been working closely with operators in India to increase the geographical coverage and lower the total cost of ownership for consumers. Today, Nokia has one of the largest distribution network with presence across 1,30,000 outlets. In addition, the company also has Nokia Priority Dealers across the country and Nokia ‗Concept stores‘ in Bangalore, Delhi, Jaipur, Hyderabad, Chandigarh, Ludhiana, Chennai, Indore and Mumbai to provide customers a complete mobile experience. Services business With the global launch of Ovi, the company's Internet services brand name, Nokia is renewing itself to be at the forefront of the convergence of internet and mobility. From being a product centric company, Nokia is now focusing to become solutions centric. The strategic shift is built on Nokia‘s bid to retain consumers and empower Nokia device owners to realise the full potential of the Internet. Nokia will build a suite of Internet based services like Nokia Maps, the Nokia Music Store and Nokia NGage around its Ovi brand.
Infrastructure business Nokia Siemens Networks is a leading global enabler of communications services. The company provides a complete, well-balanced product portfolio of mobile and fixed network infrastructure solutions and addresses the growing demand for services with 20,000 service professionals worldwide. Its operations in India include Sales & Marketing, Research & Development, Manufacturing and Global Networks Solutions Centre. Headquartered in Gurgaon, Nokia Siemens Networks has 47 offices and presence in over 170 locations across the country. R & D centers Nokia has three R&D centres in India, one each in Bangalore and Mumbai. The centres are focused on next-generation packet-switched mobile technologies and communications solutions to enhance corporate productivity. Currently Nokia has 1000 people working on various R&D projects. Of the three, the Bangalore R&D centre is the largest Nokia site in India. It was established in 2001 with the acquisition of Amber Networks. Over the years it has played a pivotal role in the development of new applications, software platforms and chipsets for high-end Nokia mobile devices. The facility today houses over 1200 employees across all teams, The mission of the R&D centre is to become an innovation hub by leading the internet revolution and making its operating platform the preferred choice. There is a strong intent to make it a growth site for Nokia through development of knowledge, resource and infrastructure building. To achieve this, the centre encourages and fosters an environment that encourages people to be connected to social networks; flexibility, sharing of best practices and spawning of new ideas with both internal and external customers. There have been other key initiatives which have contributed significantly to the overall development of products and services. An example is S60 Webservices and Webvideo programs have qualified to the semi – finals in the Product Excellence Category of the Nokia Quality Award 2008. At a broader perspective, the centre has been driving operational excellence and innovation in hardware, software and internet services and today has to its credit several great accomplishments. Going forward the Bangalore R&D centre will continue to drive operational excellence and focus on several innovative initiatives. It will continue to build and foster an ecosystem of Architects and Product Managers, while delivering key technology programs to improve S60 competitiveness.
Design Studio Nokia has set up its first Design Studio in Bangalore in partnership with Srishti School of Art, Design and Technology. The first of its kind, the design studio will give Nokia designers and India‘s talented youth the opportunity to work together on new design ideas for India and the global markets. Manufacturing in India As the global leader in mobile communications, Nokia is committed towards developing its manufacturing infrastructure and establishing a global sourcing network. The Nokia India manufacturing facility located in Sriperumbudur, Chennai is Nokia's tenth mobile device production facility globally and has been created in line with Nokia's global philosophy of developing world class manufacturing systems that enable best-in-class quality, lowest cost, world class responsiveness, just in time delivery and a challenging and joyful work environment. Factory Highlights
The factory construction from ground breaking to manufacturing of the first product took 5 months Started with 550 people in January 2006, and grown to 8000 people
Spread over an area of 210.87 acres, Nokia started its operations with 550 employees in January 2006 and today boasts of 8000 employees, 70 percent of whom are women. Currently the factory exports to 50+ countries in South East Asia, Middle East, Africa, Australia and New Zealand, other than catering to the demands of the domestic market. Nokia's manufacturing facility in India reiterates its commitment to the fast growing Indian telecommunications market. The Chennai facility has been built keeping in mind Nokia's commitment to employee safety and in compliance with environmental standards. The quality management and safety systems at the Nokia manufacturing facility in Chennai are world class. Nokia lays special emphasis on the well being of its employees and the Chennai manufacturing site has a highly motivating work environment that is designed to sustain a large & diverse talent pool. Nokia's employee practices are committed to ethical conduct, full compliance to applicable national and international laws and respect for human rights in the spirit of internationally recognized international labour standards in the ILO conventions, the United Nations' Universal Declaration of Human Rights and the Convention on Rights of the Child.
Nokia Telecom Park Chennai was selected as the location for the Nokia Telecom Industry Park due to the availability of skilled labor, support from the state government and the presence of good logistics connections. The mission of the Nokia Telecom Industry Park is to create a network of co-located and co-dependent partners that operate at world class standards and manufacture high quality products. Developing the Nokia Telecom Industry Park in Chennai into a world class high-tech industrial zone is an important part of Nokia's global manufacturing and R&D network strategy. The Telecom Industry Park not only underlines Nokia's successful cooperation with the Indian government but also represents a unique and optimized business model that will provide growth opportunities for all parties in the value chain. The 210.87 acres of land in the Telecom Industry Park provides Nokia with the benefits of a pollution free environment, in-house customs clearance, and uninterrupted power supply. With Nokia as the key enabler, the Telecom Park is expected to attract about 8 global and domestic component suppliers and service providers and create more than 30,000 jobs when it is in full operation. This Nokia Telecom Park will ensure that the Nokia India Chennai factory has a consistent supply of lowest total cost material and services from reliable, collaborative sources of global and local suppliers. Nokia Telecom Industry Park Construction update and facts
Size - 210.87 acres External fencing around Nokia Telecom Industry Park - 5.7 km in length Area of main building: 30,748 m2 Total amount of structural steel used in factory construction 2500 t Total Capacity of under ground water sump at factory 450 m3 Project Safety target achieved - One Million man hours without Lost Time Injury
The Nokia Telecom Park also has made significant progress with 7 suppliers already signed up. These include Salcomp, Aspocomp, Foxconn, Perlos, Jabil, Laird and Wintek. Of these, 2 suppliers have already started shipping to Nokia Chennai viz., Salcomp and Perlos. The Park will strengthen Nokia's delivery capabilities with added efficiencies and flexibility.
Nokia has been the engine of the investment train in Chennai's manufacturing corridor. Many electronics manufacturing companies have announced plans to come to the city since Nokia's establishment. The total impact of the Nokia SEZ can be measured only by an assessment of the actual potential realized – encompassing construction, direct employment and services opportunities that are sure to come in response to the rising headcounts. Since the launch, the Nokia facility and the Telecom Park have not only met the targets set at the beginning, but created an extremely bullish atmosphere in the Sriperumbudur manufacturing corridor. Nokia will continue to play a key and leading role in the development of this region.
Nokia’s six-year journey to becoming an efficient and effective center-led supply management organization:
The $34 billion Euro mobile communications giant began its transformation initiative late in 2000. At the time, the supply management organization was highly decentralized with little spend leverage or process alignment across its four business units or geographies. Faced with global competition and pressures to reduce costs and increase innovation, Nokia set out to improve the efficiency and effectiveness of its supply management operations. Alf Noto, Vice President of Indirect Sourcing at Nokia, said his organization set the following three-year plan:
Reduce supply costs by $300 million Euro Better align supply strategies with business requirements Reduce purchasing operation and transaction costs Better integration supply management with supply chain management and product creation
―We recognized that a more centralized organizational structure was the way to drive and sustain value,‖ said Noto. However, he added that Nokia also recognized the need to support local requirements and to leverage expertise and infrastructure across business units and regions. Nokia‘s transformation plan was defined along five structural dimensions:
1. Geographical distribution. Noto said Nokia wanted to have centrally defined processes and global spend leverage with geographically distributed support and exectuion. 2. Category aggregation strategies. While standardization the goal, Nokia recognized the need to support variations by global, regional, business, and category lines. 3. Process ownership and development for both strategic sourcing and transaction procurement operations. 4. Strategy. Nokia knew it needed to better define and align its functional strategies and goals. 5. Reporting lines. Nokia set out to both improve the supply management reporting to senior corporate executives as well as to better align the function with invididual business groups and other functional stakeholders, such as supply chain and product development. Said Noto: ‖Which structural dimensions you employ are influenced by the size and speed of your transformation goals, supply market dynamics, stakeholder location and organization, business growth and expansion plans, and the degree of localization required.‖ Nokia set out on a path to transition to what Noto refers to as ―a centralized organization with a strong matrix‖ across regions. This structure is most commonly known as the center-led organization, which blends spend leverage, process standardization, and knowledge- and resource-sharing attributes of centralization with the local empowerment and execution characteristics of the decentralized model. (Transitioning to a center-led or centralized organizational structure is one of the Top 5 Supply Strategies enterprises have prioritized for the next two years.) Nokia did not make the jump to the center-led model in one fell swoop. Instead, the company‘s supply management organization evolved through three organizational phases before reaching its goal: global sourcing, regional, and center-led. I have prepared the below table to summarize the timing, attributes, and intent of each phase (click to enlarge). During the first phase of its transformation, Nokia achieved its three-year goals — a year ahead of schedule. The company has since driven considerable improvements in supply costs, operational efficiencies, and spend leverage. Nokia‘s approach offers a sound roadmap for other organizations looking to make the jump to a center-led supply management structure.
Some firsts for Nokia in India
1995 – First mobile phone call made in India on a Nokia phone on a Nokia network 1998 - Saare Jahaan Se Acchha, first Indian ringtone in a Nokia 5110 2000 - First phone with Hindi menu (Nokia 3210) 2002 - First Camera phone (Nokia 7650) 2003 - First Made for India phone, Nokia 1100 2004 - Saral Mobile Sandesh, Hindi SMS on a wide range of Nokia phones 2004 - First Wi-fi Phone- Nokia Communicator (N9500) 2005 – Local UI in additional local language 2006 – Nokia manufacturing plant in Chennai 2007 – First vernacular news portal
Some Achievements for Nokia
Ranked No 1 Most Trusted Brand Survey by Brand Equity, 2008 Ranked the No 1. MNC in India by Businessworld, India‘s leading business weekly, 2006 Ranked as the No. 1 telecommunications equipment vendor in the country by Voice & Data for five consecutive years –2008, 2007, 2006,2005 and 2004 Ranked as the 9th most powerful brand by Millward Brown‘s BrandZ 2008 Ranked world‘s 4th most valuable brand by Interbrand, 2007 Ranked Asia‘s most trusted brand by the Media-Synovate, 2006
Nokia will empower everyone to share and make the most of their life by offering irresistible personal experiences.
Nokia vision of the future
"Connecting people" is now connecting people to what matters - whatever that means for each person - giving them the power to make the most of every moment, everywhere, any time. Connecting the "we" is more powerful than just the individual. That's how Nokia is needed to help make the world a better place for everyone.
Nokia’s strategy
2007-08: Decision to expand into service: Expand into services area and become more like an internet company. Set up structural capabilities to achieve the objective. 2008-2009: Transformation Planning: Transform into leading mobile solutions provider: Vision and Transformation path and goals defined Directional strategic business objectives defined
To do this we will become the leading provider of mobile solutions. Nokia‘s solutions strategy leverages one of our greatest assets - a portfolio of outstanding devices, with unmatched scale and geographic reach. Nokia couple them with smart services, integrated via an intuitive and seamless user experience. Nokia differentiate these solutions offerings based on our in-depth consumer understanding, with a strong focus on social location (people and places). In a world where connecting people to what matters, empowers them to make the most of every moment. Nokia‘s ambition is to become the leading provider of mobile solutions
Acquisitions
Acquisitions by Nokia company from 1997 to 2010. During the past few years Nokia has been actively acquiring companies with interesting new technologies and competencies, including also investments in minority positions. All of these acquisitions and investments were targeted to enhance Nokia's ability to help create the Mobile World. Date September 1, 2010 April 9, 2010 April 9, 2010 September 28, 2009 September 11, 2009 August 5, 2009 February 9, 2009 December 2, 2008 November 4, 2008 Acquisition Target Motally Inc. Novarra, Inc. MetaCarta Inc. Dopplr Plum cellity bit-side GmbH Symbian OZ Communications Nokia Unit Mobile Solutions Services Services Services Services Services Services Nokia Corporation Services & Software
July 15, 2008 July 10, 2008 June 17, 2008 December 4, 2007 October 8, 2007 July 24, 2007 October 16, 2006 October 12, 2006 June 30, 2006 February 10, 2006 October 18, 2004 November 3, 2003 August 19, 2003 April 22, 2003
PLAZES
Services & Software Nokia Corporation Devices Enterprise solutions Nokia Corporation Multimedia Multimedia Multimedia Networks Enterprise Solutions Nokia Corporation Nokia Networks Nokia Mobile Phones Nokia Internet Communications
NAVTEQ Trolltech Avvenu Enpocket Twango Loudeye Corp. gate5 AG LCC International's U.S. deployment business Intellisync Corp. Metrowerks Corporation Tahoe Networks Sega.com Inc. Eizel Technologies(TM)
May 22, 2002 July 25, 2001 June 28, 2001 December 7, 2000 October 20, 2000 August 8, 2000 February 1, 2000 December 13, 1999 October 22, 1999 September 2, 1999 June 30, 1999 May 14, 1999
Redback Networks Inc. Amber Networks Inc. F5 Networks Inc. Ramp Networks Inc. NGI Industrial (NGI) DiscoveryCom Inc. Network Alchemy Inc. Security software business from TeamWARE Group Telekol Group Rooftop Communications Corp Aircom International R&D units from TeamWARE Group
Nokia Networks Nokia Networks Nokia Internet Communications Nokia Internet Communications Nokia Mobile Phones Nokia Networks Nokia Internet Communications Nokia Wireless Network Solutions Nokia Internet Communications Nokia Networks Nokia Networks Nokia Mobile Phones Nokia Wireless Business Communications
February 18, 1999
InTalk Corp
February 16, 1999 December 18, 1998 September 17, 1998 August 20, 1998
Diamond Lane Communications Vienna Systems Corp NE-Products Oy
Nokia Networks Nokia Internet Communications Nokia Mobile Phones Nokia Communications Products Nokia Mobile Phones Nokia Networks
User Interface Design
June 25, 1998 December 9, 1997
Matra Nortel Communications Ipsilon Networks Inc
Nokia to remain the market leader … helped by Emerging Market expansion
Nokia the worlds biggest manufacturer of mobile devices , still enjoys a 40% global market share, dwarfing it‘s nearest competition; Motorola , Sony-Ericsson, Samsung, & LG. The company is particularly strong on an international basis, with top market share in practilally all markets served. More importantly, from a MyStockVoice perspective, 80% of sales come from outside the US. With recent advances in 3G licensing in Asia, notably Vietnam, India & China, Nokia looks well set to come out as the real winner from the mobile broadband explosion. The company‘s scale allows it to produce what is now regarded as a commodity product (low-end cell phones) at a much cheaper prices than it‘s competitors. Nokia‘s dominace in the mobile handset market sees it earning roughly 15% profit even on entry-level units, while it‘s most profitable competitor, Samsung, reputedly earns slightly above 13%. Nokia is also working on growing it‘s service offerings, expanding into music & games, whilst adding compatible location based services (LBS)with the recent acquisition of NAVTEQ. The strategy being that Nokia can earn incremental revenue from these services whilst building brand loyalty/customer lock-in, as users become
accustomed to Nokia‘s services & will opt to replace their existing handset & existing services with another Nokia model instead of migrating to a competitor. From a financial point of view, Nokia holds an enviable position. The current balance sheet shows €5.5 billion against about €4.4 billion in debt, 70% of which is in short term notes. Return on capital is pretty impressive to date, since 2004, ROIC is over 160%, & standard return on capital is equally impressive at 75%. Operating margins run at circa 13%, with free cash flow at 9%. For the long term investor, Nokia also has a track record of delivering a dividend yield of close to 4%. That said, the dividend rate was cut by 20% in January to reflect the impact of the gloabl downturn. Nokia is clearly facing some major competition in the high end ―smartphone‖ category, which is judged to be the fastest growing sub-sector of the market. While Nokia is still the world‘s biggest smartphone maker, competitors Apple with the iPhone & Research in Motion with its Blackberry range have both quickly gained market share , whilst Asian manufacturers such as HTC are also proving to be a thorn in the flesh. My take is that if Nokia can crack some key markets in SE Asia, India & China, they will be able to surpass their upstart rivals, although in China, native handset makers will obviously have a first pass; e.g. TD-SCDMA with China Mobile . Nokia has a long track record with Vodafone, Orange & Telefonica, all of whom are increasingly active in Emerging Markets. With a retrospective look at the last quarters results & with the current overly sold price, I am looking at Nokia as a winner, 6 moth personal target price of $18.50 on the ADR
History of Nokia:
1. Nokia’s first century (1865-1967) 2. The Journey into Telecommunications (1968-1991) 3. Focusing on Telecommunications (1992-1999)
1. Nokia’s first century (1865-1967): Nokia's history starts in 1865, when engineer Fredrik Idestam established a wood-pulp mill in southern Finland and started manufacturing paper. Due to the European industrialization and the growing consumption of paper and cardboard Nokia soon became successful. In 1895 Fredrik Idestam handed over the reins of the company to his son-in-law Gustaf Fogelholm. Nokia's products were exported first to Russia and then to the UK and France. The Nokia factory attracted a large workforce and a small community grew up around it. A community called Nokia still exists on the riverbank of Emäkoski in southern Finland.
The Nokia Community attracts other Companies. The hydroelectricity (from the river Emäkoski) which the wood-pulp mill used also attracted the Finnish Rubber Works to establish a factory in Nokia. In the 1920s, the Rubber Works started to use Nokia as their brand name. In addition to footwear (galoshes) and tyres, the company later went on to manufacture rubber bands, industrial parts and raincoats.
Expanding into Electronics After World War II the Finnish Rubber Works bought the majority of the Finnish Cable Works shares. The Finnish Cable Works was a company that had grown quickly due to the increasing need for power transmission and telegraph and telephone networks. Gradually the ownership of the Rubber Works and the Cable Works companies consolidated. In 1967 the companies were merged to form the Nokia Group (link to Nokia company logos).
The Finnish Cable Works had manufactured cables for telegraph and telephone networks and in the 1960 they establishmed the Cable Works´Electronics department. At this time the seeds of Nokia's global success in telecommunications were planted. In 1967, when the Nokia Group was formed, Electronics generated three percent of the Group's net sales and provided work for 460 people.
2. The Journey into Telecommunications (1968-1991): Nokia´s Cable Work's Electronics department started to conduct research into semiconductor technology in the 1960´s. This was the beginning of Nokia‘s journey into telecommunications.
In the early 1970s, the majority of telephone exchanges were electromechanical analog switches. Nokia began developing the digital switch (Nokia DX 200) which became a success. Nokia DX 200, which was equipped with high-level computer language and Intel microprocessors
gradually evolved into the multifaceted platform that is still the basis for Nokia's network infrastructure today. At the same time, new legislation allowed the Finnish telecommunications authorities to set up a mobile network for car phones that was connected to the public network. The result was Nordic Mobile Telephony (NMT). Opening in 1981, NMT was the world's first multinational cellular network. During the following decade, NMT was introduced in many other countries and launched the rapid expansion of the mobile phone industry. At the end of the 1980s a common standard for digital mobile telephony was developed. This standard is known as GSM (Global System for Mobile Communications). In 1991 Nokia made agreements to supply GSM networks to nine European countries and by August 1997 Nokia had supplied GSM systems to 59 operators in 31 countries. New Products During the 1980s, Nokia's operations rapidly expanded to new business sectors and products. The strategy was to expand rapidly on all fronts. In 1988, Nokia was a large television manufacturer and the largest information technology company in the Nordic Countries.
3. Focusing on Telecommunications (1992-1999): During the deep recession in Finland at the beginning of the 1990s, the telecommunications and mobile phones divisions were the supporting pillars of the Nokia. Despite the depth of the recession, Nokia came to its feet quickly as the company started streamlining its businesses. In May 1992 Nokia made the strategic decision to divest its non-core operations and focus on telecommunications. The company's 2100 series phone was an incredible success. In 1994, the goal was to sell 500,000 units. Nokia
sold 20 million. It has been rumored that a group of businessmen tried to offer Nokia to the swedish telecom company Ericsson during the recession (1990´s)! Today, Nokia is a world leader in digital technologies, including mobile phones, telecommunications networks, wireless data solutions and multimedia terminals.
Nokia Inside:
Devices business Nokia has established itself as the market and brand leader in the mobile devices market in India. The company has built a diverse product portfolio to meet the needs of different consumer segments and therefore offers devices across five categories i.e. Entry, Live, Connect, Explore and Achieve. These include products that cater to first time subscribers to advanced business devices and high performance multimedia devices for imaging, music and gaming. Nokia has been working closely with operators in India to increase the geographical coverage and lower the total cost of ownership for consumers. Today, Nokia has one of the largest distribution network with presence across 1,30,000 outlets. In addition, the company also has Nokia Priority Dealers across the country and Nokia ‗Concept stores‘ in Bangalore, Delhi, Jaipur, Hyderabad, Chandigarh, Ludhiana, Chennai, Indore and Mumbai to provide customers a complete mobile experience. Services business With the global launch of Ovi, the company's Internet services brand name, Nokia is renewing itself to be at the forefront of the convergence of internet and mobility. From being a product centric company, Nokia is now focusing to become solutions centric. The strategic shift is built on Nokia‘s bid to retain consumers and empower Nokia device owners to realise the full potential of the Internet. Nokia will build a suite of Internet based services like Nokia Maps, the Nokia Music Store and Nokia NGage around its Ovi brand.
Infrastructure business Nokia Siemens Networks is a leading global enabler of communications services. The company provides a complete, well-balanced product portfolio of mobile and fixed network infrastructure solutions and addresses the growing demand for services with 20,000 service professionals worldwide. Its operations in India include Sales & Marketing, Research & Development, Manufacturing and Global Networks Solutions Centre. Headquartered in Gurgaon, Nokia Siemens Networks has 47 offices and presence in over 170 locations across the country. R & D centers Nokia has three R&D centres in India, one each in Bangalore and Mumbai. The centres are focused on next-generation packet-switched mobile technologies and communications solutions to enhance corporate productivity. Currently Nokia has 1000 people working on various R&D projects. Of the three, the Bangalore R&D centre is the largest Nokia site in India. It was established in 2001 with the acquisition of Amber Networks. Over the years it has played a pivotal role in the development of new applications, software platforms and chipsets for high-end Nokia mobile devices. The facility today houses over 1200 employees across all teams, The mission of the R&D centre is to become an innovation hub by leading the internet revolution and making its operating platform the preferred choice. There is a strong intent to make it a growth site for Nokia through development of knowledge, resource and infrastructure building. To achieve this, the centre encourages and fosters an environment that encourages people to be connected to social networks; flexibility, sharing of best practices and spawning of new ideas with both internal and external customers. There have been other key initiatives which have contributed significantly to the overall development of products and services. An example is S60 Webservices and Webvideo programs have qualified to the semi – finals in the Product Excellence Category of the Nokia Quality Award 2008. At a broader perspective, the centre has been driving operational excellence and innovation in hardware, software and internet services and today has to its credit several great accomplishments. Going forward the Bangalore R&D centre will continue to drive operational excellence and focus on several innovative initiatives. It will continue to build and foster an ecosystem of Architects and Product Managers, while delivering key technology programs to improve S60 competitiveness.
Design Studio Nokia has set up its first Design Studio in Bangalore in partnership with Srishti School of Art, Design and Technology. The first of its kind, the design studio will give Nokia designers and India‘s talented youth the opportunity to work together on new design ideas for India and the global markets. Manufacturing in India As the global leader in mobile communications, Nokia is committed towards developing its manufacturing infrastructure and establishing a global sourcing network. The Nokia India manufacturing facility located in Sriperumbudur, Chennai is Nokia's tenth mobile device production facility globally and has been created in line with Nokia's global philosophy of developing world class manufacturing systems that enable best-in-class quality, lowest cost, world class responsiveness, just in time delivery and a challenging and joyful work environment. Factory Highlights
The factory construction from ground breaking to manufacturing of the first product took 5 months Started with 550 people in January 2006, and grown to 8000 people
Spread over an area of 210.87 acres, Nokia started its operations with 550 employees in January 2006 and today boasts of 8000 employees, 70 percent of whom are women. Currently the factory exports to 50+ countries in South East Asia, Middle East, Africa, Australia and New Zealand, other than catering to the demands of the domestic market. Nokia's manufacturing facility in India reiterates its commitment to the fast growing Indian telecommunications market. The Chennai facility has been built keeping in mind Nokia's commitment to employee safety and in compliance with environmental standards. The quality management and safety systems at the Nokia manufacturing facility in Chennai are world class. Nokia lays special emphasis on the well being of its employees and the Chennai manufacturing site has a highly motivating work environment that is designed to sustain a large & diverse talent pool. Nokia's employee practices are committed to ethical conduct, full compliance to applicable national and international laws and respect for human rights in the spirit of internationally recognized international labour standards in the ILO conventions, the United Nations' Universal Declaration of Human Rights and the Convention on Rights of the Child.
Nokia Telecom Park Chennai was selected as the location for the Nokia Telecom Industry Park due to the availability of skilled labor, support from the state government and the presence of good logistics connections. The mission of the Nokia Telecom Industry Park is to create a network of co-located and co-dependent partners that operate at world class standards and manufacture high quality products. Developing the Nokia Telecom Industry Park in Chennai into a world class high-tech industrial zone is an important part of Nokia's global manufacturing and R&D network strategy. The Telecom Industry Park not only underlines Nokia's successful cooperation with the Indian government but also represents a unique and optimized business model that will provide growth opportunities for all parties in the value chain. The 210.87 acres of land in the Telecom Industry Park provides Nokia with the benefits of a pollution free environment, in-house customs clearance, and uninterrupted power supply. With Nokia as the key enabler, the Telecom Park is expected to attract about 8 global and domestic component suppliers and service providers and create more than 30,000 jobs when it is in full operation. This Nokia Telecom Park will ensure that the Nokia India Chennai factory has a consistent supply of lowest total cost material and services from reliable, collaborative sources of global and local suppliers. Nokia Telecom Industry Park Construction update and facts
Size - 210.87 acres External fencing around Nokia Telecom Industry Park - 5.7 km in length Area of main building: 30,748 m2 Total amount of structural steel used in factory construction 2500 t Total Capacity of under ground water sump at factory 450 m3 Project Safety target achieved - One Million man hours without Lost Time Injury
The Nokia Telecom Park also has made significant progress with 7 suppliers already signed up. These include Salcomp, Aspocomp, Foxconn, Perlos, Jabil, Laird and Wintek. Of these, 2 suppliers have already started shipping to Nokia Chennai viz., Salcomp and Perlos. The Park will strengthen Nokia's delivery capabilities with added efficiencies and flexibility.
Nokia has been the engine of the investment train in Chennai's manufacturing corridor. Many electronics manufacturing companies have announced plans to come to the city since Nokia's establishment. The total impact of the Nokia SEZ can be measured only by an assessment of the actual potential realized – encompassing construction, direct employment and services opportunities that are sure to come in response to the rising headcounts. Since the launch, the Nokia facility and the Telecom Park have not only met the targets set at the beginning, but created an extremely bullish atmosphere in the Sriperumbudur manufacturing corridor. Nokia will continue to play a key and leading role in the development of this region.
Nokia’s six-year journey to becoming an efficient and effective center-led supply management organization:
The $34 billion Euro mobile communications giant began its transformation initiative late in 2000. At the time, the supply management organization was highly decentralized with little spend leverage or process alignment across its four business units or geographies. Faced with global competition and pressures to reduce costs and increase innovation, Nokia set out to improve the efficiency and effectiveness of its supply management operations. Alf Noto, Vice President of Indirect Sourcing at Nokia, said his organization set the following three-year plan:
Reduce supply costs by $300 million Euro Better align supply strategies with business requirements Reduce purchasing operation and transaction costs Better integration supply management with supply chain management and product creation
―We recognized that a more centralized organizational structure was the way to drive and sustain value,‖ said Noto. However, he added that Nokia also recognized the need to support local requirements and to leverage expertise and infrastructure across business units and regions. Nokia‘s transformation plan was defined along five structural dimensions:
1. Geographical distribution. Noto said Nokia wanted to have centrally defined processes and global spend leverage with geographically distributed support and exectuion. 2. Category aggregation strategies. While standardization the goal, Nokia recognized the need to support variations by global, regional, business, and category lines. 3. Process ownership and development for both strategic sourcing and transaction procurement operations. 4. Strategy. Nokia knew it needed to better define and align its functional strategies and goals. 5. Reporting lines. Nokia set out to both improve the supply management reporting to senior corporate executives as well as to better align the function with invididual business groups and other functional stakeholders, such as supply chain and product development. Said Noto: ‖Which structural dimensions you employ are influenced by the size and speed of your transformation goals, supply market dynamics, stakeholder location and organization, business growth and expansion plans, and the degree of localization required.‖ Nokia set out on a path to transition to what Noto refers to as ―a centralized organization with a strong matrix‖ across regions. This structure is most commonly known as the center-led organization, which blends spend leverage, process standardization, and knowledge- and resource-sharing attributes of centralization with the local empowerment and execution characteristics of the decentralized model. (Transitioning to a center-led or centralized organizational structure is one of the Top 5 Supply Strategies enterprises have prioritized for the next two years.) Nokia did not make the jump to the center-led model in one fell swoop. Instead, the company‘s supply management organization evolved through three organizational phases before reaching its goal: global sourcing, regional, and center-led. I have prepared the below table to summarize the timing, attributes, and intent of each phase (click to enlarge). During the first phase of its transformation, Nokia achieved its three-year goals — a year ahead of schedule. The company has since driven considerable improvements in supply costs, operational efficiencies, and spend leverage. Nokia‘s approach offers a sound roadmap for other organizations looking to make the jump to a center-led supply management structure.
Some firsts for Nokia in India
1995 – First mobile phone call made in India on a Nokia phone on a Nokia network 1998 - Saare Jahaan Se Acchha, first Indian ringtone in a Nokia 5110 2000 - First phone with Hindi menu (Nokia 3210) 2002 - First Camera phone (Nokia 7650) 2003 - First Made for India phone, Nokia 1100 2004 - Saral Mobile Sandesh, Hindi SMS on a wide range of Nokia phones 2004 - First Wi-fi Phone- Nokia Communicator (N9500) 2005 – Local UI in additional local language 2006 – Nokia manufacturing plant in Chennai 2007 – First vernacular news portal
Some Achievements for Nokia
Ranked No 1 Most Trusted Brand Survey by Brand Equity, 2008 Ranked the No 1. MNC in India by Businessworld, India‘s leading business weekly, 2006 Ranked as the No. 1 telecommunications equipment vendor in the country by Voice & Data for five consecutive years –2008, 2007, 2006,2005 and 2004 Ranked as the 9th most powerful brand by Millward Brown‘s BrandZ 2008 Ranked world‘s 4th most valuable brand by Interbrand, 2007 Ranked Asia‘s most trusted brand by the Media-Synovate, 2006
Nokia will empower everyone to share and make the most of their life by offering irresistible personal experiences.
Nokia vision of the future
"Connecting people" is now connecting people to what matters - whatever that means for each person - giving them the power to make the most of every moment, everywhere, any time. Connecting the "we" is more powerful than just the individual. That's how Nokia is needed to help make the world a better place for everyone.
Nokia’s strategy
2007-08: Decision to expand into service: Expand into services area and become more like an internet company. Set up structural capabilities to achieve the objective. 2008-2009: Transformation Planning: Transform into leading mobile solutions provider: Vision and Transformation path and goals defined Directional strategic business objectives defined
To do this we will become the leading provider of mobile solutions. Nokia‘s solutions strategy leverages one of our greatest assets - a portfolio of outstanding devices, with unmatched scale and geographic reach. Nokia couple them with smart services, integrated via an intuitive and seamless user experience. Nokia differentiate these solutions offerings based on our in-depth consumer understanding, with a strong focus on social location (people and places). In a world where connecting people to what matters, empowers them to make the most of every moment. Nokia‘s ambition is to become the leading provider of mobile solutions
Acquisitions
Acquisitions by Nokia company from 1997 to 2010. During the past few years Nokia has been actively acquiring companies with interesting new technologies and competencies, including also investments in minority positions. All of these acquisitions and investments were targeted to enhance Nokia's ability to help create the Mobile World. Date September 1, 2010 April 9, 2010 April 9, 2010 September 28, 2009 September 11, 2009 August 5, 2009 February 9, 2009 December 2, 2008 November 4, 2008 Acquisition Target Motally Inc. Novarra, Inc. MetaCarta Inc. Dopplr Plum cellity bit-side GmbH Symbian OZ Communications Nokia Unit Mobile Solutions Services Services Services Services Services Services Nokia Corporation Services & Software
July 15, 2008 July 10, 2008 June 17, 2008 December 4, 2007 October 8, 2007 July 24, 2007 October 16, 2006 October 12, 2006 June 30, 2006 February 10, 2006 October 18, 2004 November 3, 2003 August 19, 2003 April 22, 2003
PLAZES
Services & Software Nokia Corporation Devices Enterprise solutions Nokia Corporation Multimedia Multimedia Multimedia Networks Enterprise Solutions Nokia Corporation Nokia Networks Nokia Mobile Phones Nokia Internet Communications
NAVTEQ Trolltech Avvenu Enpocket Twango Loudeye Corp. gate5 AG LCC International's U.S. deployment business Intellisync Corp. Metrowerks Corporation Tahoe Networks Sega.com Inc. Eizel Technologies(TM)
May 22, 2002 July 25, 2001 June 28, 2001 December 7, 2000 October 20, 2000 August 8, 2000 February 1, 2000 December 13, 1999 October 22, 1999 September 2, 1999 June 30, 1999 May 14, 1999
Redback Networks Inc. Amber Networks Inc. F5 Networks Inc. Ramp Networks Inc. NGI Industrial (NGI) DiscoveryCom Inc. Network Alchemy Inc. Security software business from TeamWARE Group Telekol Group Rooftop Communications Corp Aircom International R&D units from TeamWARE Group
Nokia Networks Nokia Networks Nokia Internet Communications Nokia Internet Communications Nokia Mobile Phones Nokia Networks Nokia Internet Communications Nokia Wireless Network Solutions Nokia Internet Communications Nokia Networks Nokia Networks Nokia Mobile Phones Nokia Wireless Business Communications
February 18, 1999
InTalk Corp
February 16, 1999 December 18, 1998 September 17, 1998 August 20, 1998
Diamond Lane Communications Vienna Systems Corp NE-Products Oy
Nokia Networks Nokia Internet Communications Nokia Mobile Phones Nokia Communications Products Nokia Mobile Phones Nokia Networks
User Interface Design
June 25, 1998 December 9, 1997
Matra Nortel Communications Ipsilon Networks Inc
Nokia to remain the market leader … helped by Emerging Market expansion
Nokia the worlds biggest manufacturer of mobile devices , still enjoys a 40% global market share, dwarfing it‘s nearest competition; Motorola , Sony-Ericsson, Samsung, & LG. The company is particularly strong on an international basis, with top market share in practilally all markets served. More importantly, from a MyStockVoice perspective, 80% of sales come from outside the US. With recent advances in 3G licensing in Asia, notably Vietnam, India & China, Nokia looks well set to come out as the real winner from the mobile broadband explosion. The company‘s scale allows it to produce what is now regarded as a commodity product (low-end cell phones) at a much cheaper prices than it‘s competitors. Nokia‘s dominace in the mobile handset market sees it earning roughly 15% profit even on entry-level units, while it‘s most profitable competitor, Samsung, reputedly earns slightly above 13%. Nokia is also working on growing it‘s service offerings, expanding into music & games, whilst adding compatible location based services (LBS)with the recent acquisition of NAVTEQ. The strategy being that Nokia can earn incremental revenue from these services whilst building brand loyalty/customer lock-in, as users become
accustomed to Nokia‘s services & will opt to replace their existing handset & existing services with another Nokia model instead of migrating to a competitor. From a financial point of view, Nokia holds an enviable position. The current balance sheet shows €5.5 billion against about €4.4 billion in debt, 70% of which is in short term notes. Return on capital is pretty impressive to date, since 2004, ROIC is over 160%, & standard return on capital is equally impressive at 75%. Operating margins run at circa 13%, with free cash flow at 9%. For the long term investor, Nokia also has a track record of delivering a dividend yield of close to 4%. That said, the dividend rate was cut by 20% in January to reflect the impact of the gloabl downturn. Nokia is clearly facing some major competition in the high end ―smartphone‖ category, which is judged to be the fastest growing sub-sector of the market. While Nokia is still the world‘s biggest smartphone maker, competitors Apple with the iPhone & Research in Motion with its Blackberry range have both quickly gained market share , whilst Asian manufacturers such as HTC are also proving to be a thorn in the flesh. My take is that if Nokia can crack some key markets in SE Asia, India & China, they will be able to surpass their upstart rivals, although in China, native handset makers will obviously have a first pass; e.g. TD-SCDMA with China Mobile . Nokia has a long track record with Vodafone, Orange & Telefonica, all of whom are increasingly active in Emerging Markets. With a retrospective look at the last quarters results & with the current overly sold price, I am looking at Nokia as a winner, 6 moth personal target price of $18.50 on the ADR
