Post on 18-Aug-2018
1 © 2006 Nokia
Nokia in North America
Tim EckersleySenior Vice President
Customer and Market Operations
2 © 2006 Nokia
Wireless Industry Growth Expected To SlowSlowdown Driven By Saturation And Declining ARPUs
0
50
100
150
200
250
300
2001
2002
2003
2004
2005
2006
E20
07E
2008
E20
09E
2010
E
0
20
40
60
80
100
120
140
160
180# subs(M)
Subscriber and revenue growth expected to slow to ~2-4% annual growth...
Revenue($B)
Revenue# Subs
CAGR ’01-’05 CAGR ’06-’10
10.5%14.7% 3.7%
2.4%
Industry subscriber and revenue growth 2001-2010
Source: IDC U.S. Wireless Consumer 2006-2010 Forecast; Strategy Analytics Wireless Operator Performance Benchmarking, March 2006; Bear Stearns U.S. Wireless Market, April 2006
• 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 2001-2006
• Industry recently performing well along key dimensions, with strong churn and data revenue growth
• National Retailers Have ~16% ofwireless market...majority of their sales are prepaid products with 41% CAGR
• Carriers and non-traditional competitorspushing industry slowly towards convergence
3 © 2006 Nokia
USA Market Subscription Growth Forecast
0
30
60
90
120
150
180
210
240
270
2002 2003 2004 2005 2006E 2007E0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Subscriptions Growth
(M) Subscribers Subscriber Growth
Source: Nokia estimates
4 © 2006 Nokia
USA Market Replacement Volume Forecast
-10
10
30
50
70
90
110
130
150
2002 2003 2004 2005 2006E 2007E 0%
5%
10%
15%
20%
25%
30%
35%
40%
Volume Growth
(M) Volume Replacement Growth
Source: Nokia estimates
5 © 2006 Nokia
0
20
40
60
80
100
120
140
160
180
200
2001
2002
2003
2004
2005
2006
E20
07E
2008
E20
09E
2010
E20
11E
2012
E
(in m
illio
ns)
0%5%10%15%20%25%30%35%40%45%50%55%60%65%70%
Volume Total renewal rate
USA Replacement Volume Forecast
Replacement rates are strong and with higher ASP
0
20
40
60
80
100
0 50 100
Handset prices by buyer type, US Marketg
Pricebracket(%)
$75–99
>$200
<$50
$100–149
$50–74
$150–199
Upgraders
ReplacementFirsttime Other
56%
42%
…and result in sales of higher value handsets with advanced features and style
Upgrade & replacement sales increasingly dominate volume sales…
Source: Nokia Market Analysis
6 © 2006 Nokia
Significant 3G Device Growth in US Market
0
50
100
150
200
2003 2004 2005 2006E 2007E
Mar
ket V
olum
e (m
)
WCDMA
DO
GSM
CDMA
iDen
TDMA
Source: Nokia estimates
<10%
7 © 2006 Nokia
Convergence Drives Carrier Strategies
We are uniquely qualified to deliver “three screen”
services
Educating consumers is a top priority
TVInternetWireless
Experiences
Multi-radio devices
Enabling infrastructur
eVideoVoice
Internet
Messaging
Unified Core
Convergence
8 © 2006 Nokia
Distribution landscape
0%20%40%60%80%
100%
Q403 Q204 Q404 Q205 Q405 Q206
Carrier Controlled Carrier Influenced
Source: Telephia 2Q06 Device Report
Operator Controlled vs. Influenced Distribution Channels
Operators have continued to dominate the distribution landscape…
• 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
9 © 2006 Nokia
Carriers Rely On Multiple Channels To Reach Customers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Q4 2003 Q2 2004 Q4 2004 Q2 2005 Q4 2005 Q2 2006
COR + Exclusive agent
E-store
National Retail(1)
Customer Service
Other OnlineKioskNon. excl dealersOther
Channel Size Trend Q4 ’03-Q2 ‘06
Source: Telephia US Device report Q2 06
10 © 2006 Nokia
Working with Carriers to maximize National Retail
Nokia
National Retailer
Nokia phones
proposed
CarrierNRO / NAM
filter
NRO filter
Nokia phones at Retail
CarrierSelection
Carrierportfolio
SlottedNokia phones
Develop fact based value proposition
Link products to actual retail segments
Win-win business case-incremental 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
Carrier
11 © 2006 Nokia
Leveraging Share of Voice is Critical in North America
$636
$763
$840
$30
$855
$704
$646
$742
$641
$615
$605
$40$81
$28$37$24$69
$24$36$28
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2'05 Q3'05 Q4'05 Q1'05 Q2'06
Total Carrier Spend Total Manufacturer Spend
Carrier vs. Manufacturer Media Spend (M$)
Milli
ons
Source: Telephia Q2’06 Ad Insights
12 © 2006 Nokia
USA Business model remains largely the same
Handset subsidies
Retail commissions
Operator influenced
distribution
Device locking
Current market changes are unlikely to
change fundamental industry forces
13 © 2006 Nokia
Total Channel Management Capability
Cingular Verizon Wireless
T-Mobile USA
Sprint-Nextel
USA Market
Walmart
Best Buy
Radio Shack
Dealer Agents
MVNO
B2B
E-Store
Carrier Online
Core Retail
Convergence
•Dynamic interaction between channels
•Increasing penetration and replacement market alters business drivers
•From product sell-in to total channel understanding
CON
SUM
ER SEGM
ENTATIO
N
14 © 2006 Nokia
Committed to Winning in North America
Investing in New Technologies
Joint Portfolio Creation NA Dedicated R&D
Shared Portfolio
Vision
15 © 2006 Nokia