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 electro-

mechanical 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 N-
Gage 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 Acquisition Target Nokia Unit

Motally Inc. Mobile

September 1, 2010
Solutions

April 9, 2010 Novarra, Inc. Services

April 9, 2010 MetaCarta Inc. Services

September 28, Dopplr Services

2009

September 11, Plum Services

2009

August 5, 2009 cellity Services

February 9, 2009 bit-side GmbH Services

Symbian Nokia
December 2, 2008
Corporation

November 4, 2008 OZ Communications Services &

 Software

PLAZES Services &

July 15, 2008
Software

Nokia
July 10, 2008 NAVTEQ
Corporation

June 17, 2008 Trolltech Devices

Avvenu Enterprise
December 4, 2007
solutions

Enpocket Nokia
October 8, 2007
Corporation

July 24, 2007 Twango Multimedia

October 16, 2006 Loudeye Corp. Multimedia

October 12, 2006 gate5 AG Multimedia

June 30, 2006 LCC International's U.S. deployment business Networks

Intellisync Corp. Enterprise

February 10, 2006
Solutions

Metrowerks Corporation Nokia

October 18, 2004
Corporation

November 3, 2003 Tahoe Networks Nokia Networks

Sega.com Inc. Nokia Mobile

August 19, 2003
Phones

April 22, 2003 Eizel Technologies(TM) Nokia Internet

 Communications

May 22, 2002 Redback Networks Inc. Nokia Networks

July 25, 2001 Amber Networks Inc. Nokia Networks

F5 Networks Inc. Nokia Internet

June 28, 2001
Communications

Ramp Networks Inc. Nokia Internet

December 7, 2000
Communications

NGI Industrial (NGI) Nokia Mobile

October 20, 2000
Phones

August 8, 2000 DiscoveryCom Inc. Nokia Networks

Network Alchemy Inc. Nokia Internet

February 1, 2000
Communications

Security software business from TeamWARE Nokia Wireless

December 13,
Group Network
1999
Solutions

Telekol Group Nokia Internet

October 22, 1999
Communications

September 2, 1999 Rooftop Communications Corp Nokia Networks

June 30, 1999 Aircom International Nokia Networks

R&D units from TeamWARE Group Nokia Mobile

May 14, 1999
Phones

Nokia Wireless
InTalk Corp
February 18, 1999 Business
Communications
February 16, 1999 Diamond Lane Communications Nokia Networks

December 18, Vienna Systems Corp Nokia Internet

1998 Communications

September 17, NE-Products Oy Nokia Mobile

1998 Phones

Nokia
User Interface Design
August 20, 1998 Communications
Products

Matra Nortel Communications Nokia Mobile

June 25, 1998
Phones

December 9, 1997 Ipsilon Networks Inc Nokia Networks

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