Nokia case study
15 Pages
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Nokia case study


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15 Pages


1 © 2006 Nokia ANRT IFRI conférence, 19 septembre 2006. Les réseaux mondiaux d'innovation dans les télécoms. Nokia case ...



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ANRT IFRI co n f é r e n ce , 1 9 se p t e m b r e 2 0 0 6 Le s r é se a u x m o n d ia u x d 'in n o v a t io n d a n s le s t é lé co m s
1 © 2006 Nokia
No k ia ca se st u d y
Ro n a n Tr é b a o l Pa r t n e r sh ip Pr o je ct Dir e ct o r No k ia
Co n t e n t s
Nokia transformation over 1995-2005
Why and where to open a new R&D site ?
5 case studies Dallas Mountain View Budapest Hangzhou Chengdu
Consolidation, the Nokia-Siemens case
2 © 2006 Nokia
o a s g n s n e se a g r e e m e n s v a u e a t o v e r EUR 2 b illio n f o r t h e f u ll y e a r 2 0 0 6 September 12, 2006 Ceremony witnessed by Chinese and Finnish Premiers. Deliveries started in the beginning of the year. Helsinki, Finland - At a ceremony today in Helsinki, Finland witnessed by Chinese Premier Mr. Wen Jiabao and Finnish Premier Mr. Matti Vanhanen, Nokia signed agreements with its Chinese customers China Mobile and PTAC valued at over EUR 2 billion for the full year 2006. The agreements show Nokia's continued commitment to the Chinese market. To date Nokia has committed over EUR 3.3 billion to investments in China , and continues to invest in manufacturing, sales and R&D in the Chinese market. "The signing of these two important agreements is a milestone event for Nokia's operations in China," said Nokia CEO Olli-Pekka Kallasvuo. "We set up our operations more than 20 years ago with a handful of employees and today we employ over 6700 people in China . It is the single biggest market for Nokia, as well as one of the largest contributors to Nokia's R&D, manufacturing and innovation." The frame agreement with China Mobile relates to the purchase of GSM/GPRS network equipment from Nokia with a value of approximately EUR 580 million during the full year 2006. The agreement with the Chinese national mobile phone distributor PTAC relates to the purchase of mobile devices from Nokia with an estimated value of at least EUR 1.5 billion for the full year 2006. Nokia's operations in China include two mobile phone manufacturing facilities, two network manufacturing facilities, and six R&D units focusing on both the Chinese and global markets. On September 1, 2006 Nokia announced that it is expanding its recently established 3G R&D center in Chengdu, Sichuan province.
3 © 2006 Nokia
Nokia people
Latin America 7%
North America 11%
4 © 2006 Nokia
Asia-Pacific 8%
average 2005  56 896 people
China 10%
Europe 63%
Middle-East & Africa 1%
Ke y f ig u r e s – p a r t 1
Personnel Net sales (B€) Operating profit (B€) % Personnel in Finland % Personnel abroad Europe Am erica APAC
5 © 2006 Nokia
31948 5.0 0.7 14% 17821 56% 14127 - -  -
58708 30.4 5.8 19% 24495 42% 34213 14365 11491 8357
R& D t a k e s p la ce w it h in 4 BGs, TP a n d NRC
Customer & Market Operations
Technology Platforms Research & venturing Brand and design Developer support Business infrastructure
6 © 2006 Nokia
Mobile Phones
1 245 M€
R&D expenditures 2005  3 825 million€
860 M€
Enterprise Solutions
329 M€
1170 M€
1604 M€
No k ia Re se a r ch Ce n t e r , st r a t e g ica lly lo ca t e d
7 © 2006 Nokia
Nokia R&D 20,882 people
Nokia Research Center 1,100 people
Glo b a l M a n u f a ct u r in g Ne t w o r k
8 © 2006 Nokia
Key benefits:
Lower logistics costs and taxes Co-location with suppliers
Dongguan (China) Beijing (China) Masan (South Korea) Chennai (India) – 200 Salo (Finland) Oulu (Finland) x2 Bochum (Germany) Espoo (Finland) Komárom (Hungary) Beijing (China) Reynosa (Mexico) Suzhou (China) Manaus (Brazil) India in 2006 = 9 devices sites + UK = 5 networks sites
Ke y f ig u r e s – p a r t 2
R&D personnel % of tot al personnel incl. NRCpersonnel R&D costs (B€) % of Net sales R&D costs / head (k€) Production sit es-counties devices netw orks
9 © 2006 Nokia
7000 22% 500 0.3 7% 49  - -- 
19304 33% -2.6 9% 134 22-10 11-8 11-8
5 n e w R& D sit e s
Dallas – Market & political pressures 1995 : radio & core networks local face + 2 years exercice for USA approval & USA specific features too expensive, main R&D ended over 2002-2005, TS & research remains Budapest – Resources 1998 : mobile switching, ~350 in ~2 years Costs half of home, more activities with packet core, messaging, IMS Labor market becoming tight Mountain View – Technology access 2001 : IP routing, ~200 through acquisitions Too expensive to implement technology into products Ramp-down, focus on high value add Hangzhou - Market & political pressures 2001: applications & platforms for 3G Clear demand from Chinese operators and government Cost 40% of home base + high quality & productivity, ~300 growing Chengdu - Resources Oct 2005: new sources in specific competences, ~100 in 6 months Secondary reason: dual political + costs Cost level is world class, hundreds more in the coming years
10 © 2006 Nokia
Key learnings
5 challenges Rising cost levels in most locations coupled with decreased margins Ability to nurture new technologies/products within large scale mainstream structures Control between home and remote centers Responsiveness to fragmented market Transformation from a product and R&D led company into a services company 4 possible reasons to open a new site Market & political pressures Resources Technology access Costs Where to open ? Today current focus for low cost but excellent R&D area is in no order: East Europe, China, India The low cost countries of the future may included Russia, Philippines and Vietnam
11 © 2006 Nokia