1 © 2006 Nokia Innovation and Competitiveness ICT Industry Perspective Lauri Kivinen Vice President, Head of Nokia EU Representative Office, Brussels Budapest,

2 © 2006 Nokia World’s largest mobile handset manufacturer Number one in GSM and 3G devices The world’s sixth most-valued brand Nokia and Siemens plan to combine their networks businesses in ,000 employees of some 120 nationalities Sales in more than 130 countries Net sales of EUR 34 billion in 2005 Operating profit of EUR 4.6 billion Nokia at a Glance

3 © 2006 Nokia Nokia in Hungary Nokia units in Hungary since 1993 Nokia is one of the biggest investors in the telecom sector in Hungary Nokia Hungary head office and R&D center in Budapest, factory in Kom á rom Number of Nokia employees in Hungary at present over 4000 Nokia Networks supplies GSM network infrastructure to PGSM and Vodafone Community Involvement Strong cooperation with major technical universities & colleges (scholarships, joint curriculum development, lab sponsorships) Support to two national children’s hospitals with donations of total Euro 160,000 over a period of 8 years.

4 © 2006 Nokia Mobile phone subscriptions globally, millions Source: Nokia 3 billion in billion in e Current global penetration 33 % -07e 4 billion in billion in 2010 Towards the 4 Billion Milestone

5 © 2006 Nokia Strong Investment in R&D % of net sales EURm 3% 6% 9% % Global network with R&D centers in 11 countries Over 20,000 people in R&D at the end of 2005 (~36% of employees) Collaboration with more than 100 universities globally R&D expenditure totaled EUR 3,8 billion in 2005 (11.2% of net sales)

6 © 2006 Nokia Role of ICT in the society Rapidly growing industrial sector An enabler for productivity growth Large potential for contribution of ICT Wide adoption throughout economy and public service Global economic equalizer

7 © 2006 Nokia European R&D and Innovation Landscape Good, but fragmented scientific performance Declining industrial R&D Insufficient innovative performance Increasing competition from outside Low interest in science and engineering Inability to mobilize sufficient resources to respond to the global challenges

8 © 2006 Nokia Europe’s R&D Efforts are Lagging Behind Europe spends less on R&D than its global competitors % of GDP 2003 R&D expenditure Source: Towards a European Research Area; Key Figures

9 © 2006 Nokia New Competition China: over new engineers per year Singapore: a new bio-med hub in Asia Increasing importance of ICT and bio-med: US dominance Cost competition; a software engineer: India € 7, China 14, US 44, Germany 54 New players catching up in the competence game

10 © 2006 Nokia European Paradoxes Inventions not converted into new products, jobs and patents Small, highly innovative start-ups do not easily grow into big, globally successful companies In many sectors, the adoption of (ICT) innovations has not resulted in important productivity gains

11 © 2006 Nokia Lahti Summit Conclusions in November ) Establishing European leadership in future strategic technologies 2) Forging much stronger links between universities, research and business 3) Improving the framework conditions A genuinely integrated Single Market Financing innovation An improved intellectual property policy Faster setting of open and interoperable standards

12 © 2006 Nokia Favorable Innovation Environment Companies Appropriate R&D funding arrangements Access to top-level research Access to high quality experts and labour; mobility; respect for diversity Favourable regulatory environment (IPR, company statutes, taxation etc.) Rich fabric of private partners; enabling vertical and horizontal integration Efficient VC markets Efficient Internal market conditions; cost efficiency

13 © 2006 Nokia European Technology Platforms for ICT Mobile and wireless Communications eMobility Networked European Software and Systems NESSI European Nanoelectronics Initiative ENIAC Embedded Intelligent Systems ARTEMIS European robotics platform Networked and Electronic media NEMI Other possible themes to be identified later…

14 © 2006 Nokia Innovation for European Competitiveness Do not stop: Continue to invest in ICT Work together: Create meaningful European projects Think new: Improve overall conditions for innovation

15 © 2006 Nokia