1 © 2007 Nokia

Internet for the Next Billion

Telecom Forum 23 October 2007

Kai Öistämö

Nokia Corporation, Mobile Phones

Executive Vice President & General Manager

2 © 2007 Nokia

Company Conf ident ialCompany Conf ident ial

In a world where everyone can be connected

We help people feel close to what matters to them

3 © 2007 Nokia

Our approachConsumer understanding drives us.

We take a very human approach to technology.

Internet is our quest.

We are taking the Internet to new places

Push for affordability – expand entry markets

Drive universal access through affordability

Meaningful innovations to consumers in entry markets

Achieve ultimate cost leadership

6 © 2007 Nokia

Company Confidential

World population

Internet users

Mobile subscriptions

Source: AMD, Internet World Stats, EMC, Nokia

1995 2000 2005 2010

1

2

3

4

5

6

7

Billio

n

…but not homogeneously

0%

10%

20%

30%

40%

50%

60%

70%

Nor

thA

mer

ica

SE

AP

adva

nced

Japa

n &

Kor

ea

Wes

tern

Eur

ope

Eas

tern

Eur

ope

Mex

ico

LTA

and

carib

ean

Bra

zil

Chi

na

SE

AP

emer

ging

Indi

a

ME

A

Internet penetration 2005

Source: ITU, Internet World Stats

Internet is growing fast…

The emerging market opportunity

The mobile solution

7 © 2007 Nokia

Company Confidential

Mobile GSM Handset and PC Penetration Forecast, 2006-2010

10,0%

20,0%

30,0%

40,0%

50,0%

06 07 08 09 10

China

Africa

India

Africa

India

China

GSM

PC

8 © 2007 Nokia

Company Confidential

Building Blocks to Bridge the Gap

Content

Access

Device

Affo

rdab

ility

Cap

abili

ty

9 © 2007 Nokia

Company Confidential

Content: Relevance, Email and Browsing

82

Purchasing goods and services

Instant messaging

Watching movies

Internet chat rooms

Watching news and sports reports

Work

Playing games

Downloading music

Overseas communication

Sending SMS messages

Researching for information

Browsing the Internet

Sending/receiving emails

72

33

15

15

11

10

7

6

4

3

9

3

4

1

1

4

1

1

1

21

16

57

18

Main reason All reasons

Its not the same as the fixed Internet

Unreliable Internet service on phone

Content not as detailed on mobile phone

Subscription costs

Cost of browsing

Can access fixed Internet elsewhere

Not know how to activate my phone /phone not set up

Difficult to use/ not understand how to use

No need/interest

18

10

10

5

53

8

13

15

5

3

3 5

15

58

15

13

All barriersBiggest barrier

Reasons for using fixed Internet Barriers to mobile Internet usage

Source: Nokia study in Africa, 2007

Content

Access

Device Aff

ord

abil

ity

Capab

ilit

y

10 © 2007 Nokia

Company Confidential

Access: Different Strategies for Different Groups

Mid

Low

High

RuralSuburbanUrban

Population spread

Popula

tion

by

inco

me c

lass

Wireless Internet for the high-end

Internet for the high-income segment

Wireless Internet for the masses personal usage

Connecting the unconnectedPersonal or shared access to people with no

access currently

xDSL and fiber

Wireless Internet for the masses personal usage

Content

Access

Device Aff

ord

abil

ity

Capab

ilit

y

11 © 2007 Nokia

Company Confidential

Device: Same Goal, Different Approaches

Low cost PC (e.g. Tian Yan GX-2)

Thin client PC (e.g. Nova NetTV)

Entry phone & enhancements

Content

Access

Device Aff

ord

abil

ity

Capab

ilit

y

12 © 2007 Nokia

Company Confidential

Capability: Ease of Use Is of Utmost Importance

11

9

6

4

3

67

18

No need

No fixed Internet access at home

Internet not available near my home or place of work

Not interested

Too expensive/cannot afford to

Communicate by alternative means

Don't know how to/too complicated

• Two thirds do not use for lack of capability

• Affordability is only a barrier after capability has been tackled

• Mobile phones are significantly easier to use than the other options

Reasons for not using fixed Internet

Source: Nokia study in Africa, 2007

Content

Access

Device Aff

ord

abil

ity

Capab

ilit

y

13 © 2007 Nokia

Company Confidential

Affordability: % of Income and TCO Are the Drivers

• Consumers are prepared to pay 5-10% of a monthly income level around USD 50 to USD 100, hence the USD 5/month target or USD 60/year

• As an example, in India that could potentially include 95% of the households (assuming household income larger than USD 1000/year)

Share of Personal Total I ncome on Mobile Services(Willingness to Pay)

0%

2%

4%

6%

8%

10%

12%

Average Brazil Mexico Turkey Russia China India

51-150 USD per month income

151-250 USD per month income

251-500 USD per month income

Content

Access

Device Aff

ord

abil

ity

Capab

ilit

y

Source: Nokia market research

14 © 2007 Nokia

Company Confidential

Building blocks to bridge the gap

Content

Access

Device

Affo

rdab

ility

Cap

abili

ty

15 © 2007 Nokia

Company Confidential

Key points

• The bulk of the Internet growth in emerging markets is still to happen

• Local content is essential; email and browsing the key use-cases

• Access is clearly via mobile communications (GPRS in the short term)

• The mobile phone has the potential to be the device of choice for access provided it continues to meet the criteria for affordability and capability

16 © 2007 Nokia

Company Confidential

Thank You!