3 Key Insights Into Nokia’s Path To Long-Term Success

By Patrick Moorhead - December 6, 2019
Nokia CEO Rajeev Suri.

As a networking infrastructure analyst, I’ve traveled the world to spend time with the likes of Ericsson, Huawei and Samsung to understand their overall 5G strategies. I finally found the same opportunity this week to spend three days with Nokia at its global analyst forum in Finland. It’s no secret that I’ve been critical of the company in the past—it’s coming off a challenging third quarter. In spite of that, I walked away from the event with three insights that could point to Nokia’s recovery and success in 2020 and beyond: a focus on the enterprise, optical networking and a deep culture of diversity.   

The enterprise as a new path to market

Kathrin Buvac leads a business unit that’s just over a year old focused on the enterprise. It’s a significant undertaking given this represents an entirely new addressable market for Nokia. Enterprises have very different needs than the company’s traditional service provider and carrier install base, but Ms. Buvac and her team compiled a compelling set of solutions and recruited an experienced sales team for key verticals. The targets are what one might expect—energy, transportation, logistics, healthcare, mining and manufacturing, among others. From my perspective, the single largest opportunity for Nokia in this endeavor is providing an integrated solution for cellular-based private LTE and eventually 5G networks. Use cases that have latency and distance demands that exceed the capabilities of Wi-Fi are prime candidates. Contrary to what some carriers believe, I don’t think 5G will kill Wi-Fi—if interested you can find my article on the topic here.

Unlike carriers, who spend billions of dollars on infrastructure and typically deploy a vendor mix of core, radio access and transport components, enterprises don’t have the competency to piecemeal cellular-based networks together. As such, I believe Nokia positioned itself exceptionally well to deliver private network solutions through operators and possibly on its own as a managed service. The division counts 120+ wins to date and is executing to a plan that I haven’t seen from the likes of its other competitors. I believe the private networking opportunity for Nokia is especially compelling in the United States given the CBRS/OnGo initiative that will democratize spectrum access and likely accelerate deployments.

Why optical networking is strategic

Optical networks serve as the backbone for what makes the Internet and streaming services such as Netflix and the recently launched Disney+ a reality today. I knew that Cisco Systems and Huawei have significant capabilities in optics, but I was surprised to learn about Nokia’s depth and breadth. The company is focused on large enterprises, cloud operators and content providers. As a proof point, Nokia and Microsoft recently announced an Azure Cloud collaboration that’s poised to help both enterprises and service providers realize new capabilities from a digital transformation perspective. Nokia claims that its optical portfolio is complete, best-of-breed and well-funded from a research and development perspective to ensure long term investment protection. After hearing from Nokia’s executives at the event, I would agree wholeheartedly.

Diversity as a competitive advantage

There’s a diversity wave sweeping corporate America today within big tech companies such as Cisco, Dell EMC, HPE and Microsoft, and it’s a very good thing. I have two college-aged daughters studying technical disciplines and it’s my hope that they will break the proverbial glass ceiling. As I spent time with Nokia, it became abundantly clear to me that diversity has been an integral part of the company’s culture since its inception. Nokia’s group leadership is not only ethnically diverse, it is also well-balanced with female executives—in addition to Ms. Buvac’s leadership in enterprise, Sandra Motley leads Fixed Networks and Jenni Lukander leads Nokia Technologies. I also had the opportunity to visit Nokia’s Oulu facility, which is instrumental in prototyping many of the company’s radio access products, hosts 5G lab investigations, and provides an impressive OTAVA (Over The Air Validation Area) test bed—all under the leadership by another female executive, Erja Sankari, Vice President of Supply Chain Engineering. In my mind, diversity has the power to drive exceptional employee morale through a meritocracy approach to achieving key business goals and objectives. By all measures, Nokia is executing in this regard.  

Wrapping up

Early in the week, CEO Rajeev Suri quoted boxer Mike Tyson in his opening keynote with a slide that read, “Everyone has a plan until they get punched in the mouth.” Nokia has recently been fighting in the shadow of its competitors and taking some blows. However, as it continues to post 5G wins with AT&T, Sprint, Vodafone and others, I came away with a new appreciation for the company’s resolve. Nokia’s emphasis on the enterprise, optical networking, and a deep culture of diversity could be a one, two, three punch that paves the way for longer term success.

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Patrick founded the firm based on his real-world world technology experiences with the understanding of what he wasn’t getting from analysts and consultants. Ten years later, Patrick is ranked #1 among technology industry analysts in terms of “power” (ARInsights)  in “press citations” (Apollo Research). Moorhead is a contributor at Forbes and frequently appears on CNBC. He is a broad-based analyst covering a wide variety of topics including the cloud, enterprise SaaS, collaboration, client computing, and semiconductors. He has 30 years of experience including 15 years of executive experience at high tech companies (NCR, AT&T, Compaq, now HP, and AMD) leading strategy, product management, product marketing, and corporate marketing, including three industry board appointments.