Nokia Mobile Networks: Positioned to win

I updated you a few months ago on our ongoing improvement program, that began in earnest two years ago, and was designed to strengthen Nokia’s Mobile Networks business and Radio Access Networks (RAN) products. In this post I want to share some further detail on the significant progress we have made in this regard and how I believe we are now positioned to win in 5G, as recently also presented at Nokia’s Capital Markets Day.

The turnaround program has delivered sterling results, with 70 major enhancements achieved across five principal domains of the business, and while this remains a work in progress we are fully confident of the road ahead. We’ve made gains in speed, agility, productivity and quality, built a high-performance culture, and have carefully renewed our top leadership team, to ensure we have the right technical knowledge and turnaround skills in place to maintain this trajectory.

Our R&D assets have been consolidated into fewer sites, and we’ve grown our R&D headcount in 5G by 40 percent. We’ve moved from a waterfall model in operations to large-scale agile, incremental development, allowing us to dramatically increase productivity - so our software feature output is up 60 percent, and our R&D work has become much more predictable, with feature build accuracy up from 60 percent to 90 percent. We’ve tripled our system-on-chip development, and our work with Nokia Bell Labs has allowed us also to ramp up our 3GPP wireless research, connect our research teams with product management, and implement a data-driven product decision process. This has made us the industry number 1 in Standard Essential Patents, as re-confirmed last month by an independent IPLytics study.

Nokia is positioned to win in 5G

5G is still very much in its infancy, with most of the prize still to be won - and Nokia is now in prime place to emerge as the global leader. Over the next three years, the 5G market will triple in EMEA, double in APAC, and grow by half in North America. It’s also worth noting that the peak of 5G’s cycle will be extended, because its first phase is focused on mobile broadband, with the second more about facilitating IoT with ultra-low latency and ultra-high reliability. 5G will deliver enormous and sustained value to the industry, and we are still, ultimately, not so far along from the starting point.  

There is therefore still much to be gained by those tasked with building this future, and we at Nokia are positioned to win. We’ve seen the 5G roadmap gap with our main competition narrow significantly. We’re now the global number two, excluding mainland China* and our success rate in converting 4G customers outside China to 5G is around 90 percent. And, we are shaping the market, driving adoption of open and virtualized radio access networks (O-RAN and vRAN). We are a trusted vendor, repeatedly recognised for the quality of what we deliver, and for our ethical business practices.

29 of top 30 mobile operator groups run Nokia base stations

In fact, we’re consistently winning business across the board: Nokia has won 22 wholly new customers in RAN over the last two years, and grown our RAN share in 20 incumbent accounts. This speaks to the excellent momentum we now enjoy, and in fact, out of the world’s 30 biggest mobile operator groups** measured by the number of subscribers, 29 run Nokia base stations.

In private wireless networks, where the market is growing at 35 percent CAGR, we are already the leader, having sold networks to more than 260 private wireless customers to date through CSPs or directly to enterprise customers, and more than 30 of these are 5G.

The future of wireless lies in O-RAN and vRAN, to which Nokia is fully committed, having been the only large, established supplier to endorse and help to found the O-RAN Alliance when it consisted of only five operators. Today, 23 of the 27 CSPs in the O-RAN Alliance are Nokia customers. We believe in this open, collaborative future, and our early market-making will enable us to increase share and margins as the market matures. There remain challenges in O-RAN and vRAN - the technologies are not yet fully mature or cost-competitive - but many key verticals are interested in cloud computing in private wireless networks, and we are working with leading operators to make O-RAN and vRAN a commercial reality. In support of these ambitions, we are building an ecosystem of public cloud partners, and just a week back, announced partnerships with AWS, Google and Microsoft.

The road ahead

In 2021 we will secure full portfolio competitiveness, reset fixed costs and increase 5G R&D. And, we will drive further momentum in 5G with CSPs and for private wireless customers. As the industry leaders already in O-RAN and vRAN, we will be positioned to capitalise on early O-RAN and vRAN market-making throughout 2022 and 2023. This year is all about completing the reset - the next two are about acceleration. From there, as we head into 2024, we will be completing 5G coverage build-outs, densifying networks with small cells and mmWave hot spots, driving further 5G growth with new use cases for private wireless networks amongst industry verticals. It’s a thoroughly rewarding time to be working in this area of Nokia’s business, and I’m excited for us to work collaboratively with our customers and partners to build the future.

*Source : Nokia
**Source : GSMA Intelligence