Chris Nicoll, Principal Analyst at Analysys Mason, comments:
Nokia absorbing NSN is a strategy move to strengthen both the NSN and Nokia brands by leveraging both ends of the mobile connection – similar to what Samsung is doing. With a resurgence by the Nokia with the Lumia devices and growing LTE leadership on the part of NSN, Nokia is taking advantage of the opportunity to re-establish the company’s mobile market leadership in the growing LTE market, particularly in the European markets where NSN is an incumbent network supplier in many networks.
Nokia needs to make some significant investments in NSN to address concerns in three areas: NSN’s overall loss of market share has created concerns regarding NSN’s long-term viability. Delays with their LTE roadmap (specifically EPC) causes concerns; and the need for further radio developments for the Single RAN solution need to be addressed to strengthen the core LTE roadmap.
The consolidation in the mobile market continues, with Nokia reacquiring the networking spin-off NSN. With the increased dependence on the device to take advantage of advanced network features such as Carrier Aggregation and MIMO, the re-acquisition makes sense from a market perspective. With Samsung also leveraging its industry Galaxy line and Huawei becoming more aggressive with its own device portfolio, the latest move my Nokia leaves ALU and Ericsson without their own device strategies.
We are seeing the impact of the total mobile ecosystem with vendors such as Samsung and Huawei taking an end-to-end view. Samsung has used it handsets to launch advanced network features such as LTE-A already and I expect Huawei to do the same. This would be possible using a partnership, but we have not seen that actually happen yet. Apparently Nokia also thought it needed full control over both sides of the connection and I expect it will use the control to speed to market more advanced networking features.
Nokia, Huawei and Samsung all boast the end-to-end ecosystem of devices and RAN/networking solutions. Huawei is just beginning to leverage its device business, while Samsung’s is obviously well-matured. NSN already underwent its operation to pare down its wireless business (dropping Wi-Max), as well as fixed BB, BSS and IPTV. The resulting focus on its GSM/UMTS base and path to upgrade to LTE, as well as Single RAN base stations puts the new Nokia in a good position assuming it can capture the business from its existing customers. Wi-Fi remains a weak area for the company in the face of growing strength of Cisco in both the licensed and unlicensed Small Cell area.
ALU is still trying to find its market position and is rationalising its own product lines, in refocusing on core market areas. However, the company has significant assets in network intelligence, radio management, and interference management that could easily serve as the underpinnings of a new network solution spanning both macro networks and small network solutions. Ericsson is still a strong player in LTE, but needs to beef-up its small cell/Wi-Fi strategy to keep up with the findings from our surveys with operators that show Wi-Fi is an important element in their customer satisfaction/retention strategies.
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